El Salvador unveils Bitcoin City plans in the middle of the market crash

Nayib Bukele, the El Salvadorian President, is still bullish on the Bitcoin, even as the crypto coin's value continues to tumble. He recently took to Twitter to unveil his plans for Bitcoin City, a city with almost no taxes. 

#Bitcoin City is coming along beautifully ❤️ pic.twitter.com/A6ay8aAREW

— Nayib Bukele (@nayibbukele) May 9, 2022

Cryptocurrencies are going through a rough phase with their values crashing. Bitcoin, the most popular of them all, has seen its valuation against the U.S. dollar slump by over 50 percent just six months ago. With experts warning that the coin could drop further, one would be wary about buying it. But not Nayib Bukele.

Bullish about the Bitcoin

While billions are being lost in crypto trades every day, President Bukele is picking up more Bitcoin from the market. 

El Salvador just bought the dip! ??

500 coins at an average USD price of ~$30,744 ?#Bitcoin

— Nayib Bukele (@nayibbukele) May 9, 2022

While that could still be a justifiable step, he also tweeted out pictures of the architect's vision of Bitcoin City, gleaming with gold. 

Landmarks and all… pic.twitter.com/PefwGp8yC6

— Nayib Bukele (@nayibbukele) May 9, 2022

In November last year, Bitcoin was scaling its all-time highs that Bukele had first revealed plans for this city. The city will be powered by harvesting energy from a volcano and have only a value-added tax to run the municipal amenities and pay back the money raised to construct it. 

Bitcoin city bonds

Scheduled for purchase in early 2022, the bonds still haven't been issued yet.  While these bonds were supposed to be issued by the El Salvador government, they will now be issued by LaGeo, the geothermal power company, since the national government has struggled to repay its debt, Vice reported.

Experts warn that LaGeo is unlikely to be able to repay those bonds but is likely to be still allowed to issue them since their failure will not reflect on the national government. While the finance minister has claimed high investor interest in these bonds,  Business Insider reported that the bond had failed to lure a single investor. 

When it launched the Bitcoin as legal tender last year, the El Salvador government also launched a digital wallet that could be used for transactions by the people. Vice reported that only 2 percent of remittances were happening on this wallet, and over 70 percent of the population had "little or no trust" in the Bitcoin. 

With little public and investor interest and the hanging sword of default on conventional debt, it remains to be seen how Bukele will fund the construction of his Bitcoin city.