Labitconf 2021 ended this Saturday (20) in El Salvador, and the last day of the event was marked by a bombshell announcement by President Nayib Bukele.
According to the president, El Salvador will be home to the world’s first “Bitcoin City”, and bitcoin-backed sovereign bonds will finance the project. In total, the planned city will cost 300,000 bitcoins, around US$ 17 billion.
The crypto city will be built near the municipality of La Unión, a region that is about 200 km away from San Salvador, the country’s capital. Using geothermal energy, Bukele intends to attract new residents and investors through tax incentives.
The only tax levied in El Salvador’s “Bitcoin City” will be the Value Added Tax (VAT). According to Bukele, half of this tax will be enough to finance the bitcoin bonds issued.
Labitconf 2021 came to a close this Saturday (20) in El Salvador, and the last day of the event was marked by a bombshell announcement from President Nayib Bukele.
According to the president, El Salvador will be home to the world’s first “Bitcoin City”, and bitcoin-backed bonds will fund the project. In total, the planned city will cost 300,000 bitcoins, about 17 billion dollars.
The other part of the VAT will be intended for the maintenance of the planned city around the bitcoin.
The president of El Salvador announced the “Bitcoin City” project at the close of LaBitConf.
El Salvador’s plans for the “Bitcoin City” were advanced by Bukele, who is expected to announce within 60 days the bonds to finance the planned city. However, offering the bonds will be gradual, according to Blockstream’s chief strategy officer Samson Mow.
Blockstream’s CSO commented on how the bonds for El Salvador’s “Bitcoin City” will be offered on the market. Initially, the first offering of the bonds is expected to be US$ 1 billion in bitcoin.
Called the “volcano bond”, the first offering of bitcoin-backed bonds to finance the smart city will have a 6.5% bonus to users. In total, 50% of the amount raised will be used to buy the cryptosset.
The other half will be used to start the “Bitcoin City” project. But the bitcoins acquired with the El Salvador bond cannot be sold for the next five years.
After this period, the bitcoin balance could be sold gradually by the country, and the value should be used in the future to liquidate the papers and present some kind of bonus to users.
El Salvador is expected to become a global financial center and preferred destination for cryptoasset industry investments.