- El Salvador remains at the forefront of Bitcoin (BTC) adoption.
- President Nayib Bukele announced the launch of Bitcoin City.
- Bitcoin City was funded with $1 billion in Bitcoin bonds.
- Bitcoin City will be developed with the active participation of prominent crypto companies.
- Residents will only be subject to value-added tax (VAT) in Bitcoin City.
El Salvador remains at the forefront of Bitcoin (BTC) adoption, with President Nayib Bukele announcing the launch of Bitcoin City. It was initially funded with $1 billion in Bitcoin bonds. Bukele first announced the initiative at the Bitcoin Week conference in El Salvador. It was held to celebrate the country’s adoption of Bitcoin and encourage citizen participation.
Bukele said that “In #BitcoinCity we will have digital and technological education. Geothermal energy for the whole city and efficient and sustainable public transport”.
According to Bitfinex CTO Paolo Ardoino, Bitcoin City will be developed with the active participation of prominent crypto companies such as cryptocurrency exchange Bitfinex and Adam Back’s Blockstream. The exchange will support El Salvador’s Bitcoin City initiative by launching a securities platform to hold the Bitcoin bonds.
He said that “[The platform] will soon be home to many digital asset delivery services at home and abroad that are developing new regulations for digital assets for the country! El Salvador, Bitfinex, and Blockstream are writing history together”.
According to the president, Bitcoin City will be a fully functional city with residential areas, shopping malls, restaurants, a port, and everything around Bitcoin. Besides that, residents will only be subject to value-added tax (VAT), which will be used to pay the municipality’s bonds, with the remainder going to public infrastructure and city maintenance, according to Bukele.
Blockstream’s chief security officer, Samson Mao, clarified the feasibility of obtaining the $1 billion Bitcoin bonds at the conference. He said that “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 in Bitcoin bonds will be locked up for five years, effectively removing the invested capital from global circulation. Moreover, the entrepreneur explained how a 10 fold increase in similar initiatives from other countries would eventually remove half of Bitcoin’s 21 million market capitalization from circulation.
El Salvador’s government has been reinvesting unrealized gains into various infrastructure development projects since Bitcoin’s mainstream adoption. Bukele announced in early November that the state’s Bitcoin Trust account surplus would be used to build 20 new schools.
He said that “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.”
El Salvador’s government invested $4 million from the profits of their Bitcoin Trust in a new veterinary hospital in the capital, San Salvador, in mid-October.