El Salvador plans to launch the first ‘Bitcoin City’ backed by Bitcoin bonds

Speaking at the closing ceremony of a week-long promotion of Bitcoin in El Salvador, Buke said the planned city in the eastern part of La Union would receive geothermal power from the volcano and would not impose any taxes except value added tax (VAT).

“Invest here and make all the money you want,” Buke said in English, wearing all white clothes and a reverse baseball cap at the Mijata Beach Resort. “It’s a totally ecological city that works and is energized by volcanoes.”

Half of the levied VAT will be used to fund a bond issued to build the city, and the other half will be paid for services such as garbage collection, Buke said, estimating that about 300,000 bitcoins will be spent on public infrastructure.

Although Buke is a popular president, opinion polls suggest the Salvadoran are skeptical of his love for Bitcoin, and its turbulent introduction has sparked protests against the government.

Comparing his plan to the cities founded by Alexander the Great, Buckeye said the Bitcoin city would be circular, with airports, residential and commercial areas, and would feature a central plaza designed to look like a Bitcoin symbol from the air.

“If you want Bitcoin to spread around the world, we have to build some Alexandrias,” said Buke, a 40-year-old tech expert who declared himself El Salvador’s “dictator” on Twitter in September.

El Salvador plans to issue initial bonds in 2022, Bukele said, suggesting it will take place over a 60-day period.

The first 10-year issue, known as the “Volcano Bond,” will be $ 1 billion, backed by Bitcoin and carrying 6.5% coupons, Samson Mole, chief strategy officer at blockchain technology provider Blockstream, told the gathering. Half the money will go to the market to buy Bitcoin, he said. Other bonds will follow.

After a five-year lockout, El Salvador will start selling some of the bitcoin used for bonds to give investors “extra coupons”, Mole said, adding that the value of cryptocurrencies will continue to rise strongly.

“It will make El Salvador the financial center of the world,” he said.

The bond will be issued on the “liquid network”, a bitcoin sidechain network. To make the process easier, the El Salvador government is working on securities law, and the first license to operate the exchange will go to Bitfinex, Mole said.

The crypto exchange Bitfinex Mow was listed as the Book Runner for Bond in a later presentation.

Once 10 bonds are issued, $ 5 billion bitcoin will be removed from the market for many years, Mole said. “And if you get 10 more countries to do these bonds, that’s half of Bitcoin’s market cap.”

The “game theory” in bonds favored the first issuer, El Salvador, Moul argued.

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