El Salvador to inaugurate Bitcoin City backed by $1B BTC bonds
The development of Bitcoin City will see the proactive involvement of prominent crypto companies including cryptocurrency exchange Bitfinex and Adam Back’s Blockstream.
El Salvador continues to lead the Bitcoin (BTC) adoption drive as President Nayib Bukele announces the launch of Bitcoin City, which will be funded initially by $1 billion Bitcoin bonds.
The initiative was first announced by Bukele at El Salvador’s Bitcoin Week conference, which sought to celebrate Bitcoin’s mainstream adoption in the country and increase citizen participation.
"Pensé que teníamos que dar un anuncio grande en esta #BitcoinWeek. Así que hoy quiero anunciar que vamos a construir la primera #BitcoinCity", Presidente @nayibukele. pic.twitter.com/7yHQLyIjBx
— Casa Presidencial (@PresidenciaSV) November 21, 2021
In Bukele’s words:
“In #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport”
The development of Bitcoin City will see the proactive involvement of prominent crypto companies including cryptocurrency exchange Bitfinex and Adam Back’s Blockstream. According to Bitfinex CTO Bitfinex Paolo Ardoino, the exchange will support El Salvador’s Bitcoin City initiative by launching a securities platform to hold the Bitcoin bonds. He added:
“[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.”
The president envisions Bitcoin City to become a fully functional city with residential areas, shopping centers, restaurants, a port, “everything around Bitcoin.” Moreover, the residents are subject to only value-added tax (VAT), which according to Bukele will be used to pay the municipality's bonds, and the rest for public infrastructure and city maintenance.
At the conference, Blockstream’s chief security officer Samson Mao clarified the feasibility of sourcing the $1 billion Bitcoin bonds:
“With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
Mao also informed the citizens that the $500 million worth of Bitcoin bonds will be subject to a five-year lock-up period, effectively taking away the invested capital out of the global circulation. In addition, the entrepreneur explained how a 10 fold increase in similar initiatives from other countries will eventually take away half of Bitcoin’s 21 million market capitalization out of circulation.
Related: El Salvador to build 20 ‘Bitcoin Schools’ with surplus from Bitcoin Trust
Soon after Bitcoin’s mainstream adoption, the El Salvador government has been reinvesting unrealized gains onto various infrastructure development projects.
Early November, Bukele announced that the surplus earned from the state’s Bitcoin Trust account will be used for constructing 20 new schools:
“When this project was started, we had not made as much money in FIDEBITCOIN [state BTC Trust account] as we have made now. So we have decided to make the first 20 Bitcoin Schools.”
In mid-October, the government of El Salvador reinvested $4 million from the profits of their Bitcoin Trust to construct a new veterinary hospital in the capital, San Salvador.