El Salvador still dreams of Bitcoin city

 Despite facing the risk of default due to digital currency, El Salvador still dreams of building a Bitcoin city in the context of the gloomy market.

On September 7, 2021, El Salvador enacted the Bitcoin Law, becoming the first country in the world to use cryptocurrency as its national currency. A year later, the International Monetary Fund (IMF) warned the country to ditch Bitcoin if it wanted to save its economy. El Salvador is owed $23 billion and has to pay $800 million to the IMF by 2023. If it can't pay, it risks becoming the first country to default on Bitcoin.

According to economist Carmen Tatiana Marroquín, El Salvador's government appears to be "gambling with people's money" after the bottom-fishing of Bitcoin, but the digital currency has lost its bottom. However, despite the warnings of experts and the protests of the people, the leaders of El Salvador continue to build Bitcoin City.

President Nayib Bukele announced plans to build a Bitcoin city during an event on November 20, 2021. Photo: Reuters
President Nayib Bukele announced plans to build a Bitcoin city during an event on November 20, 2021. Photo: Reuters

Coin Telegraph quoted Héctor Enrique Celarié Landaverde, El Salvador's deputy ambassador to the Netherlands, as saying that the Central American nation's government is still looking to attract Bitcoin investments on a "first come, first served" basis. .

"El Salvador's dream is to have a Bitcoin City to build a stronger society. We are trying to attract more and more investment in this area so we can develop the community," he said. He believes that using Bitcoin will have the optimal impact and invites everyone to witness how the digital currency will change the country.

Bitcoin City is El Salvador's iconic project, announced last November. Part of the funding comes from the sale of government bonds worth one billion USD. The bond issuance is backed by two industry giants, the Bitfinex exchange and blockchain services firm Blockstream.

As described by the President of El Salvador, Bitcoin City will be a fully functional metropolis: residential areas, commercial centers, restaurants, harbors. It all revolves around cryptocurrencies. Even the planning map is inspired by Bitcoin with a circular shape when viewed from above. Here, people do not have to pay any tax except VAT. This tax is used to pay for bonds and to build and maintain public infrastructure.

However, so far the bond issuance has not started. One of the biggest causes comes from market turmoil and El Salvador's huge debt. Last month, Bitfinex CTO Paolo Ardoino said it was still waiting for a license from the government after the digital securities bill was passed.

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