El Salvador will host the first Bitcoin city, built around the eastern region, near Conchagua Volcano in El Salvador, stated President Nayib Bukele on his Twitter handle on May 10. The city will become the trading hub of Bitcoins, and the volcano will power the whole city through geothermal energy and contain the cryptocurrency mines.
Bitcoin is a virtual currency that has no tangible form; it is only digital and circulated by mining.
Features Of The Bitcoin City
El Salvador was the first country which had adopted Bitcoins legally in 2021. In a rush to enable growth, President Bukele hopes to harness cryptocurrency to attract investments in El Salvador.
He has claimed that the whole city will be powered by the volcano and prove ecological. The city will have all public facilities such as an airport, residential area, commercial markets, etc. Residents won't have to worry about any tax, as they would only have to pay Value Added Tax for community well-being and maintenance. The central plaza will have the bitcoin symbol created in the air, as reported by DNA India.
For the funding and materialisation of the city, the El Salvador government has issued Bitcoin bonds worth $1 billion. Thus, Bitcoin will lay the foundation of this city.
Samson Mow, Chief Strategy Officer of Blockstream, a blockchain technology provider company, commented, "This will make El Salvador the world's financial centre," as cited in NDTV.
Nevertheless, reactions from the people have been mixed as Salvadorans are sceptical about their complete dependence on Bitcoin, and the decision to make this city has triggered protests against the government.
The move by El Salvador comes at a time when the whole cryptocurrency market has started fluctuating and fallen to 50 per cent from its high levels in November 2021.
Another factor to consider is that only 20% of the population in El Salvador uses Bitcoin, according to a US study by the National Bureau of Economic Research recently. Most of the population still uses US Dollar.
Moreover, International Monetary Fund (IMF) has warned that the legal adoption of Bitcoin can consequentially pose a threat to economic stability and consumer security.