A year ago, El Salvador's President, Nayib Bukele, declared Bitcoin officially legal tender in his country, alongside the U.S. dollar. He later introduced the "Bitcoin Law" that required merchants to accept the cryptocurrency, and invested a large amount of public funds in bitcoin and issued "volcano bonds" to build a "Bitcoin city." The digital currency experiment now looks like a bad investment decision in a country where debt is 84 per cent of GDP -- Bitcoin recently fell to an 18-month low. One person who took stock of Booker's tweet estimated that the government has lost about half of its investment, or $50 million, so far. The risk of default has soared, adding to the country's woes.
The cryptocurrency crash has been brutal. Total market value has fallen nearly 70% from last year's high, to just $1.3 trillion. Bigger challenges may lie ahead. Will this scupper plans for the world's first Bitcoin city? On May 10, President Nayb Bukir tweeted a mock-up of the city, with the caption: "# Bitcotcity is coming."
The proposed volcanic Bitcoin City is planned to be located in the Gulf of Fonseca on El Salvador's southern coast, backed by The Volcano Conchagua. The government is expected to issue $10 billion in bonds to finance the creation of the world's first bitcoin city
The Bitcoin City was designed by Mexican architect Fernando Romero, founder of FR-EE Architecture. The architects designed the city as a circle based on the shape of the bitcoin symbol.
The planned structure of Bitcoin City is a single concentric circle, with a central plaza bearing the Bitcoin logo and a large "B" for bitcoin at the center. Around the center of the circle are a series of smart buildings with the latest technology, a museum that displays the history of human money, a multifunctional stadium, and NFT Gallery.
Conchagua's geothermal energy could power the entire Bitcoin city grid, including cryptocurrency mining, which would provide space for tech companies that handle cryptocurrencies.
The bitcoin City will be green (trees) and blue (ocean), and there will be a circular observation deck on top of the volcano. Transport within the city is dominated by light rail, with an express train connecting the proposed airport, seaport and other nearby cities.
The volcano-driven Bitcoin city, arguably the most utopian urban plan of the day, has received mixed reviews. Samson Mow of Blockstream told Fortune, "It's going to be the 'financial center of the world' and the 'Singapore of Latin America,' because bitcoin is going to be a million dollars in five years, and everyone who invests in it is going to be very rich."
It is indeed a big gamble - urbanically and financially.
To win is to revive the economy of the whole country.
If you lose, you're literally doomed, and the entire economic system collapses.