Will the cryptocurrency city project in El Salvador be successful? Opinion of local residents
A territory with zero taxes, geothermal energy from a volcano and funding from crypto-bonds – that’s what La Unión, a small town in eastern El Salvador, should become. Naturally, this will only be possible if President Nayib Buquele’s ambitious plan comes to fruition. However, following disruptions to the national cryptocurrency wallet Chivo and delays in the release of the aforementioned cryptocurrencies, the prospects for Bitcoin City in the country, where the major cryptocurrency only became official tender in September, could be at risk. We tell you more about what’s going on.
As a reminder, the cryptocurrency city or so-called Bitcoin City project was unveiled in November 2021. The key feature should be the use of geothermal energy from volcanoes, in addition the territory should cancel all taxes except VAT. Overall, the authorities hope to raise a lot of funding through an innovative idea. You can read more about it in a separate article.
In addition, the day before a similar island project for users of digital assets was supported by the Vanuatu government. Considering the activity of the officials, we can assume that the project will happen.
What will happen to Bitcoin City
According to the plan unveiled by Bukele in November, Bitcoin City will include residential and commercial areas, restaurants, an airport as well as a port and rail connection. The city’s infrastructure will be designed in the shape of a circle as a kind of reference to the shape of the Bitcoin logo. Ideally, the place will become a “tax haven” with cutting-edge developments in the crypto-sphere and even its own crypto-farms for BTC mining.
El Salvador’s President Nayib Bukele
Locals from La Unión seem to be optimistic and cautious about such plans. On the one hand, they hope that the investments will help to fill the local budget and improve living standards. On the other hand, they fear the failure of Bukele’s overly ambitious plans.
In an interview with CoinDesk news outlet journalists, Amilcar Alvarado, manager of Tienda Par2’s La Unión branch, shared his perspective. Here’s his line.
Here in La Unión, there’s not much trade. The city needs Bitcoin City to help the economy grow, with the project pushing La Unión towards changes like those already seen in San Salvador, the country’s capital. There should be plenty of tourist spots here.
A rough outline of the infrastructure in Bitcoin City
According to Alvarado, La Unión could become an important city in El Salvador, but amid the government’s many announcements about Bitcoin adoption, many citizens have mixed feelings. Ancel Miguel Flores Laínez, an agent in La Unión who helps people use the national cryptocurrency wallet Chivo, holds a similar opinion.
We have been on the sidelines for a long time. Bitcoin City is a good opportunity for the people of La Unión. The port here is unused, a lot of things are idle. La Unión will be able to develop.
Michael Peterson, founder of the so-called Bitcoin Beach in El Zonte, considers the cryptocity initiative a hastily developed one, but has little doubt of its success.
Bitcoin City is a last-minute concept. I think there’s a good chance that the government saw how much interest there was in it in El Salvador and also realised the appeal of the idea to businesses and investors.
Nayib Bukele promoting zero taxes in Bitcoin City at project launch
Locals also note that in La Unión, almost half of the shops freely accept Bitcoin. However, statistics suggest otherwise. As a reminder, according to the Salvadoran Chamber of Commerce and Industry, 86 percent of local firms have not made any sales using the cryptocurrency, and only 13.9 percent said they have dealt with BTC. Meanwhile, only 3.6 percent of local shop owners say Bitcoin has boosted their sales, while 91.7 percent reported that Bitcoin adoption has had no impact on their business.
Cryptocurrency in El Salvador
Moreover, according to a recent survey by experts at Francisco Gavidia University, 91 per cent of Salvadorans would prefer to use the dollar rather than Bitcoin for their payments. Many of the country’s citizens still don’t understand the intricacies of the cryptocurrency, so the process of its full adoption could be delayed. Nevertheless, if Nayib Bukele’s idea succeeds, Bitcoin will get a very powerful boost to popularity and acceptance. In addition, BTC has been in official use in El Salvador for a relatively short time, so this pace of popularization of the digital asset is understandable.
We believe that the cryptocurrency city project really needs to happen. Not only would it make it a magnet for tourists who are familiar with digital assets, but it would also improve the reputation of cryptocurrencies. Still, they could be actively used for a wide variety of spending categories, rather than just being held in anticipation of a rise in the exchange rate. And this creates a new reason to engage with crypto.
What do you think about this? Share your opinion in our Millionaires Crypto Chat. We’ll discuss other unusual ideas from the blockchain world there too.
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