In a dramatic effort to fuel investment in 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 nation’s southeastern coast.
The plan is a complex one, but relies primarily on a bitcoin-backed bond offering of $1 billion in tokenized bonds via Blockstream’s Liquid Network sidechain, which carries a coupon of 6.5%. $500 million is to be allocated to the construction of the city and $500 million used to buy more bitcoin.
The city, including a bitcoin mine, will be powered via geothermal energy from the nearby Conchagua volcano. The only tax in the City will be a 10% value-added tax to help fund construction and pay for additional overhead.
Blockstream CSO Samson Mow was on hand for the announcement of the plan and described the attractiveness of the bond for investors. After a five-year period, additional dividends are to be paid to bondholders from the sale of the crypto holdings purchased via the bond.
Samson Mow estimates that after a 10-year period, the APY will be 146% based on the assumption that bitcoin will be worth $1 million by then.
“If you want bitcoin to spread over the world, we should build some Alexandrias,” said Bukele at the LA Bitcoin and Blockchain Conference while referencing cities built by Alexander the Great.
The plan comes on the heels of the nation adopting bitcoin as legal tender in September. El Salvador has built 20 ‘Bitcoin schools’ and a veterinary clinic from bitcoin proceeds.