El Salvador to build world’s first ‘Bitcoin City’

The metropolis planned in La Union’s eastern section would use geothermal energy generated by a volcano and would not collect any taxes other than the value added tax.

El Salvador aims to establish the world’s first “Bitcoin City,” first funded by bitcoin-backed bonds, President Nayib Bukele announced on Saturday, doubling down on his bet that the crypto currency will help the Central American country attract investment.

Mr Bukele said the city planned in the eastern province of La Union would get geothermal power from a volcano and would not impose any taxes except the value added tax at an event that wrapped up a week-long promotion of bitcoin in El Salvador (VAT).

Mr Bukele estimated that the public infrastructure would cost roughly 300,000 bitcoins and that half of the VAT levied would be used to fund the bonds issued to develop the city, while the other half would be used to pay for services such as rubbish collection.

El Salvador became the first country in the world to recognize bitcoin as legal mode of payment in September. Despite the fact that Mr. Bukele is a popular president, opinion polls show that Salvadorans are dubious of his enthusiasm for bitcoin, which has sparked anti-government protests due to its rocky rollout.

Bukele said Bitcoin City would be circular, with an airport, residential and business sections, and a centre plaza designed to look like a bitcoin symbol from the air, like towns created by Alexander the Great. Mr Bukele mentioned that El Salvador expects to issue the first bonds in 2022, implying that it would be in 2 months timeframe.

The bond would be issued on the “liquid network,” a bitcoin sidechain network. According to Mr Mow, El Salvador’s government is working on a securities law to aid in the process, and Bitfinex will be granted the first licence to operate an exchange.

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