The Roca Wrap

A daily deep-dive into fascinating topics in world affairs, business, history, and science.

Get it each morning as part of our free newsletter, the Roca Daily.

Sign up below:

Thank you for riding the Roca wave!
Oops! Something went wrong while submitting the form.

Bitcoin City

December 23, 2021

El Salvador plans to build the world's first "Bitcoin City", funded initially by bitcoin-backed bonds and located at the base of a volcano. Learn more in today's Roca Wrap.

Share it!

Singapore is one of the world’s safest and most prosperous countries: Its per capita GDP is $60,000, its murder rate is arguably the world’s lowest (.2 murders per 100,000 people), and it’s one of the world’s leading global financial centers.

El Salvador has long had one of the world’s highest murder rates (peaking at 103 murders per 100,000 people in 2015). Its per-capita GDP is $3,800, and about 25% of the country’s GDP is remittances sent from abroad.

Given those differences, it may be odd to compare the 2 countries. Yet that’s exactly what prominent crypto executive Samson Mow said this weekend: El Salvador will become “the financial center of the world” and “the Singapore of Latin America.”

Mow was speaking alongside El Salvador’s Polo-cap wearing, 40-yo president, Nayib Bukele, at the launch of “Bitcoin City.” Bitcoin City is Bukele’s latest bet on crypto: In September, he made El Salvador the first country to adopt bitcoin as an official currency and his government has since bought 11,000+ of the coin, each currently worth about $60k.

According to Bukele, there will be no property, income, or investment taxes in Bitcoin City. It will be built on the Pacific Coast near a volcano, whose geothermal energy will power the city. The city will have a circular layout with a central plaza shaped like the Bitcoin symbol. To fund the city’s construction, El Salvador will offer a “Bitcoin bond.” Bukele says the infrastructure will cost about 300k bitcoin.

Blockstream, the crypto company of which Mow is an executive, projects that the bond could pay investors 146% annual returns because of bitcoin’s appreciation (Blockstream projects bitcoin hitting $1M within 5 years). “The first countries that do this will have a massive advantage. This is the beginning of nation state Bitcoin FOMO,” Mow said.

It would take a crystal ball to know if Bitcoin City is a brilliant idea or an awful one, but El Salvador plans to use its bitcoin weight to increase the odds of success. Once it sells $1B in bonds, it will invest $500M directly in bitcoin. It will then lock up the coins for 5 years, taking them out of circulation to make bitcoin scarcer and more expensive.

The Bitcoin City team projects that other countries will see the logic and follow their lead. If 10 countries follow the same strategy, $5B in bitcoin would be taken out of the market. If more pile in, bitcoins will become increasingly scarce and their price will soar. If that happens, Bukele’s bitcoin bet wins big.

You May Also Like

Get the Wrap in your inbox.

Roca's mission is to deliver news that makes your life better.

Join the 1 million-strong Roca Community with the Roca Daily newsletter.

4 need-to-know stories, popcorn, a Wrap, and reader feedback.

Thank you for riding the Roca wave!
Oops! Something went wrong while submitting the form.

You May Also Like

More Roca Wraps

@2021 by RocaNews. All Rights Reserved