El Salvador to build world's first 'Bitcoin City,' fueled by cryptocurrency

• El Salvador’s Bitcoin city will be constructed near the Conchagua volcano

• The city’s infrastructure would cost roughly 300,000 bitcoins

El Salvador plans to construct the world’s first-ever ‘Bitcoin City’ that will be funded by the bitcoin-backed bonds, President Nayib Bukele said on Saturday. 

While speaking at the Latin American Bitcoin and Blockchain Conference Bukele said the city, which would be developed near the Conchagua volcano in south-eastern El Salvador, will have residential and business areas, services, entertainment, restaurants, and an airport.

The city will use geothermal energy from a volcano and would not collect any taxes other than a value-added tax (VAT) and construction will begin in 2022. 

El Salvador was the first in the world to adopt bitcoin as legal tender. 

According to Bukele, the Conchagua volcano will fuel the entire city as well as the mines.

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Bitcoin mining is the act of creating new bitcoins by utilizing computers to solve complicated mathematical problems – a time-consuming and energy-intensive operation, 

In addition, the nation has developed a bitcoin wallet to enable residents to utilize cryptocurrency.

"Invest here and make all the money you want," Bukele, said in English. "This is a fully ecological city that works and is energized by a volcano."

Bukele estimated that the public infrastructure would cost roughly 300,000 bitcoins. Half of the VAT raised would be used to support the bonds issued to develop the city. In addition, the other half would be responsible for services such as waste collection.

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Volcano Bonds

The first 10-year offering, termed as the "volcano bond," would be worth $1 billion, backed by bitcoin, and carry a 6.5 percent coupon, according to Samson Mow, chief strategy officer of blockchain technology provider Blockstream. 

El Salvador will begin selling some of the bitcoin used to fund the bond after a five-year lock-up period to provide investors an "additional coupon," 

"This is going to make El Salvador the financial center of the world," he said.

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Bitcoin is trading at $ 57,419.10 and remains the world’s most well-known cryptocurrency. 

With inputs from Reuters

Picture Credits: Globalpostportal