El Salvador Plans To Develop Bitcoin City

Nayib Bukele, the El Salvadoran President, declared this weekend that the country is involved in making preparations for the construction of the earliest Bitcoin City (an almost tax-free utopia to provide benefit Bitcoin investors being backed by Bitcoin (BTC)-based bond as well as geothermal powered mining of Bitcoin. The country intends to fund the city’s construction as well as Bitcoin mining infrastructure through a tokenized bond of up to $1B. The single tax implemented in the respective city will consist of a 10% charge-added tax assistance fund for construction and payment of the other related dues. Liquid Network of Blockstream has issued this bond and iFinex will process it.

The bond to power Bitcoin city, and its allocation

The bond’s $500M, which has 6.5% as the coupon rate, would be reserved for the building of the respective city as well as the required mining infrastructure, though the bond’s other half would be spent on purchasing more Bitcoin. Following a period of five years, the country can start to trade the crypto holdings thereof to recompense an extra surplus to the holders. After 10 years, Samson Mow (the CEO of Blockstream) guessed that 146% would be the percentage of APY based on the supposition that BTC will have a value of up to $1M by that time.

Mow is of the view that the bond’s $500M, that is allocated to buy Bitcoin (supposing that El Salvador’s principal would be followed by the other countries), will speed up the price appreciation thereof by extracting tokens out of the market. The declared purchase amounts of El Salvador (nearly 8,500 BTC) is smaller than the cumulative 2.3M BTC amount’s 0.4%, which is being presently existing on the exchanges, although a downward trend has been witnessed in this number during the recent few months.

A future perspective

Mow, while giving a presentation with Bukele, mentioned that the country will turn out to be the Latin American Singapore as well as among the most significant financial centers around the world. The gross domestic product (GDP) of El Salvador per capita in 2020 was up to $3,799. Whereas Singapore’s per capita GDP was almost $59,798 during 2020. The Conchagua volcano, being a power source for the latest Bitcoin mining activities got linked with the orbiting BTC node of Blockstream in the recent week.