El Salvador to create ‘Bitcoin City’ powered by a volcano

Those who live in the city will not have to pay income, property, capital or payroll taxes

El Salvador and bitcoin                                 
Bitcoin is an official means of payment in El Salvador – Photo: Alamy
                                

President Nayib Bukele of El Salvador announced the creation of a ‘Bitcoin City‘ at the nation’s recent Bitcoin Week conference.

‘Bitcoin City’ will be located along the Gulf of Fonseca, close to the Conchagua volcano in southeastern El Salvador. The government plans to install a power plant close to the volcano, to harness its energy in order to provide for both the city and bitcoin mining.

El Salvador made history by becoming the first nation to accept bitcoin as legal tender on 7 September this year.

The city will consist of residential and commercial areas, restaurants, an airport, port and rail service, and will be laid out in a circle, like a coin. The city centre will have a plaza with a bitcoin symbol in it, and residents will have to pay no income, property, capital or payroll taxes.      

Instead, Bitcoin City residents will be subject only to value-added tax (VAT), which Bukele stated will be used to pay the municipality’s bonds, and the rest for public infrastructure and city maintenance.

Crypto investor Anthony ‘Pomp‘ Pompliano tweeted a list of advantages the Bitcoin City will offer.

El Salvador to issue $1bn in tokenised bonds 

The President of El Salvador also announced the issuing of $1bn’s worth of ‘Bitcoin Bonds‘ on the Liquid Network.

The Liquid Network and blockchain technology company Blockstream have been in talks with El Salvador to support the nation’s initiative of making the lead crypto legal tender, where the idea they discussed was “Bitcoin Bonds”.

The Liquid Network explained that the bonds “will be split between a $500m allocation of bitcoin and a $500m infrastructure spend for building out energy and bitcoin mining infrastructure in the region.”

The Liquid Network detailed how El Salvador also aims to create a “securities law and grant a licence to Bitfinex Securities to process the bond issuance”.  

Paolo Ardoino, chief technology officer (CTO) at Bitfinex, a cryptocurrency exchange operated by Finex, tweeted to explain the company’s role in the El Salvador announcement.

Ardoino said: “Finex will launch a securities platform that will be the home of El Salvador bitcoin bonds and soon many local and foreign digital assets offerings, developing new digital asset regulations for the country.”

During the talk, Blockstream’s chief security officer Samson Mao also said that “El Salvador is the Singapore of Latin America”.

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