On September 7, 2021, El Salvador made history by becoming the first country in the world to make Bitcoin a legal tender. A way for President Nayib Bukele to give his country a chance to get out of the circle of generalized impoverishment to which the current monetary and financial system has always condemned it.
A quick way to change for the better the lives of his population, which depends heavily on the money sent from abroad by migrants from El Salvador who have left to seek a better fortune in America. More than 6 billion dollars are sent every year to El Salvador this way, and the costs that this generates exceed 400 million dollars.
The Bitcoin standard implemented by El Salvador is already a total game-changer in this respect. Sending via the Lightning Network reduces transaction costs to a minimum.
The daily life of Salvadorans is already changed for the better by Bitcoin
That said, the Bitcoin experience goes much further than that. Nayib Bukele is a bold and visionary president. He has decided to fully embrace the Bitcoin revolution by buying dips at every opportunity since September 7, 2021. El Salvador now holds 1,120 BTC in reserve and plans to use the profits generated on this Bitcoin to directly improve the lives of Salvadorans.
Twenty schools and a veterinary clinic will be built in the coming months with money directly from the standard Bitcoin set up by El Salvador. And this is just the beginning when you think about what's in store for Bitcoin in the years to come.
El Salvador has also embarked on Bitcoin mining in a green way using geothermal energy from its volcanoes. Again, Nayib Bukele wants to go all the way with his Bitcoin bet by exploiting everything that Bitcoin allows.
Nayib Bukele wants to go further by building the world's first Bitcoin city
A new step has just been taken as President Nayib Bukele has just confirmed the launch of the construction in El Salvador of the world's first Bitcoin city. For this, El Salvador has partnered with Blockstream to issue $1 billion in tokenized bonds on the company's Liquid Network.
Half of the funds raised will be invested in Bitcoin, or $500 million, while the other half will be invested in the infrastructure of the Bitcoin city under construction. These bonds will be sold starting in 2022. They will allow people to quickly obtain citizenship and residence in El Salvador. Nayib Bukele is bringing to life the dream of many Bitcoin maximalists with the construction of what looks like a real Bitcoin citadel.
This city will be powered by geothermal energy from the local volcano, Conchagua. Only one tax will be in effect in this city, a 10% sales tax. No income, capital, property, payroll, or municipal taxes.
These bonds have the potential to accelerate hyperbitcoinization by bringing investors a new financial system built on top of the Bitcoin blockchain. El Salvador also aims to create a government securities law and grant a license to Bitfinex Securities to process the bond issuance.
For investors interested in these bonds, it is worth noting that they will have a special dividend paid on an annual basis generated by the staggered liquidation of Bitcoin. Blockstream explains that these dividends will be paid out using its Asset Management Platform (AMP). This will reduce the fees and therefore make it easy to accept investments starting at $100 to democratize access to these bonds.
Final Thoughts
Anyone who wants to participate in the Bitcoin adventure in El Salvador will be able to do so via these bonds. It is also an opportunity for Blockstream to show its technological know-how with its Liquid Network solution, which is a layer-2 technology built on top of the Bitcoin Blockchain.
All of this is going in the right direction for the Bitcoin revolution, and while it may not be directly reflected in the Bitcoin price in the short term, you have to see it as something extremely Bullish for the future of Bitcoin.
The big question now is what other country will jump on the bandwagon by following the path that El Salvador is blazing. I'll let you share your suggestions in the comments.
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