El Salvador to Establish ‘Bitcoin City’ with $500M from Proposed $1B Bond Issue

President Nayib Bukele stated that the Salvadoran government is going to create an entire city based on bitcoin, which is the only nation where bitcoin is legal tender. El Salvador is working on creating a city called “bitcoin city” where the use of bitcoin will be legal. The proposal to complete this project was recently introduced by president Nayib Bukele, who has stated that it would help bring in a huge amount of foreign investments and simplify transactions. According to News. Bitcoin, Bukele believes that the proposed town would help attract foreign investors and simplify transactions. It is possible that he is hopeful about a similar project in Venezuela, which was suggested by president Nicolas Maduro. 

This digital currency called El Petro is currently being considered as a national cryptocurrency, but it has been criticized for its lack of transparency. El Salvador’s government is planning to sell $1 billion of bonds to finance this project and the treasury is also considering the use of bitcoin as payment for these bonds. According to president Bukele: “We are going to Establish the first city in the world where [the bitcoin] is accepted as legal currency.” On the Liquid Network, El Salvador’s president, Nayib Bukele, announced that his nation is creating a $1 billion USD “bitcoin bond,” a tokenized financial instrument produced by Blockstream.

 Of that amount, $500 million will be used to help build essential energy and bitcoin mining infrastructure while the remaining $500 million will be spent to finance the development of a new city called “bitcoin city.” The $500 million bonds will be denominated in cryptocurrency, and it is possible that it will be paid with bitcoin. “Bitcoin City” will be built near a volcano along the Gulf of Fonseca, according to the president. The government intends to build a power plant near the volcano in order to supply electricity for both bitcoin mining and the city, he added. It is also possible that Bukele’s Bitcoin City be a literal city, with residential and commercial sections, restaurants, an airport, and a port and rail service. The city will be built in the form of a circle (like a coin), with a major bitcoin symbol in the city center. 

There will be no income taxes, property tax, VAT, or fee for the purchase of goods and services. According to News. Bitcoin, Bukele’s project was presented on May 14 at a meeting with potential foreign investors in El Salvador. It has been suggested that investments will be needed from the private sector so that bitcoin can become a national currency and part of everyday life. Thus, the government intends to encourage the creation of digital currency mining centers, which will eventually turn El Salvador into Latin America’s largest crypto-mining nation. According to News. Bitcoin, the goal is for this project to be completed by 2022. The country has five years to establish a bitcoin economy that will have an impact on the rest of Central America and promote both the use of bitcoin and blockchain technology within the region.