For the first time, bitcoins will have a city of their own. El Salvador has issued a legal tender to mine and use bitcoins. While announcing a bill of $1 billion for bitcoin bonds recently, the President was indeed very hopeful of a bitcoin future. An entire city made of just bitcoins is the vision and mission of El Salvador’s President, Nayib Bukele. The site chosen is the Gulf of Fonseca near the Conchagua volcano. The city will be a circle in the shape of a coin and the center will be a plaza portraying a large bitcoin symbol.
Can you mine bitcoins?
Ohh! Yes, bitcoin mining is a reality but is not done using shovels and gears but technology. It has a slightly different way of utilization than the normal way of using the word.
The President plans to utilize geothermal energy for empowering the Bitcoin city as well as its mining. Mining involves solving innumerable complicated mathematical calculations that have throughout for adding and verifying coins into the Blockchain.
A pilot bitcoin venture is already mining successfully in the city but is drawing its energy from another geothermal site near the Tecapa volcano.
To make it more interesting the President announced a tax free living for the residents of Bitcoin city. The sole aim of this city will be to draw more foreign investments towards it.
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Bitcoin bonds! What are these?
The normal definition of a bond is made by the borrower to the lender wherein the borrower makes a promise to pay the sum invested by the lender alongside a profit earned by the borrower from the amount.
A USD 1 billion bond is being issued wherein half of the bond money will go into the maintenance of mining and energy infrastructure. The rest USD 500 million will go towards purchasing more bitcoins from the market.
Bitcoin stream, a Bitcoin service-focused company will manage the bonds and even a small investment of $100 can be made by anyone across the world. As the company is using Liquid Network and Block stream AMP, investments as small as $100 can be accepted from users from anywhere in the world.
Tools assimilated with this liquid network are capable of paying back dividends in due time to the bondholders. Blockstream predicted the bonds will probably introduce a hyperbitcoinization that will in itself be a new financial system over bitcoin.
The city will pave the way to the start of a 2-layered technology called the Liquid Network. Payment of dividends will be instant with in-built cryptographic confidentiality.
The city will sell off some bonds after a lock period of 5 years with an expected 6.5 % profit yield. Once 10 bonds come up, $5 billion bitcoins will be swept off the market for a few years. If ten other countries follow in these footsteps, half of the current bitcoin market cap will be reached.
The value of bitcoin, if and when reaches $1 million then El Salvador can sell two-quarters of its bitcoin and gather a whopping $500 million.
What will it be like living in El Salvador bitcoin city?
Many wonder what it is to live in a bitcoin city.
According to reports, it will be a normal city with malls, restaurants, residential locations, alongside a port. The city will give way to digital education, public transport means, and different technologies.
The welcome message by Bukele urges people to invest in the city that will allow retaining all the profit that comes from it.
But, you will pay a tax and just one tax- the value added tax (VAT).
Can you imagine just a single tax? When while living in different cities people end up paying innumerable other taxes to just live there.
The money that comes from this tax will go towards paying the municipal bond costs and half of it in maintaining the municipal infrastructure.
A report to AFP says residents will not pay any;
|Zero Tax towards|
Phew! Seems like the new world is going to take over the old world soon!