El Salvador To Build World's 1st Bitcoin City
After becoming world's first country to adopt Bitcoins as legal tender in the country, El Salvador President Nayib Bukele world's first between cities and it usually buy 'Bitcoin City' funded initially by Bitcoin-backed bonds, doubling down on his bet to harness the cryptocurrency to fuel investment in the central American country. Bukele's administration is counting on Bitcoin to spur the country's economic growth and investment,assuming that Bitcoin price remains on an overall upward trajectory.
Likening his plan to cities founded by Alexander the great, Bukele said Bitcoin City would be circular, with an airport, residential and commercial areas and features a central plaza to designed to look like a bitcoin symbol from the air. The city will be built near the Conchagua volcano to take advantage of the country's geothermal energy - to power both the city and cryptocurrency mining - an energy consuming process of solving complex mathematical calculations day and night to verify and add crypto coins to the Blockchain network. It is worth noting that El Salvador is already running a pilot Bitcoin mining venture at another geothermal power plant beside the Tecapa volcano.
The only tax collected there will be value-added tax, half of which will be used to pay the municipal bonds and the rest for municipal infrastructure and maintenance. The city would be built with attracting foreign investment in mind. The Bitcoin Bond represents the start of a reformation of capital markets. Dividends can be distributed to investors instantly, with built-in cryptography to maintain confidentiality.
The IMF has warned El Salvador against using Bitcoin as legal tender due to various risks associated with cryptocurrency. Critics have warned that the currency's lack of transparency could attract increased criminal activity to the country and that the digital currency's wild swings in value would pose a risk to those holding it. Also,given Bitcoin's high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity and financial stability. Its use also gives rise to fiscal contingent liabilities. Only the time will tell whether Bitcoin will become gamechanger or not.