How Central American Wealthy are Building Cities?
Daily, tourists have driven up El Salvador’s Conchagua Volcano in a converted trash truck and dropped off at an eco-tourism lodge. People were tossed about as the truck lurched down the pothole-filled route. After reaching the peak, they emerge into the bright woodland and thus are awarded with panoramic views of the azure Gulf of Fonseca. Mountain Spirit refers to the indigenous Lenca concept that a divine presence resides in the volcanic crater, occasionally taking the form of a butterfly or eagle. Seven years ago, the land’s owner, Luis Diaz, started building on the plot. He may have found temporary peace there, but that might not be the case. In November 2021, El Salvador’s president Nayib Bukele declared that the country’s capital would relocate to the site of the volcano, which would thereafter be known as Bitcoin City. There may soon be a massive building project to transform the untouched wilderness into a bustling city.
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The government has released some drawings of the city, which depict a ringed metropolitan area expanding outward from a B-shaped center square as well as a multi-colored street design reminiscent of what one could see if they squinted through a prism. The plan is to use Bitcoin as the local currency and use the geothermal power from the volcanoes to operate the town. Only one tax is paid by citizens on the things they buy. Volcano Bonds, with a total value of $1 billion USD, are being issued by the Central American nation of El Salvador in order to finance the metropolis. Half of the bond proceeds will be used to build Bitcoin City and Bitcoin mining activities, while the other half will be used to purchase Bitcoin, which might be utilized to redeem the bonds in the future if their value increases.
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Notwithstanding difficulties, Alejandro Zelaya, the finance minister of El Salvador, said at the beginning of April that the bonds had garnered a desire of $1.5 billion. Bitcoin and other Cryptocurrency speculators are anticipated to buy the majority of bonds, with a few paying as much as $100,000 for the opportunity to become naturalized residents of El Salvador. If it is ever constructed, Bitcoin City would be a magnificent manifestation of the Cryptocurrency community’s hopes for the expansion of the planet. Nevertheless, that’s not the end of the vision. Increasing numbers of Cryptocurrency speculators are lobbying foreign governments to establish semi-autonomous areas that may serve as labs for financial innovation, with the expectation that this would ultimately benefit the local community.
Yet, international businessmen have already parachuted into Central America with false promises of riches, just to seize property as well as extort locals of their wealth. The United Fruit Company grabbed political influence in Honduras, Guatemala, as well as Costa Rica and colonized enormous swathes of territory in the area during the first half of the 20th century, igniting a cycle of financial injustice that has plagued the area for decades. Sweatshops have proliferated in recent years in “export processing zones” established for multinational clothing manufacturers.
Certain local officials and citizens are optimistic about Cryptocurrency’s ability to stimulate the economy, whereas others fear a replay of past mistakes. Even as Bitcoin City takes shape in El Salvador as an experimentation, a comparable process is currently under progress in Honduras, however opposition from residents has threatened its continued existence. Although some believe that the success of these Bitcoin Cities will lead to the creation of a hundred more, others wonder who these initiatives are intended for and if the nations who are acting as test beds will really reap any benefits.
The Pitch
The concept of a “Bitcoin fortress” has long piqued the interest of pioneering Cryptocurrency speculators as well as businesspeople. A few people believe that the value of Cryptocurrencies will skyrocket and the fiat currency system will collapse, causing affluent investors to hide out in walled compounds. Others, motivated by the freedom to operate independently of any one country, view Cryptocurrency as a means to escape the constraints of a centralized monetary system based on outmoded ideas such as taxes and public spending. Efforts by libertarians to found their own self-sufficient mini-civilizations date back to at least the 1960s, however the advent of Cryptocurrency has given this long-dead ambition a new lease of life.
Cryptocurrency Fans have Attempted Utopias
In the past, Crypto community members have attempted to build their own utopias, with mixed outcomes. A few instances involve the much-mocked Cryptoland, a damaged $12 million proposal for a Fiji island invoiced as a paradise for Crypto enthusiasts, and R&B singer Akon’s $6 billion planned Crypto-powered settlement, Akon City, which has yet to begin construction. Both MS Satoshi and Cryptoland were named after the pseudonymous Bitcoin creator Satoshi Nakamoto. Notwithstanding such setbacks, a new generation of venture capitalists is making big plans to create Cryptocurrency-friendly societies throughout the globe. Special Economic Zones are a common component of their proposals. The idea is straightforward: create a partially autonomous territory with lax legislation, low government involvement, and low taxes, then let free enterprise take over. Singapore, Dubai, as well as Shenzhen are often cited by believers as exemplary cities.
Actually, things are more nuanced than that. Thibault Serlet, director of research at Adrianople, a consultancy business specializing in special economic zones, believes that it is impossible to evaluate the influence of these zones on a country’s economy since there are so many of them or 5,000 in 70 nations and several contextual elements. According to a report published in The Economist in 2015, just a small fraction of the special economic zones set up throughout the world at the time were really effective, whereas the majority either had no effect on the economy as a whole or were complete disasters. The ambitious objectives of El Salvador aim to make the most of a strategy which has achieved only little success so far.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.
