In Brief:
- El Salvador President plans to create the world’s first bitcoin city.
- The project is to be backed by $1B bitcoin bonds built on the Liquid network.
- The city will be powered by the local geothermal energy.
El Salvador President Nayib Bukele announced plans to create the world’s “first Bitcoin City” at Bitcoin Week 2021 held at Mizata.
The Bitcoin City project is to be initially backed by $1 billion in bitcoin bonds which is set to get issued in 2022. The bitcoin bond will be issued on Blockstream’s Liquid Network, a Bitcoin sidechain network.
The bitcoin city residents would not need to pay income tax, property tax, capital gains tax, or payroll tax. They only need to pay a 10% VAT to fund construction and services.
The money raised through VAT would be used to pay off the bonds issued to fund the bitcoin city’s startup costs, with the other half going toward public services.
$500 million of the $1B is set to build the city’s energy and mining infrastructure, and the rest of the funds are to be invested in bitcoin.
Bitfinex will participate in the project along with Blockwork and offer support by building a digital securities platform to host the Bitcoin bonds.
Samson Mow, CSO of Blockstream stated, “After a five-year lockup period, the government will begin to sell its Bitcoins and pay an additional dividend to investors. Investors will also be awarded permanent residence and be fast-tracked to citizenship.”
The city will be built between the municipalities of La Unión and Conchagua in eastern El Salvador and would get the geothermal power to operate from a volcano.
Bukele stated, “Invest here and make all the money you want. This is a fully ecological city that works and is energized by a volcano.”
Bukele compared his plan to Alexander the Great’s cities, declaring Bitcoin City would be circular, have an airport, residential and commercial areas, and a central plaza designed to look like a bitcoin symbol from the air.
El Salvador made headlines earlier this year by becoming the first country to adopt bitcoin as legal tender and now the plans on bitcoin city has the whole crypto community excited, some even planning to permanently move to the country.
