El Salvador to Build Bitcoin City in 2022
This week has been another interesting week for Bitcoin prices, with a seven day movement of 14.6% in the downward direction by close of business in the US market yesterday.
The world’s most popular digital currency had reached almost $70,000 two weeks ago, and is now trading at around $56,200, however the predictions from some of the analysts at the world’s major investment banks, usually conservative in their estimates especially with regard to decentralized finance (DeFi) and cryptocurrency, have been saying that Bitcoin could get to $150,000 in the near future.
This level of speculation and volatility has made for not only a very interesting investment and trading background recently, but has also marked out Bitcoin as a major big-hitter of the current financial ecosystem and a potential benchmark for the future of all areas of finance, trading and investment.
Now, entire countries are going down the Bitcoin route. Back in the summer of 2021, El Salvador empowered its unbanked citizens by adopting Bitcoin as legal tender and an official currency. This is the first nation in the world to do so.
Immediately, over 60% of El Salvador’s population joined the digital economy and are now able to shop online, travel, and participate in an international financial and commercial marketplace, when previously they were disempowered and unable to do so.
El Salvador has now gone a step further, and is about to launch a ‘Bitcoin city’.
Announced by President Nayib Bukele over the weekend, El Salvador’s plans to construct an entire city funded by Bitcoin, with building set to commence in 2022.
The new city, which is scheduled to be built near the Conchagua volcano in south eastern El Salvador will have no taxes except from value-added tax, which is a levy on goods and services at each step along the supply chain.
El Salvador’s government also intends to raise over $1 billion by issuing a Bitcoin bond, in which the proceeds will go toward buying more Bitcoin and toward developing and building mining infrastructure.
As the mining entities which used to be located in China are now migrating across the world to Russia, North America and parts of the Caucasus, huge rigs are cropping up in some of the world’s rapidly developing areas in Central America, and with El Salvador’s Bitcoin-based economy being an ideal synergy.
Whilst it is clear that Bitcoin is now evolving from being a disruptor to a de facto method of moving entire communities into the future and having entire infrastructure development projects based on it, it is worth noting that, due to its technological capabilities, Ethereum is not far behind in terms of growth and rapid adoption by millions of users worldwide, however the reasoning is different.
Bitcoin is the accepted store of value that has kept out of the current geopolitical woes of the centralized economy, whilst Ethereum is being developed increasingly further and is forming the underpinnings for the infrastructure of a decentralized, digital future.
Bitcoin is therefore forging ahead as a store of value and means of payment, and is very much in the sights of governments and banks worldwide, as they now see it as a genuine rival to the traditional banking and monetary system.
It is self-sustaining and has proven to be completely robust, given the stress-testing that the Bitcoin infrastructure underwent when the Chinese government clamped down on mining. At that time over 70% of all mining entities were in China. The sudden closure of their operations actually had no effect at all on the operational stability of Bitcoin, which is remarkable.
El Salvador may well have shown its avantgarde ideology in adopting Bitcoin as a national currency, however building an entire new city with Bitcoin at the core of it is taking this to the next level.
Who else will follow?