If you don’t follow the Crypto news you can be forgiven for not knowing about what’s happening in El Salvador. Needless to say they are leading the Bitcoin revolution:
This year El Salvador made Bitcoin legal tenure and is in the process of lifting its people out of poverty (70% of the population does not have a bank account). By legalising Bitcoin and providing a bitcoin smart phone wallet anyone with a smart phone (everyone) now has a place to save their money
El Salvador has also announced plans to build the first Bitcoin City. This ‘Citadel’ will be financed and run on Bitcoin
To fund the Citadel El Salvador has announced a Bitcoin Volcano Bond.
Wait what?
Introducing Nayib Bukele the current president of El Salvador. He is a visionary with his finger very much on the pulse of the new technological age.
Born in July 1981 the fresh faced 40 year old is quite frankly transforming El Salvador into a country for the new world. Bukele along with his party have firmly positive action into motion when they voted to establish Bitcoin as legal tender alongside the US dollar in June 2021. 🤩 (Cry harder IMF😭)
This means that Bitcoin is Legal Tender in the country and carries no capital gains tax and is treated the same way you would treat Dollars, Euros, Pounds in your home currency.
Rapidly this action alone has enabled millions of El Salvadorians whom previously were unbanked (have no access to savings accounts) to get access to banking style services using the Bitcoin network. One only requires a phone and internet connectivity to do so. Using the local Bitcoin Wallets (Chivo App) Bukele has managed to do what no other president or parliament before him has done.
He has lifted millions of his citizens out of abstract seclusion and future poverty and given them bright future and hope. For many many years nearly 70% of the population were unbanked and for most of you reading this it is hard to comprehend just how difficult life is without banking services.
Imagine having to save in paper money and drive 3 hours risking extortion and corruption to go and pay a bill or send/receive money from a relative. This was a daily occurrence for millions was like in this country.
Wait it gets worse, say your family member has managed to get a job in the US or Mexico and is supporting you by sending money back to your family in El Salvador. Traditionally that action was done using money transfer companies like Western Union whom would take a cut (and a large one at that!) to get that money to you. Remember with no banking services these citizens would have to risk time, distance and friction to go and fetch physical cash with a large % ripped out! Sad reality 🥺
Bitcoin
In comes Bitcoin and the Lightening network that enables instant finality settlement, irrespective of borders and practically for free using services like Strike / Chivo App built on top of the Bitcoin Network.
This single advance will save El Salvador $millions in remittance payments over the coming years and that means $millions more into the hands directly of those most impoverished, those unbanked citizens that now get 100% of the funds sent to them from a family member abroad without Middle Men Sharks taking a large cut.
Wait there’s more
Nayib Bukele and his parliament have not stopped at just enabling bitcoin rails for the country, they are fully leaning into it’s potential to rocket El Salvador out of its low ranking developing nation status.
Introducing Bitcoin City
Yes, you read that correctly, El Salvador under the direction of Nayib and with support from the Bitcoin global community are embarking on building a Bitcoin based City.
A city that will be geothermically powered by a neighbouring volcano 🌋 and essentially be the cleanest renewable ♻️ energy driven city on earth. One for the rest of the world to try now emulate as the standard will be set!
Here’s the real kicker
0% income tax
0% capital gains tax
0% property tax
0% municipal tax
0% CO2 emmissions
The only taxation of a citizen in Bitcoin city will be a 10% sales tax (thats it!)
This is revolutionary not only by way of future vision but it makes El Salvador one of the most attractive locations for foreign investment, tourism and high tech individual emigration. We are sure excited here at the Wealth Gap already!
How is this all being created and paid for?
Bitcoin Volcano Bond
This is where things get REALLY interesting.
El Salvador is issuing a $1billion tokenised 10 year bond that will carry a 6.5% yield for investors. Approx $500m will go towards building the city foundation, infrastructure and getting the legs of the project firmly off the ground. The other $500m raised will go into Bitcoin. The Bitcoin element will start making return payments to investors after 5 years. Some of the conservative forecast models anticipate a ROI of 95% (on top of the existing 6.5%) towards the end of the bond term.
This is extremely novel concept and will revolutionise the world of finance as we know it as they will have introduced a new Tokenised Bond that is backed by Bitcoin and a geothermal renewable city.
The Wealth Gap View
There is a lot going on here and this new industry is moving at break neck speed but given what we know of the existing fiat currency system we can’t applaud these actions loudly enough. The petrodollar is waning, debasement of the global currencies will continue until the credit system eventually collapses… the sooner we have the new bitcoin rails firmly entrenched in parallel to the legacy system the cleaner the potential transition will be when the old makes way for the new.
This will get choppy in the press and plenty of detractors will come out against everything that is going on in El Salvador. Award winning economists and their dogs will be rolled out in front of the cameras to tell us why these plans will fail. The Central banks will be especially hostile as begin to lose control of the money supply and the manipulative benefits of it. With leaders like Nayib Bukele taking the risk to help his people and move his country forward then the future is bright. Nayib has closed the wealth gap on a tremendous scale in such a short period of time in El Salvador.
Nayib Bukele gets a Five Star ⭐️ review from The Wealth Gap team for his bold approach and commitment to helping his people. Only time will tell if he can deliver on these promises but the line is firmly in the sand.
Till next time
The Wealth Gap Team