The authorities of El Salvador plan to build in collaboration with Blockstream and crypto exchange Bitfinex a city focused on the distribution of cryptos.
It will be located on the shores of the Gulf of Fonseca near the volcano, whose energy will be used for infrastructure and mining, according to the country's president Nayib Bukele.
According to him, "the Bitcoin city" will become a settlement complete with residential and commercial real estate, restaurants, an airport and a railroad. The boundaries of the city will have a rounded shape, similar to a coin, and a complex will be built with a huge BTC symbol in the center. Bukele has stated:
"We will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport."
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As part of the initiative, El Salvador will issue Bitcoin bonds, a tokenized financial instrument to "accelerate hyperbitcoinization and create a new Bitcoin-based financial system." Blockstream's Liquid Network protocol will be used for the bond issue, with a total amount of $1 billion. Of the funds raised, $500 million will be used to prepare the infrastructure for Bitcoin mining, while the other $500 million will be used to make direct investments in BTC. Blockstream said:
"This bond offering is something we think will be attractive to a wide range of investors ranging from cryptocurrency investors, investors seeking yield, HODLers, and ordinary people."
The Bitcoin city will not levy income, property and capital gains taxes. The only tax will be VAT, through which the authorities plan to redeem the bonds.