El Salvador is again revolutionising the financial services sector with the announcement of the construction of a Bitcoin city to add another first in the world.
The concept of this unique city is duly backed by Bitcoin, the world's largest crypto player in terms of market capitalisation, instead of regular fiat currencies. In September this year, El Salvador became the first country in the world to adopt Bitcoin as legal tender, despite warnings from influential players like the International Monetary Fund.
The construction of the Bitcoin city will further boost the Central American country's digital economy and would give added legitimacy to the use of Bitcoins on a global scale. Based on the concept of the Bitcoin city, which has been articulated by the Salvadorian authorities, the Central American country is seeking to introduce a new lifestyle for residents, free of payroll, property and income taxes.
With the Bitcoin city, the Economic Times of India is reporting that El Salvador plans to usher in a new era of digital education, sustainable energy reserves, and green mining. When the city becomes a reality, it will aim to achieve zero CO2 emissions and become a Bitcoin mining ecosystem driven by geothermal energy.
The timeline of setting up this fabled city is still under the wraps but based on discussions, the Bitcoin city will simplify the concept of foreign investments by eliminating cross-border delinquencies and bottlenecks. According to the Indian Economic Times, "Once investors across the globe can contribute towards the development of this city via Bitcoin bonds, the crypto space will transform into something more comprehensive."
It is expected that the city will eventually attract bond-issued funding, allowing investors to get hold of tokenised Bitcoin bonds at face value. These bonds, it has been reported, will be available at prices as low as US$100 and will initially pay 6.5 per cent interest annually.
El Salvador plans to raise US$1 billion with these bonds to make way for a greener mining infrastructure and more Bitcoins. The purchased Bitcoins will be sold in bits after the five-year lock-in period, which will generate higher dividends for the investors. All in all, the entire set-up will aim to incentivise the proponents of the Bitcoin city.
As a forerunner to the development of the Bitcoin city, El Salvador is building a technology park to advance its digital economy. Local real estate firm Grupo Aristos reports that the tech park will be constructed on the outskirts of the capital San Salvador and will have eight office buildings with a total floor space of 46,000 square metres.
All the buildings in the park will be powered from a solar farm. In addition, there will be recreational centres, bus stations and playgrounds. Grupo Aristos says once completed, the tech park will house workstations for as many as 5,000 professionals.
El Economista quoted José Escobar, president of Grupo Aristos, as saying, "We want to create a technological ecosystem that has never been seen before in the country, with corporate offices for BPOs, call centres, data centres, and software development firms."
Meanwhile, a Costa Rican firm called Codisa has agreed to build a data centre nearby the park. Estimated to cost US$30 million, the data centre will carry Tier III certification from the Uptime Institute.
