São Paulo – The President of El Salvador, Najib Bukele, on Saturday (20) announced plans to open Bitcoin City (Bitcoin City), a real city with homes, businesses, airports, ports and rail service with an economy that will revolve entirely around cryptocurrency.
According to Bukele, city residents will not pay income, property, capital gains or payroll taxes. The tax will be applied only to services, at a rate of 10% – 5% for municipal financing and the rest for the state treasury.
It will be built in a circle around a square with the Bitcoin symbol. The plan is to create a new city at the base of the Conchagua Volcano, whose energy will be used to supply the city and mine Bitcoin in a sustainable way. There is no date yet to start business.
“It is an experiment in a free zone within the country,” says Rossello Lopez, a crypto entrepreneur from El Salvador. Watch closely as the audience celebrates Bukele’s performance of Bitcoin City.
“The country still needs to be educated about the usability of cryptocurrency and what will be built. Most places still don’t understand it. But crypto entrepreneurs will soon have an address to live in,” he notes.
The project had no effect on the price of the cryptocurrency, which was trading at a drop of around 3% at 1:30 PM today. However, the businessman believes that the city, once built, can be a source of inspiration for other governments.
“El Salvador and the project are small, what will really change when others copy this model. Brazil can do experiments like this, I think it is perfectly valid,” says Lopez.
The initiative will be funded with $500 million in debt issuance by the government of El Salvador, backed by Bitcoin. Another $500 million has been allocated to buy more bitcoins.
The first Bitcoin bond, worth $1 billion, will be issued by Blockstream, in partnership with broker Bitfinex. According to Samson Maw, chief strategy officer at Blockstream, the bonds will be denominated in US dollars for 10 years and will initially pay an interest of 6.5% per annum.
After a period entitlement (Lock) Five years, El Salvador will start selling its crypto holdings and paying additional dividends to bondholders. After 10 years, the annual percentage return will be 146%, assuming Bitcoin will reach $1 million over the next five years. “El Salvador will become the Singapore of Latin America,” Mao said.
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