TL; DR failed
- The President of El Salvador announced a plan for a fully Bitcoin-based city (BTC).
- The city is considered tax-free and no tax will be levied, except for VAT.
- All financial transactions in this city can be done using bitcoin.
- The city will also be financed using bitcoin bonds.
Bitcoin City project.
A decade ago, no one imagined a city would be financed with digital currency, but this is becoming a reality. El Salvador’s vice president, Bukle, recently announced the “Bitcoin City” development project. He made the announcement during a conference on Bitcoin and the Latin American China Bloc, noting that the city would be fully funded and managed using Bitcoin.
He revealed that the city’s energy comes from the geothermal energy of Konchagua Volcano. This energy will also be used to extract digital currencies. In addition, the volcano will be an additional source of energy for the Tecapa volcano thermal power plant. What makes this announcement attractive to many is the emission of 0% CO2, because energy sources do not cause any harm to the environment.
In addition, the city of Bitcoin will be exempt from tax, except for VAT. Hence, the citizens in this city based on modern cryptocurrencies will not face tax problems.
The bitcoin funds planned for this project are managed by a blockchain technology company called Blockstream. The project’s strategic officer, Samson Mu, said $ 1 billion in bonds would initially be used for the project. The El Salvador government plans to start issuing these bonds in 2022. Following the issuance of the bonds, the El Salvadorian government will invest half of it in bitcoin and direct the other half to the development of the city’s infrastructure.
It will be a city that meets all the needs of a traditional city. These include residential areas, commercial blocks, health facilities, educational institutions, recreational areas and so on. This will be a perfect example of a modern city that is not only based on bitcoin, but will also be used in its development. The city center building will look like a bitcoin.
Although the project has been announced and the bonds will be released soon, the El Salvador government has not set any specific timetable for starting the construction of Bitcoin City. However, the location of the future city has been determined, which is reportedly the La Unión region.
The project has attracted interested investors because of the benefits it has promised. The cost of building this city is estimated at 300,000 bitcoins. The extra profits from investing in Bitcoin, other than those spent on construction, will be shared among investors.
Legal status of bitcoin in El Salvador
El Salvador is the first country in the world to legally recognize bitcoin as a currency. Prior to the adoption of bitcoin as the legal tender, El Salvadorians had been using the US dollar for two decades.
As a result of the legal recognition of BTC in El Salvador, the government has gone a step further to take advantage of the growth of bitcoin. Because the value of bitcoin is projected to exceed $ 1 million in a decade, it will bring many benefits to investors. If the Bitcoin City project succeeds, El Salvador will probably become the center of the global bitcoin market.
The El Salvador government has been working to promote digital currency. It has issued digital wallets to its citizens that can be used to purchase items.
A new future – a bitcoin-based economy
Creating a bitcoin city could be the beginning of a new era of bitcoin-based economics. Other cities are likely to follow suit and move to smart cities. It will also help the growth of bitcoin, which has been on the rise since this year.
The world has already tried to make it happen. The President of El Salvador has taken this great step and has been an example to other states. Although it may take time for complete success, it is a move that is changing the traditional concept of economics.
Despite the prospects for the project, it is expected to provoke protests. This is due to the inflation and instability that it may bring to the country. The project promises to bring new jobs to market, but the El Salvadorian public still seems to disagree.
Although the prospect of this project is fifty-fifty due to fluctuations in the value of Bitcoin, it will open up new opportunities for digital investment.
The city of Bitcoin will bring huge changes to the state-level economy and is a breakthrough. Although still in the planning stage, it will have a major impact on the future of crypto investments. It also determines investors’ trust in these projects. This is considered a big step, because of the huge investments, it will determine the fate of El Salvador.