On November 20 last year, El Salvador president Nayib Bukele made headlines once again when he announced that the country had begun planning the world’s first Bitcoin city. This announcement came just two months after they made history by becoming the first country in the world to make Bitcoin (BTC) a legal tender of the country.
El Salvador’s Bitcoin Utopia
On May 10 this year, Bukele Tweeted a series of images of the city’s design plans, which were composed by Mexican architect, Fernando Romer. Romer is an internationally acclaimed architect who is known for being the founder of the international design company, fr-ee.org, as well as winning many architecture design awards over the years.
Based on the images, El Salvador’s Bitcoin city will be located at the base of the Conchagua volcano and will descend right up to the water’s edge, completely overrunning the city of La Unión that is currently located there. However, that is not to say that the residents will be pushed out of the area, as it is intended to be both a commercial and industrial area, including its own airport.
It is intended to be shaped like a coin, with many trees and a futuristic design.
It is also reportedly meant to be powered by the geothermal energy of the volcano itself, aiding cheap mining of Bitcoin.
Bukele also envisions the city as being a tax-free Utopia for all cryptocurrency holders.
The plans for the Bitcoin city were originally met favourably. According to Amilcar Alvardo, the manager of a Tienda Par2 outlet in La Unión, the residents of the city are generally favorable towards the development of a Bitcoin City there as they feel that it will improve commerce in the area. That seems to be the general consensus with businesses in the area.
One Year On and Progress Has Halted
When Bukele first made his announcement in November 2021, he stated that capital for the project would be raised via a ‘Bitcoin Bond’ of $1 billion USD that would be issued as Tokenized Bonds on Blockstream’s Liquid Network.
These bonds would be in effect for 10 years at an interest rate of 6.5%. The funds are planned to be divided into a $500 million USD worth of BTC allocation, and the remaining $500 million USD of BTC would go towards infrastructure spend for building out energy, as well as for Bitcoin mining infrastructure in the city.
On February 18, 2022, the Blockstream CSO, Samson Mow, announced that to date only half of the bonds had been purchased by ‘verbal commitments.’ And on May 25, it was announced that the city’s construction had been put on hold and there has still been no construction or public statement regarding the project since then.
Aside from the fact that El Salvador’s Bitcoin bonds still haven’t reached the $1 billion USD that is estimated to actualize the project, another glaring reason is the state of the crypto economy in general.
The impact that the crypto winter has had on El Salvador’s BTC adoption is obvious in the fact that the BTC adoption project initiated in September last year seems to be failing in the country, especially since an estimated 77% of Salvadorans feel that the BTC adoption program has been a failure.
There are also rumors that the government may be considering moving the project to another port town.