President Bukele of El Salvador, one of the most prominent political faces in the cryptocurrency landscape, recently continued with his almost limitless support for bitcoin. He revealed plans for the same country to build its Bitcoin City. That news is already something that many analysts discarded as a means of bolstering and popular propaganda which aims to paint the country as something that is suddenly at the forefront of tech innovation. Not only that, the same narrative is pushing the idea that the country’s backing of digital currency also knows no limits and will even move into the domain of physical infrastructure. When it comes to building entire cities that usually takes the cake in comparison to any other public works that create new infrastructure.
But, even if the bolstering and premeditated attention-seeking it puts aside, there is still the fact that the El Salvador experiment with bitcoin keeps going, evolving and even growing in size and scope. That is still a very strong signal to many other locations and even an invitation to think about similar possibilities. Also, the way how the country and its president Bukele actually take on these challenges is interesting, because it gives a glimpse into the potential and tools for a small nation like El Salvador. That too is something that many other countries, especially those in the underdeveloped or developing parts of the world, are trying to gauge and understand.
Physical Location of Bitcoin City
The plan that president Bukele showcased is exceedingly simple and insanely ambitious. It calls for the creation of an entire city around the concept and application of the biggest cryptocurrency in the world, bitcoin. The same government official revealed this plan last Saturday, speaking to a huge and excited crowd in what was Bitcoin Week in the country. He also presented the location for the city, saying that it will be located near the Gulf of Fonseca.
It will also sit near a volcano, which should be used as a source of geothermal energy. It will generate power for the crypto mining facilities that El Salvador is already planning across the nation, including a number of them in the new city. But, the same volcano should also generate power for the city as well and all of its power demands. This opened up a range of questions about the size of the same location and what it will entail, but Bukele had a ready answer for those as well.
Fully-Developed Urban Area
El Salvador plans to build a city that will be a fully-developed metropolis area. It will house commercial areas, but also residential spaces, along with a range of hospitality industry venues like restaurants. But, what is even more impressive is the presence of transit infrastructure. The city will be connected with the wider world and the rest of the country with rail service, port, and even an airport. The design of the architecture that will be used is of a radial structure, meaning that it will be inside of a circle that should also reminisce people of a coin.
In the center, the city will come with a huge plaza that will carry the bitcoin symbol. All of this is bordering on science fiction, but the main factor that will entice people to come there is not even physical. Instead, according to Bukele, the city will have no direct income, but also no individual property, capital gains, or even taxes on payrolls. That will make it not just a tax haven, but something more like an ultimate tax refuge for all entities that want to pay nothing for their financial dealings.
The deal regarding the finances of Bitcoin City does not end with no property or income taxes. Instead, it goes further and ties into the plan of El Salvador to issue bitcoin bonds. These will be worth around one billion USD and they will be a tokenized financial vehicle. World-renowned company Blockstream is building these using the Liquid Network. Half of that sum will be employed to build the physical bitcoin mining infrastructure in the country.
The rest, which is 500 million USD, the country will use to again buy even more bitcoin tokens. At present prices, the country would be able to use the same money to buy around 2,000 BTC tokens. That is a massive amount and one that very few individual entities in the world hold right now. No country of similar size and geopolitical or financial influence to El Salvador has anything like that in its national coffers.
The involved parties in the El Salvador bond crypto scheme believe that the process will yield incredible results 10 years from now. Blockstream models show that the price of cryptocurrencies, especially bitcoin, will explode in value in the coming period. El Salvador is hoping to cash in big on those changes by locking the money that it generates during a five-year period.
The same move will also take a decent chunk of BTC tokens out of circulation, which should in theory help with the price appreciation process. Here, Bukele and his team believe in principles that build things like esports collectible markets and many similar fields – the smaller the supply the better chance for a price increase over time. While 500 million worth of BTC tokens is not an insanely huge sum, the dedication and the commitment to the lock-out process are still impressive.
Fully Behind Bitcoin
It is difficult to imagine El Salvador building a city in the middle of nowhere and adding a port, rail service, and airport to it. Each of these is a massive undertaking for a country of those means, not to mention the entire city itself. But, the commitment to the promotion of their bitcoin adoption is something that is clearly fully on the table. Even if nothing like the Bitcoin Citz comes into fruition, El Salvador is clearly cashing in on the momentum that it managed to build with its legalization of the BTC token.