Introduction
Earlier last year, at the Latin American Bitcoin and Blockchain Conference, 2021, Nayib Bukele, the President of El Salvador, announced his plans to build the first-ever Bitcoin City. The city was planned in the eastern region of La Union and would be a fully ecological city, relying on geothermal energy from the volcano it is built next to. In a recent tweet, the president announced that the plans for the formation of the city are making headway. But, with the Bitcoin prices plummeting massively, will the dreams of El Salvador Bitcoin City end even before it begins? Let’s explore!
What is happening with Bitcoin now?
The geopolitical tensions and rising global inflation finally seem to have caught up with the crypto ecosystem. The entire crypto market is falling more than what investors had anticipated, with no apparent end in sight. Bitcoin prices, currently fairing at $29,632.68 (~INR 23,07,244.91), have fallen by almost 2% within 24 hours and a massive 13% in the last week alone. The fall has been even more substantial as compared to what it was 14 days ago. Now it is down by more than 23% compared to last year, BTC is already down by 36%, touching the lowest ebb it has ever been all year round.
But… President Nayib Bukele still seems to be hopeful.
Announced with yet another shocking tweet, while the world was selling Bitcoin, El Salvador bought 500 BTC. President Nayib Bukele seemingly took advantage of the falling prices and bought Bitcoins while it was tracing its all-time lows. His passion for the crypto asset has now led to El Salvador owning almost a total of 2301 Bitcoins, equivalent to more than INR 530 crore in today’s market.
Moreover, Bitcoin is also a legal tender in El Salvador, which means that Bitcoin can be accepted in all stores as a currency. Though this move has widely elicited mixed views across the country, it has not stopped President Nayib Bukele from his vision of building the El Salvador Bitcoin City.
The future of El Salvador shines as bright as gold?
The president released pictures of a golden model as a preview of Bitcoin City. The circular structure would overlook the volcano from which it generates the geothermal energy. This is particularly ironic considering that Bitcoin mining has been criticised for consuming a lot of energy and being extremely harmful to the environment. Though the pictures showed a model made entirely of a golden metal, President Nayib Bukele clarified that the actual Bitcoin City would be filled with trees and the water, with a mesmerising view of the volcano. The model is made to resemble the Bitcoin token, radiating out from a central plaza that is designed using the bitcoin logo.
The Bitcoin City, which is to be built on the Gulf of Fonseca by the Conchagua volcano, is being designed by renowned Mexican architect Fernando Romero, the founder of the architecture studio FR-EE. He has also worked on the design for the Mexico City airport previously.
By issuing bonds of 10 years, known as the volcano bonds, El Salvador will raise money to develop this city. Half of the funds would be used to buy Bitcoin, while the other half would be spent on the Bitcoin City. Each bond would carry a coupon of 6.5% and would arrive with other financial benefits as well. Sources say that the bonds will be totalling worth $10 billion.
Parting Thoughts
El Salvador Bitcoin City envisions being a city with no income tax, no property tax, or any other tax and zero CO2 emissions. The only tax will be VAT, half of which will go towards paying bondholders, and the other half will be directed towards the welfare of the city.
While the dreams of the famous President Nayib Bukele are seemingly revolutionary, only time will tell as to what the future holds for this ecological city.
Meanwhile, many investors are taking advantage of the massive drop in the crypto market and are actively foraying into the market at attractive buying prices…all in the hope of a massive rise in the near future. Start your crypto trading journey with a safe and secure crypto exchange like ZebPay today!
