Unstoppable Domains reported last Monday, November 22, through its Twitter account, that the president of El Salvador, Nayib Bukele, plans to create “Bitcoin City”, an entire city based on the largest cryptocurrency by market value.
“El Salvador, the only country where bitcoin is legal tender, is going to build an entire city based on the largest cryptocurrency by market value,” President Nayib Bukele told a raucous crowd at a presentation Saturday night. in Bitcoin Week in El Salvador”, he said in an article published on the Coindesk portal.
According to the portal, “Bitcoin City” will be located along the Gulf of Fonseca near a volcano. The government plans to locate a power plant next to the volcano to provide power for both the city and bitcoin mining, the president said.
Bukele assured that Bitcoin City will be a full-fledged metropolis with residential and commercial areas, restaurants, an airport, as well as a port and rail service. The city will be arranged in a circle (like a coin) and in the center of the city there will be a square that will house a huge bitcoin symbol. The city will not have income, property, capital gains or payroll taxes.
In addition, he indicated that El Salvador plans to issue a 1 billion dollar “bitcoin bond”, a tokenized financial instrument developed by Blockstream, on Liquid Network. Of that amount, $500 million will be used to help build the necessary energy and mining infrastructure for bitcoins and $500 million to buy even more bitcoins. At the cryptocurrency’s recent trading price of roughly $59,000, that would bring the country’s treasure stash to roughly 9,500 bitcoins.
Blockstream noted in a statement that El Salvador intends to create a securities law and grant a license to Bitfinex Securities to process the issuance.
For his part, Samson Mow, Blockstream’s chief strategy officer, told the audience that the $1 billion in tokenized bonds will be denominated at 10 years and in US dollars and will pay 6.5% initially. After a five-year lockdown period, El Salvador will start selling its cryptocurrency holdings and pay an additional dividend to bondholders.
“By the time 10 years have passed, the annual percentage return will be 146%. According to Blockstream models that predict that the price of bitcoin will have reached a million dollars in the next five years. In fact, by using $ 500 million of the proceeds to buy bitcoin and lock it down for five years, El Salvador hopes that by taking so much cryptocurrency out of circulation for so long it will help contribute to the appreciation of the bitcoin price”, Mow said.