Through its president Nayib Bukele, El Salvador has decided to launch a project that aims to create a “Bitcoin city” or “Bitcoin city” in the country. If it were to see the light of day, it would undoubtedly be the first of its kind!
For several months, El Salvador has been an open-air laboratory for Bitcoin. Indeed, since September 2021, El Salvador has adopted Bitcoin as its official currency (in addition to the US dollar). The latest announcement from El Salvador is anything but trivial! It concerns the creation of a “Bitcoin city” …
The creation of a “Bitcoin city” in El Salvador!
On Sunday, November 21, 2021, Salvadoran President Nayib Bukele announced that his government would issue $ 1 million in bonds. The announcement came as part of the Labitcong event, a conference organized on Bitcoin.
What purpose ? This money will be used by the government to develop its project to create a “Bitcoin city” ! At this preliminary stage, still little has filtered out. Nevertheless, the idea for Nayib Bukele is to create a city where the only tax would be a VAT. This tax will be used to finance the obligations and services of the future city such as garbage collection for example.
In addition, the city would achieve carbon neutrality with a energy mainly from geothermal energy. Finally, we also learned that the city would be located in the east of the country, in the region of La Union.
At the level of the city itself, Bukele imagines a circular city with an airport, shopping areas and a central square that will look like the Bitcoin symbol from above!
“Invest [dans ce projet] and earn all the money you want. It will be a fully ecological city that will function and be powered by a volcano. »Nayib Bukele, President of El Salvador
Partnerships with Blockstream and Bitfinex for the “Bitcoin City” project
In fact, on what rests this project ? We mention two main partnerships: Blockstream and Bitfinex.
Blockstream will manage the issuance of bonds (nicknamed “volcano bond”). Blockstream is a company that provides Bitcoin services. The bonds will be tokenized on its blockchain. In detail, half of the bonds (roughly $ 500,000) will be used to buy Bitcoin. The other part, meanwhile, will be used to finance the construction of Bitcoin mining and energy structures.
“We have been in talks with El Salvador for months and have gone to great lengths to design and model the bonds. We believe this bond offering will be attractive to a wide range of investors, ranging from cryptocurrency investors, to yield seekers, HODLers and ordinary people. We believe this bond has the potential to accelerate hyperbitcoinization and create a new financial system built on Bitcoin. »Samson Mow, security manager at Blockstream
Any investor in the world will be able to participate in this financing and receive dividends. The bonds will be blocked for 5 years, after which the government will resell the bitcoins and pay additional dividends to those holders. Bitfinex will be the exchange that handles bond trading.
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