Is El Salvador’s President “Bitcoin City” Dream Possible With BTC Bonds?
President Nayib Bukele of El Salvador plans to use Bitcoin bonds to build “Bitcoin City”, which is powered by geothermal energy from volcanoes.
Nayib Bukele – President of El Salvador
Bukele announced the plan on November 20 when specified on the final evening of the LABITCONF conference. Samson Mow, Blockstream‘s Chief Strategy Officer, is also involved in the project. On the same day, it was reported that El Salvador had signed an agreement with Blockstream and iFinex (Bitfinex’s parent company) to issue the above bonds.
The president announced that the bonds will be used to fund “Bitcoin City,” which is located near a volcano that powers the community’s operations and bitcoin mining. Bukele said the bonds will be sold in 2022. He estimates that the city’s public infrastructure will cost around 300,000 BTC in total ($ 16.8 billion at press time).
The city will be located on the Gulf of Fonseca in the Pacific Ocean, whose volcanic islands form the border with Honduras and Nicaragua. Bukele imagines the metropolis to be circular, with the central Bitcoin symbol clearly visible from above. The city will have many amenities such as residential and commercial areas, bars, restaurants, airports, ports, railways and entertainment.
“The government will provide land and public infrastructure, and economic areas will attract investors to contribute to the development and construction of the city. Of course, Bitcoin City is committed to free and equal access to everything. ”
Bitcoin City will use geothermal energy from a nearby volcano. This is not the Tecapa volcano that is currently driving mining in the country.
Bukele says the city will have its own mayor, with no personal or corporation tax, capital gains tax, property tax, or wage tax. Instead, they put a 10% sales tax on purchases to pay for the city’s upkeep. Half of the proceeds from this levy will be used for normal city services such as garbage collection and park maintenance. The rest will be used to buy bonds that the government will issue to build the city.
Blockstream’s Mow explains in more detail how the “Volcano Bond”, technically called EBB1 or El Salvador Bitcoin Bond 1, works. The Central American country plans to spend $ 1 billion in Bitcoin on the first bond. Half will be used to buy bitcoin, the other half to finance bitcoin mining and energy infrastructure. He added that the bond would be the first in a planned series.
“The basis for a bitcoin bond is that it is backed by bitcoin, so half a billion dollars is used to buy bitcoin. The president will buy $ 500 million in Bitcoin in the market. ”
According to Bukele, the bond matures in 2032 and bears interest at 6.5% periodically. Additionally, the bond has a dividend that is said to return 50% of the proceeds to investors after the initial payout of $ 500 million in Bitcoin. The Republic of El Salvador is the issuer of the bonds and Bitfinex Securities is the coordinator. The bonds are issued on the sidechain of the Bitcoin Liquid Network. The president added that USD, BTC and USDT are currencies that bonds can be bought with.
Mow said the bond has a “lock-in” term of five years, which means that by then it will be $ 500 million in Bitcoin on the market. Thereafter, the periodic interest increases due to dividends.
“Of the $ 500 million in Bitcoin that the president will buy after a 5 year lockdown, they will start selling some to provide additional recurring interest to all bond investors.”
Mow added that he expects Bitcoin to hit $ 1 million in five years.
El Salvador is also working on digital securities law and plans to grant Bitfinex its first exchange license.
“You know, Bitfinex has a lot of whales so I don’t see a problem in issuing billions of dollars in bonds.”
Foreign investors spending more than $ 100,000 can apply for naturalization after five years.
The Bitcoin City project is the latest, and perhaps the most important, announcement that Bukele has made since the Central American country accepted Bitcoin as legal tender on September 7th. In addition to the government’s launch of its own Chivo wallet, the president also said it will use the “surplus” from a trust with Bitcoin and dollar balances to fund an animal hospital and schools.
Bitcoin law has sparked protests in recent months, although Bukele maintains a high approval rating. Unsurprisingly, some have raised concerns about the latest plan. For example, some have pointed to El Salvador’s Bitcoin Scheme Dialog in English, especially after Bukele first unveiled Bitcoin laws at a conference in Miami in June Ask a question whether the bond is attractive enough for investors.
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Is El Salvador’s President “Bitcoin City” Dream Possible With BTC Bonds?
President Nayib Bukele of El Salvador plans to use Bitcoin bonds to build “Bitcoin City”, which is powered by geothermal energy from volcanoes.
Nayib Bukele – President of El Salvador
Bukele announced the plan on November 20 when specified on the final evening of the LABITCONF conference. Samson Mow, Blockstream‘s Chief Strategy Officer, is also involved in the project. On the same day, it was reported that El Salvador had signed an agreement with Blockstream and iFinex (Bitfinex’s parent company) to issue the above bonds.
The president announced that the bonds will be used to fund “Bitcoin City,” which is located near a volcano that powers the community’s operations and bitcoin mining. Bukele said the bonds will be sold in 2022. He estimates that the city’s public infrastructure will cost around 300,000 BTC in total ($ 16.8 billion at press time).
The city will be located on the Gulf of Fonseca in the Pacific Ocean, whose volcanic islands form the border with Honduras and Nicaragua. Bukele imagines the metropolis to be circular, with the central Bitcoin symbol clearly visible from above. The city will have many amenities such as residential and commercial areas, bars, restaurants, airports, ports, railways and entertainment.
“The government will provide land and public infrastructure, and economic areas will attract investors to contribute to the development and construction of the city. Of course, Bitcoin City is committed to free and equal access to everything. ”
Bitcoin City will use geothermal energy from a nearby volcano. This is not the Tecapa volcano that is currently driving mining in the country.
Bukele says the city will have its own mayor, with no personal or corporation tax, capital gains tax, property tax, or wage tax. Instead, they put a 10% sales tax on purchases to pay for the city’s upkeep. Half of the proceeds from this levy will be used for normal city services such as garbage collection and park maintenance. The rest will be used to buy bonds that the government will issue to build the city.
Blockstream’s Mow explains in more detail how the “Volcano Bond”, technically called EBB1 or El Salvador Bitcoin Bond 1, works. The Central American country plans to spend $ 1 billion in Bitcoin on the first bond. Half will be used to buy bitcoin, the other half to finance bitcoin mining and energy infrastructure. He added that the bond would be the first in a planned series.
“The basis for a bitcoin bond is that it is backed by bitcoin, so half a billion dollars is used to buy bitcoin. The president will buy $ 500 million in Bitcoin in the market. ”
According to Bukele, the bond matures in 2032 and bears interest at 6.5% periodically. Additionally, the bond has a dividend that is said to return 50% of the proceeds to investors after the initial payout of $ 500 million in Bitcoin. The Republic of El Salvador is the issuer of the bonds and Bitfinex Securities is the coordinator. The bonds are issued on the sidechain of the Bitcoin Liquid Network. The president added that USD, BTC and USDT are currencies that bonds can be bought with.
Mow said the bond has a “lock-in” term of five years, which means that by then it will be $ 500 million in Bitcoin on the market. Thereafter, the periodic interest increases due to dividends.
“Of the $ 500 million in Bitcoin that the president will buy after a 5 year lockdown, they will start selling some to provide additional recurring interest to all bond investors.”
Mow added that he expects Bitcoin to hit $ 1 million in five years.
El Salvador is also working on digital securities law and plans to grant Bitfinex its first exchange license.
“You know, Bitfinex has a lot of whales so I don’t see a problem in issuing billions of dollars in bonds.”
Foreign investors spending more than $ 100,000 can apply for naturalization after five years.
The Bitcoin City project is the latest, and perhaps the most important, announcement that Bukele has made since the Central American country accepted Bitcoin as legal tender on September 7th. In addition to the government’s launch of its own Chivo wallet, the president also said it will use the “surplus” from a trust with Bitcoin and dollar balances to fund an animal hospital and schools.
Bitcoin law has sparked protests in recent months, although Bukele maintains a high approval rating. Unsurprisingly, some have raised concerns about the latest plan. For example, some have pointed to El Salvador’s Bitcoin Scheme Dialog in English, especially after Bukele first unveiled Bitcoin laws at a conference in Miami in June Ask a question whether the bond is attractive enough for investors.
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews
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