El Salvador Creates ‘Bitcoin City’, The First City Financed With Cryptocurrency

On September 7, El Salvador announced that it was adopting Bitcoin as a legal currency to improve the country despite the fact that the deployment of the cryptocurrency caused technological problems and protests. Problems aside, its adoption as legal tender marked a historic milestone, as the cryptocurrency was the first to adopt state recognition.

As stated by Nayib Bukele (president of the country) in Reuters , El Salvador now wants to build its first ‘Bitcoin City’, financed with bonds that are backed by Bitcoins . This city will get geothermal energy from a volcano and will be tax free, except for VAT (value added tax).

The cost of the public infrastructure will be approximately 300,000 Bitcoins (about 15,656 million euros). In addition, half of the VAT collected will be used to finance the bonds issued in order to build the city, while the other half will pay for services such as garbage collection.

Bukele also affirms for Reuters that Bitcoin City will be circular and will have an airport, residences, shops and a square whose design will be similar to the Bitcoin symbol. As reported by CNBC , the start of construction would be in 2022.

The first issue of the bonds
A date has been set for the initial issuance of the bonds that will be prepared for early 2022, taking into account that the first ten-year issuance will be worth 1,000 million dollars (more than 880 million euros) and half of said sum will be allocated to the purchase of Bitcoins in the market.

To facilitate the entire process, the government of El Salvador must approve a securities law and the first license to operate an exchange . Also, according to estimates, once ten of the bonds are issued, 5,000 million Bitcoins will be withdrawn from the market in different years.

Sam Brad

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