The President of El Salvador, Nayib Bukele, has declared the establishment of Bitcoin City. It would be primarily funded by 1 billion dollars in bonds of Bitcoin. The initiative was first announced by the President during the Bitcoin Week Convention in El Salvador. It intended to increase public participation in the country by promoting Bitcoin’s widespread adoption.
What is Bitcoin City? How will it be developed?
Bitcoin City would be built with the direct involvement of well-known crypto companies like the bitcoin brokers Blockstream and Bitfinex. The Bitcoin City initiative will be supported by the exchanges, and they will build a financial infrastructure to hold Bitcoin assets, as per Paolo Ardoino, Bitfinex’s Chief Technical Officer.
Bitcoin City, according to Bukele, would be a perfectly functioning city with shopping malls, residential sections, a port, restaurants, and “all about Bitcoin.” Also, residents will only have to pay value-added taxes (VAT), which would cover the municipality’s obligations. The rest would go to city upkeep and the development of public facilities.
The 500 million dollars of Bitcoin securities will be liable to a 5-year lock-up period, removing the deposited cash from the global exchange, according to Samson Mao, Chief Security Officer at Blockstream. He also mentioned that a 10-fold growth in similar initiatives in other nations would effectively remove 50% of Bitcoin’s twenty-one million dollar market capitalization from distribution in the future.
Since Bitcoin’s widespread acceptance, El Salvador’s government has been reinvesting anticipated revenues into a variety of infrastructural development projects.
At the start of November, the President declared that the surpluses from the nation’s Bitcoin Trust account would be used to build twenty new schools. The administration contributed 4 million dollars, in mid-October, from the proceeds of its Bitcoin Trust towards a new vet hospital in San Salvador.