— Casa Presidencial (@PresidenciaSV) November 21, 2021
In Bukele’s words:
“In #BitcoinCity we will have digital and technological education. Geothermal energy for the entire city and efficient and sustainable public transport”
The development of Bitcoin City will see the proactive involvement of prominent crypto companies including cryptocurrency exchange Bitfinex and Adam Back’s Blockstream. According to Bitfinex CTO Bitfinex Paolo Ardoino, the exchange will support El Salvador’s Bitcoin City initiative by launching a securities platform to hold the Bitcoin bonds. He added:
“[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.”
The president envisions Bitcoin City to become a fully functional city with residential areas, shopping centers, restaurants, a port, “everything around Bitcoin.” 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.
“With Bitfinex, they have a lot of whales. I don’t see a problem filling up a $1 billion bond.”
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 Bitcoin’s 21 million market capitalization out of circulation.
Soon after Bitcoin’s 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 state’s Bitcoin Trust account will be used for constructing 20 new schools:
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.