This year, El Salvador became the first country in the world to accept Bitcoin as legal tender. In June, lawmakers in the country’s Congress voted in favor of the Bitcoin Law.
The purpose of the Bitcoin Law approved by Congress is to make Bitcoin part of everyday life in El Salvador. The country’s leader is a big fan of cryptocurrencies. El Salvador plans to build a “Bitcoin City” near a volcano according to President Nayib Bukele. He also mentioned that the city will be funded by cryptocurrency.
This “Bitcoin City” will have residential as well as commercial areas, services, entertainment, restaurants and an airport. The country plans to build a new city near the Conchagua volcano in the southeastern part of the country. El Salvador’s government plans to use geothermal energy from the volcano for mining.
Construction will begin in 2022 and “Bitcoin City” will have no taxes except from value-added tax (VAT).
This autumn, thousands of people took to the streets to protest against the law approved by Congress. Demonstrators think that the introduction of cryptocurrency has the potential to destabilize the situation in El Salvador. Some of them even destroyed a brand-new Bitcoin machine. Other demonstrators held signs reading “Bukele Dictator”. He was able to cement control over the judiciary which cleared Bukele to run for office for a second consecutive term despite constitutional limits.
According to demonstrators, the country’s leader is using authoritarian means to tighten his grip on power. In spite of demonstrations, Nayib Bukele still enjoys support in El Salvador.
Despite challenges, Bukele continues to support Bitcoin. El Salvador launched a Bitcoin wallet to allow citizens to use the world’s largest cryptocurrency. Its price fell from its record high of $68,990.90 which it reached earlier this month. But Bitcoin’s price is still up more than 90% in 2021.
Furthermore, the country plans to raise about $1 billion via the “Bitcoin fund” in partnership with Blockstream. El Salvador partnered with a digital assets infrastructure company. The government plans to use $500 million to buy Bitcoin. Based on the information provided by Blockstream, investors in the bond will get an annual special dividend. The country’s government will spend the rest of the money on energy and Bitcoin mining infrastructure.
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