El Salvador unveils Bitcoin City
The President of El Salvador, President Nayib Bukele, in a Saturday night presentation at Bitcoin Week, revealed that the nation plans to build an entire city based on the trillion-dollar cryptocurrency asset, naming it, ‘Bitcoin City.’
According to President Nayib Bukele, the new city will be located along the Gulf of Fonseca, near a volcano. He also mentioned that the government plans on locating a power plant by the volcano to provide energy for both the city and Bitcoin mining.
The President stated, “In #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport.”
What you should know
According to President Nayib Bukele, Bitcoin City will be a “full-fledged metropolis with residential and commercial areas, restaurants, an airport as well as a port and rail service.”
The city will be laid out in a circle (like a coin) and in the city centre will be a plaza that will be host to a huge Bitcoin symbol. He further added that the city will have no income, property, capital gains or payroll taxes.
The president also mentioned the Latin American nation’s plan to issue a $1 billion Bitcoin bond, which will be a tokenized financial instrument that will be developed by Blockstream on the Liquid Network.
According to a press release by Blockstream, “The $1 billion US raised will be split between a $500M allocation of Bitcoin (BTC) and a $500M infrastructure spend for building out energy and Bitcoin mining infrastructure in the region.”
The press release also mentioned the distribution of a special dividend. It stated, “The Bitcoin Bond will have special dividends dispersed on an annual basis generated by the staggered liquidation of Bitcoin. Using Blockstream’s Asset Management Platform (AMP), dividends are easily paid out to bondholders.”
What they are saying
Bitfinex CTO, Paolo Ardoino, stated that the exchange will support El Salvador’s Bitcoin City initiative by launching a securities platform to hold the Bitcoin bonds. He stated, “[The platform] will soon be home to many local and foreign digital assets offerings developing new digital asset regulation for the country! El Salvador, Bitfinex and Blockstream are making history together.”
Blockstream’s chief security officer, Samson Mao, explained that sourcing for the $1 billion Bitcoin bonds will not be a problem. He stated, “With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
Samson Mao also stated that the Bitcoin bonds will be subject to a five-year lock-up period, effectively taking the invested capital out of the global circulation. In addition, he explained how a 10 fold increase in similar initiatives from other countries will eventually take half of Bitcoin’s 21 million market capitalization out of circulation.
Conclusion
Since the adoption of Bitcoin as a legal tender, the Salvadoran government has been investing gains into various infrastructure development projects. In mid-October, the President announced that the $4 million from the profits of their Bitcoin Trust will be used to construct a new veterinary hospital in the capital, San Salvador. Early November, Bukele announced that the surplus earned from the state’s Bitcoin Trust account will be used for constructing 20 new schools.
Bitcoin trades at $58,912, up 0.66% for the day, as of the time of this report.