El Salvador is planning its first ‘Bitcoin City’, backed by bitcoin bonds

(It is directed to talk about Samson Mow, an executive at Blockstreaming, to show that 100 countries can issue more than 10 bonds backed by bitcoin after the company said something wrong and issued an amendment)

By Nelson Renteria

MIZATA, El Salvador (Reuters) – El Salvador plans to build the world’s first “City”, initially funded by bitcoin-backed bonds, President Nayib Bukele said on Saturday to boost investment by doubling its commitment to cryptocurrency. Central American country.

Speaking at a week-long closing ceremony for the promotion of bitcoin in El Salvador, Bukel said the planned city in the eastern region of La Union would get geothermal energy from a volcano and would not levy any taxes other than value added tax (VAT).

“Invest here and make all the money you want to make,” Bukel said in English, dressed in white and wearing a reverse baseball cap, at the Mizata beach resort. “It’s a completely ecological city where a volcano works and energizes.”

Half of the VAT charged would be used to fund bonds issued to build the city, and the other half would pay for services such as garbage collection, Bukel said, estimating that public infrastructure would cost about 300,000 bitcoins.

El Salvador, in September, became the first country in the world to adopt bitcoin as its legal value https://www.reuters.com/article/el-salvador-bitcoin-idTRNIKBN2G308Z.

Although President Bukele is well-known, opinion polls suggest that Salvadorans are skeptical about his love for bitcoin, and his uneven entry has sparked protests against the government.

Comparing his plan to the cities created by Alexander the Great, Bukel said the Bitcoin City would be circular, with an airport, headquarters and shopping malls, and a central plaza designed to look like a symbol of bitcoin from the air.

“If we want Bitcoin to spread around the world, we should build some Alexandria,” Bukel, who was named “dictator” of El Salvador in September by Bukel, said in an apparent joke. .

El Salvador planned to issue the initial bonds in 2022, Bukel said, suggesting it would be within 60 days.

Samson Mow, blockchain strategy director at technology provider Blockchain, said the first 10-year issue at the meeting, known as the “volcano bond,” would cost $ 1 billion, with bitcoin backing and a 6.5% coupon. Half of one would go to buy bitcoin in the market, he said. Other links would follow.

After a five-year lockout, El Salvador would begin selling some of the bitcoin used to fund the bond to give investors “an extra coupon,” Mow said, adding that the value of the cryptocurrency will continue to rise sharply.

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

The bond would be issued on a “liquid network”, a bitcoin sidechain network. To facilitate the process, the government of El Salvador is working on a securities law, and the first license to operate an exchange would go to Bitfinex, Mow said.

The crypto exchange was listed as a book list of the bond in a presentation behind Bitfinex Mow.

After issuing 10 such bonds, $ 5 billion would be taken out of the bitcoin market for several years, Mow said. “And if you get 100 more countries to make these bonds, that’s half of the bitcoin market cap there.”

The “game theory” of bonds El Salvador’s first issuer gave him an advantage, Mow argued: “If a five-year bitcoin reaches a $ 1 million limit, I think that will be, they will sell bitcoin in two quarters and recover that. 500 million dollars “.