El Salvador, the first country in the world to recognize bitcoin as its national currency, wants to expand the use of virtual currency. President Nayib Bukele has announced plans to build an entire bitcoin city, all of which will involve a cryptocurrency. The new metropolis is to grow near the Conchagua volcano, whose geothermal energy will be used to mine bitcoins.
It is no exaggeration that everything in the new metropolis will be about cryptocurrency. The city even has to get a round shape representing a coin. Otherwise, it will offer what you would expect from a classic agglomeration – services, culture, infrastructure, residential areas – with the only difference that all transactions in the city will involve bitcoins and the economy of the agglomeration will be based on mining and use of cryptocurrency.
The uniqueness of the whole project is further supported by the fact that no taxes other than value added tax will be collected in the planned Bitcoin City. From the beginning, before the first inhabitants move into the city, it is expected that people from nearby La Unión will help with the development of the city.
The president did not provide any time frame for the metropolis to grow, but said the cost of building public infrastructure would be around 300,000 bitcoins. The financing is to be helped by government bonds worth one billion dollars, which are covered with bitcoin and which are also to be used by El Salvador to buy another cryptocurrency. Their initial yield should be 6.5 percent.
And what does the country promise from the city? The same as since the introduction of bitcoin as a national currency – support and increase the resilience of the economy. Central America has long struggled with hyperinflation, and proponents of the move argue that the cryptocurrency is protected from these effects. They also mention the fact that many Salvadorans work abroad and send their earnings home, bitcoin is supposed to save them costs.
The public has so far remained divided in accepting the news, and has been holding regular protests against the cryptocurrency and President Bukele since the summer. However, his belief in bitcoin was not weakened by the demonstrations, on the contrary, he began testing geothermal energy mining, which he now wants to include in the new city, and claims that the metropolis will become a world center for digital and technological education.