Bukele plans world’s first “Bitcoin City” for El Salvador

Nayib Bukele has revealed that El Salvador will look to become the world’s first “Bitcoin City” with plans having already been drawn up.

Indeed, the Central American country already has the potential to make it happen after it introduced Bitcoin Law earlier in 2021, with the Bitcoin becoming a form of legal tender permitted within the nation. Now, it seems that Bukele is ready to double down on the ideas and ambitions that he has in regards to digital assets, as he continues to feel it can fuel investment within the region.

The idea of the “Bitcoin City” was revealed at an event that took place over an entire week in which the president was speaking at and mentioned that the project would be funded initially by bitcoin-backed bonds. Planned to be located in the eastern region of La Union, it would get geothermal power from a volcano and would not levy any taxes on those situated there, except for the traditional value-added tax (VAT). Nayib Bukele, who spoke in English at the event and was dressed in all white and wearing a baseball cap with it on in reverse, exclaimed:  “Invest here and make all the money you want. This is a fully ecological city that works and is energized by a volcano.”

The president revealed that half of the VAT that would be levied would be used to fund the bonds that were issued to build the city, whilst the other half would then be used to pay for services such as refuse collection, before estimating that the public infrastructure would come to a cost of around 300,000 bitcoins.

Bukele has already likened his plan to the cities that were founded by Alexander the Great, as he revealed that “Bitcoin City” would be circular, that would have a number of residential and commercial areas, as well as an airport and a central plaza design that would look like a bitcoin symbol from above.

“If you want bitcoin to spread over the world, we should build some Alexandrias,” he said.

Progress made regarding crypto in El Salvador already

As highlighted already, El Salvador has made some strong advancements in regards to cryptocurrency, with the digital asset having already become a form of legal payment method within the country. This is brilliant for some within the country, as many have turned to virtual currency for a number of purposes including, as well as purchasing other services and products where they possibly can.

Nonetheless, Bukele could face some resistance to his plans to provide El Salvador with the world’s first “Bitcoin City”. There is no doubt that the president is one of the most popular that the nation has had in recent memory, however, the opinion polls would suggest that they are not as popular about crypto as they are about him. According to some that have been produced, many Salvadorans are sceptical about Bukele’s love for crypto and the rocky introduction that was experienced has led to a number of protests against his government.

The plans could be about to get set in motion in the very near future, with the El Salvador president stating that the country plans to issue the initial bonds in 2022 and within 60 days time.

“Financial center of the world”

There is excitement from some about the financial power and impact that the Central American country could have in the future, with the chief strategy officer of blockchain technology provider Blockstream, Samson Mow, revealing that the first 10-year issue, which will be known as the “volcano bond” will be worth $1 billion and backed by bitcoin whilst carrying a coupon of 6.5%.

Following the first five years, El Salvador would then start to sell some of the bitcoin that had been used to find the bond to give its investors an “additional coupon”, thus positioning the value of the crypto to continually rise.

“This is going to make El Salvador the financial centre of the world,” he said.

In order for this to happen, El Salvador’s government is currently working on a securities law, whilst the first licence to operate an exchange would go to Bitfinex, Mow confirmed. The crypto exchange was listed as the book runner for the bond on a presentation that had been made.