El Salvador to become World’s First “Bitcoin City”
Bitcoin has been legal tender alongside the U.S. dollar in El Salvador since September 2021. Now, the nation’s popular President, Nayib Bukele, added further fuel to his “rock star” persona with an announcement this past Saturday that El Salvador would be building the world's first "Bitcoin City," to be initially funded by bitcoin-backed bonds.
It’s another clear indicator of Bukele’s growing affinity for cryptocurrencies and he appears to be doubling down on his bet to harness the power of the digital assets in order to fuel further investments in the Central American country. The government has already backed Bitcoin with a $150 million fund and, to incentivize Salvadorans to use it, the El Salvadorian government has offered $30 worth of credit to those using its digital wallet.
The Liquid Network
It has been announced that the new city would be built near the Conchagua volcano - Conchagua consists of two overlapping stratovolcanoes and overlooks the Gulf of Fonseca. The geographical location is a deliberate move to take advantage of the available geothermal energy, converting it to a source of power both for the city and for more Bitcoin mining activities. "This is a fully ecological city that works and is energized by a volcano” Bukele commented at the closing a week-long promotional event for Bitcoin.
Government officials stated that the country would issue $1 billion in “bitcoin bonds” in 2022 to raise additional resources to fund the construction of Bitcoin City. The bonds are going to be issued on “the Liquid Network” - a sidechain-based settlement network that enables faster, more confidential Bitcoin transactions and the issuance of digital assets according to information posted on the site.
The Liquid Network is managed by Blockstream who said that $500 million of the funds raised will be dedicated to building the infrastructure for the city and additional bitcoin mining in the region. The other $500 million would be used for, what else, the purchase of more bitcoin cryptocurrency.
Zero Carbon Dioxide Emissions
Not to be easily outdone, the government plans to build their innovative city to look like the crypto coin from the sky when it's built. Taxes will also be noticeably lacking from the new city considering there will be no property, income or municipal taxes, and the city is expected to have a level of zero carbon dioxide emissions. Utopian in every conceivable way.
Some Salvadorans have vocalized their trepidation at Bukele’s well-publicized love affair with digital currencies with some protests being held against the government for its unbridled embrace of the digital assets. Still, they’ve done little to harm his popularity and credibility with voters.
Ultimately, the city would be built with the hopes of attracting more foreign investment. Those with influence over the project have mentioned sites for residential areas, malls, restaurants, and a port. Also, the El Salvador president mentioned ideas like digital education, technology, and sustainable public transportation.
“This is going to make El Salvador the financial center of the world,” Bukele said.