There is only one country in the whole world that has accepted bitcoin as legal tender and that country is El Salvador. This is certainly a bold and progressive move. Not only have they accepted this cryptocurrency as legal tender but they have also decided to do something even more progressive. They have decided to build a whole city based on Bitcoin. The President of El Salvador, Nayib Bukele informed an excited audience through a presentation recently at a Bitcoin Week event.
The city has been dubbed “Bitcoin City”. It will be built along the coast. This will be at the Gulf of Fonseca. It will be near a volcano. The president stated that they will also build a power plant near the volcano to provide a source of electricity for the crypto-mining and also the city itself.
The President of El Salvador says their goal is to build a full-featured Metropolis that will have a unique design. The layout of the city will be circular with the center encompassing a plaza. The plaza will have a large bitcoin symbol. This all constitutes a city layout that looks like a giant coin. It will have commercial areas, restaurants, an airport, and residential areas. It will also have port and rail services. The city will not have any income tax, property tax, payroll tax, or capital gains tax.
The President added that his country intends on issuing a Bitcoin bond valued at US$1 Billion. This is a token-based technology that they had engineered by Blockstream. This instrument is on the Liquid Network. $500 million of it will be dedicated towards the construction of the infrastructure. This will be energy and mining, infrastructure, in particular. The remainder will be used to purchase more bitcoin. The country is to purchase at Bitcoin’s trading price of US$59,000. This will then bring El Salvador’s treasury value of Bitcoin to 2,000.
Bitfinex Securities will be granted the business of issuance. The country also intends on developing a securities law.
Blockstream’s executive, Samson Mow informed the crowd that the bonds would be 10 years ones. They would also pay 6.5% initially. After 5 years, El Salvador would start selling its investment and paying bondholders additional dividends.
The annual percentage yield will be at 146% after 10 years. Mow stated this. The figures were basing on their prediction models for bitcoin’s price. They predict that bitcoin will have hit $1 million in 5 years from now. Taking out that much cryptocurrency from circulation will affect the currency. It is expected to cause bitcoin to grow in value. Mow says accomplishing this would likely make El Salvador the “Singapore of Latin America”.
With all this interesting news, one may wonder what this Latin American country is like. El Salvador is geographically the smallest country in this region of the Americas. For comparison, it is smaller than the United States’ state of Massachusetts. Its neighbors include Guatemala and Honduras. It happens to be the one nation that does not have a coast on the Caribbean Sea.
This small country is known for its volcanoes. Some of these volcanoes are still active. It is considered the “Land of Volcanoes”, for that reason. It also has frequent earthquakes.
Most of this nation’s people live in the countryside. The average citizen does not have potable water or electricity. The affluent among this country’s citizens live in San Salvador.
The government provides free education for children. This is until the 9th grade. Most families in El Salvador still don’t manage to afford this because of the cost of transportation and school supplies.
With somewhat a bleak look at affairs, one may wonder how or why El Salvador intends on building a bitcoin city.
As of now, about 2.1 million Salvadorans are using the Chivo bitcoin wallet. This accounts for about a third of El Salvador’s population. With continuing adoption rates, the future is promising for this Latin American country when it comes to bitcoin and advances.
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