El Salvador Building A City Dedicated To Bitcoin
It’s no longer news that cryptocurrencies have made a place for themselves in our world, at least for the foreseeable future. However, the extent to which we incorporate them into our daily lives is still subject to various assumptions.
However, some institutions appear ready to go the distance!
Just recently, the President of El Salvador announced that his administration plans to build a bitcoin city. Clearly, El Salvador, like many parts of the world, is doubling down the benefits of these newly found digital assets. The El Salvador president, Nayib Bukele, clearly sees the unlimited potential of cryptocurrency and is set to make his country leverage it.
According to him, the country would commit resources to set up a “Bitcoin City.”
El Salvador has overtaken many world powers in the race for cryptocurrency adoption. In September 2021, the Central American country introduced Bitcoin as a legal currency within its borders. Now, they have their sights on another massive project.
The announcement to build a Bitcoin city was made via a tweet from the president, and quite predictably, it has since sent the entire crypto space into a frenzy.
This Bitcoin city will be the most significant cryptocurrency adoption and usage case globally. When it’s completed, it will be no ordinary city. The plans for the city indicate that it will have designated living and business areas, including food courts and a plaza. Furthermore, residents would not be subject to regular taxation. In other words, payroll tax, income tax, property tax, capital gains tax, and so on.
However, they would be required to pay a 10% value-added tax to support the growth and expansion efforts of the city.
According to the announcement, the proposed new city will be funded with $1B in Bitcoin and will contain ‘everything’
Understandably, building a city of this nature does not come cheap, and El Salvador has gone to many lengths to finance the continuity of its project.
However, instead of applying for a loan from the World Bank or a similar organization, El Salvador has figured out an ingenious solution. Instead, they will rely on the crypto space to get the financial resources to establish their city. Yes, the entire project will be funded with $1 billion in Bitcoin bonds! However, only half of the fund allocation will go towards developing energy and mining infrastructure. The rest will be invested in Bitcoin.
Also, there will be an orientation on digital and technological concepts alongside nationwide education in this city. Even more, there are also plans in motion to offer residents high-quality public transport.
Interestingly, the most attractive thing about Bitcoin city is arguably the country’s goal to develop a sustainable region funded and operated with cryptocurrency!
All the bonds that will be used will be gotten from Blockstream on the Liquid Network. Blockstream is a Bitcoin sidechain for scaling the network’s capabilities by supporting faster payments than the base chain. Bifinex will also be involved in the financial aspect of this project and will launch a secured platform to store the bonds.
The city will be situated at the base of an active volcano, which will be its primary source of power
Aside from the city’s heavy focus on cryptocurrency, there are several exciting things about this city. One of them is the fact that El Salvador will construct its Bitcoin city at the foot of the Colchagua Volcano. This strategic location is the perfect answer to the high energy demands of mining cryptocurrency tokens.
You see, crypto mining consumes a lot of energy due to the non-stop complex calculations and algorithm programming that develops new tokens. This could quickly take a heavy toll on the country’s electricity grid.
But, by generating power from the volcano solely for the Bitcoin city, the city’s electric grid does not have to suffer.
This volcano would house a power plant that will provide the energy used to power the city and facilitate the mining of Bitcoin there. In addition, the power plant will run on a system that will extract boiling water from under the earth, convert it to steam, and use the steam to power large turbines.
Interestingly, El Salvador did not just start harnessing the electrical power that volcanoes can provide because of the Bitcoin city. The country already derives a quarter of its total electricity supply from geothermal energy by tapping into a few of its 20 volcanoes.
In October 2021, government officials established a prototype for the power plant system to support Bitcoin city at the base of the Tecopa volcano. While the results are not perfect yet, the results prove that the energy generation target is achievable.
Furthermore, by establishing a city powered by geothermal energy, El Salvador also contributes positively to environmental sustainability. You see, geothermal energy production is cleaner than burning fossil fuels. As a result, this type of energy production does not reduce harmful carbon-based products into the atmosphere.
Therefore, when you look at the plans already in motion, it’s clear that this city will be an ideal location for everyone – residents and tourists. It will have all the standard facilities found in top cities worldwide, including dedicated cryptocurrency mining facilities.
Fun fact? The central plaza of the Bitcoin city will be designed to look like the bitcoin logo!
A few weeks ago, the El Salvadoran government announced Bitcoin as a legal tender
Interestingly, this “Bitcoin City” project is not El Salvador’s first case of Bitcoin adoption.
A few weeks back, the El Salvador government declared Bitcoin and the US Dollar as its legal tender. After this declaration, the country went ahead to purchase 550 Bitcoins. Additional purchases of 150 BTC and 420 BTC were made to serve as the country’s cryptocurrency reserves.
Also, the government has passed a law that obligates all the businesses situated within its borders to accept BTC as a form of payment. However, they may choose to convert it to dollars upon receipt immediately.
The country’s focus on cryptocurrency projects has prompted other governments to review the role of cryptocurrencies in daily transactions. There are more positive signs of the development of the crypto community. Alex Hoeptner, CEO of Bitmex, projects that at least five other countries will join El Salvador to endorse Bitcoin as their legal tender before the end of 2022.
This will undoubtedly lead to an exponential growth of the crypto ecosystem and unlock new possibilities for Bitcoin and other cryptocurrencies!