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In a spectacular effort to fuel investment in the Central American country El Salvador, President Nayib Bukele unveiled a plan at the recent Latin American Bitcoin and Blockchain Conference to build a “Bitcoin City” on the coast. south-eastern part of the country.
The plan is complex, but mostly relies on an offering of $ 1 billion bitcoin-backed bonds in tokenized bonds through Blockstream’s Liquid Network sidechain, which carries a 6.5% coupon. $ 500 million is to be allocated to building the city and $ 500 million used to buy more bitcoin.
The city, including a bitcoin mine, will be powered by geothermal energy from the nearby Conchagua volcano. The only tax in the city will be a 10% value added tax to help finance construction and pay for additional overhead costs.
Blockstream CSO Samson Mow was on hand to announce the plan and described the bond’s attractiveness to investors. After a period of five years, additional dividends must be paid to bondholders on the sale of crypto holdings purchased through the bond.
Samson Mow estimates that after a period of 10 years the APY will be 146% assuming bitcoin will be worth $ 1 million by then.
“If you want bitcoin to spread around the world, we should be building Alexandria,” Bukele said at the LA Bitcoin and Blockchain conference while referring to the cities built by Alexander the Great.
The plan follows the nation’s adoption of bitcoin as legal tender in September. El Salvador has built 20 “Bitcoin schools” and a veterinary clinic using the proceeds from Bitcoin.
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