The Bitcoin-friendly president of El Salvador, Nayib Bukele, said that his country plans to build the world’s first Bitcoin City at a Bitcoin investment summit on Saturday.
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The city will be located in between the municipalities of La Unión and Conchagua in the eastern department La Unión.
The outset by the issuance of Bitcoin-backed billion-dollar bonds in 2022 will be used as the initial costs for developing the so-called Bitcoin City.
Fireworks were followed by Bitcoin maxi Bukele’s address at the closing ceremony of a week-long Bitcoin conference in El Salvador.
They definitely didn’t skimp on the production budget for Bukele’s entrance — Metaverse avatar and all pic.twitter.com/VwspEggmLe— Sarah Kinosian (@skinosian) November 21, 2021
Bukele addressed the assembled crowd and said that the geothermal energy generated from nearby volcanoes will be used to power Bitcoin City and it will be tax-free except for value-added tax (VAT).
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“Invest here and make all the money you want. This is a fully ecological city that works and is energized by a volcano.”
Half of the money raised through VAT would be used to pay off the bonds issued to fund the city’s startup costs, while the other half would be used to fund public services, said Bukele, who said 300,000 Bitcoins will be needed to complete the city’s infrastructure.
One of the objectives of the Bitcoin City is to attract foreign Bitcoin investment into the city. He said: “If you want bitcoin to spread over the world, we should build some Alexandrias.”
Bukele briefly explained a vision of the city’s plan and informed that it will be circular, and will contain residential and commercial districts and an airport. He also said the central plaza will look like the Bitcoin symbol from above.
El Salvador has struck deals with Blockstream and iFinex, in order to issue the bonds. iFinex will be helping the government to write new digital tokenized securities laws and will act as the government’s bookrunner.
The government will then give iFinex the first license so that it can issue Bitcoin-backed billion-dollar bonds on Bitfinex securities.
It was confirmed by Samson Mow, CSO of Blockstream, that the bonds will be issued on Blockstream’s Liquid Network as he also appeared at the event.
From legal tender to Bitcoin City
According to Ethereum founder Vitalik Buterin, El Salvador’s Bitcoin adoption was “contrary to the ideals” of crypto.
In a blog post, Buterin elaborated: “This tactic of pushing BTC to millions of people in El Salvador at the same time with almost no attempt at prior education is reckless, and risks a large number of innocent people getting hacked or scammed. Shame on Bitcoin maximalists.”
On the contrary, some of the maxis, like MicroStrategy CEO Michael Saylor and crypto podcaster Peter McCormack are in favour of Bukele’s plan.
On October 1, Bukele tweeted that El Salvador had started to mine Bitcoin with geothermal energy.
Last month, El Salvador reported that due to the currency’s rising prices, its Bitcoin trust had a surplus of $4 million. Bukele announced he would use the cash to build a pet hospital.
On October 14, El Salvadorans noticed a new “Pay Me in Bitcoin” feature that converts direct bank deposits into Bitcoin as Bitcoin wallet Strike has been one of the partners of El Salvador’s Bitcoin adoption process.
El Salvador’s total Bitcoin holdings rose to 1,120 BTC as Bukele added 420 more Bitcoins to the country’s treasury taking advantage of the dip in Bitcoin prices.