El Salvador continues to lead the Bitcoin (BTC) adoption drive as President Nayib Bukele announces the launch of Bitcoin City, which will be funded initially by $1 billion Bitcoin bonds.
The initiative was first announced by Bukele at El Salvadorâs Bitcoin Week conference, which sought to celebrate Bitcoinâs mainstream adoption in the country and increase citizen participation.
“I thought we had to make a big announcement on this #BitcoinWeek. So today I want to announce that we are going to build the first #BitcoinCity“, President @nayib Watch. pic.twitter.com/7yHQLyIjBx
– Presidential House (@PresidenciaSV) November 21, 2021
In Bukeleâs words:
âIn #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transportâ
The development of Bitcoin City will see the proactive involvement of prominent crypto companies including cryptocurrency exchange Bitfinex and Adam Backâs Blockstream. According to Bitfinex CTO Bitfinex Paolo Ardoino, the exchange will support El Salvadorâs Bitcoin City initiative by launching a securities platform to hold the Bitcoin bonds. He added:
â[The platform] will soon be home to many local and foreign digital assets offerings developing new digital asset regulation for the country! El Salvador, Bitfinex and Blockstream are making history together.â
The president envisions Bitcoin City to become a fully functional city with residential areas, shopping centers, restaurants, a port, âeverything around Bitcoin.â Moreover, the residents be subject to only value-added tax (VAT), which according to Bukele will be used to pay the municipality’s bonds, and the rest for public infrastructure and city maintenance.
At the conference, Blockstreamâs chief security officer Samson Mao clarified the feasibility of sourcing the $1 billion Bitcoin bonds:
âWith Bitfinex, they have a lot of whales. I donât see a problem filling up a $1 billion bond.â
Mao also informed the citizens that the $500 million worth of Bitcoin bonds will be subject to a five-year lock-up period, effectively taking away the invested capital out of the global circulation. In addition, the entrepreneur explained how a 10 fold increase in similar initiatives from other countries will eventually take away half of Bitcoinâs 21 million market capitalization out of circulation.
Related: El Salvador to build 20 âBitcoin Schoolsâ with surplus from Bitcoin Trust
Soon after Bitcoinâs mainstream adoption, the El Salvador government has been reinvesting unrealized gains onto various infrastructure development projects.
Early November, Bukele announced that the surplus earned from the stateâs Bitcoin Trust account will be used for constructing 20 new schools:
âWhen this project was started, we had not made as much money in FIDEBITCOIN [state BTC Trust account] as we have made now. So we have decided to make the first 20 Bitcoin Schools.â
In mid-October, the government of El Salvador reinvested $4 million from the profits of their Bitcoin Trust to construct a new veterinary hospital in the capital, San Salvador.