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El Salvador & Bitcoin
24 January 2022     1310

El Salvador & Bitcoin

Bookle opens a new city

According to the AP, El Salvadors President Naib Bukel, in his theatrical speech, said that his government intends to cultivate the coastal city of Bitcoin, at the foot of the volcano.

Buckle used a gathering of Bitcoin supporters to announce the following: El Salvador will be the first country to make cryptocurrency a legal tender.

The shares will be offered in 2022 entirely in Bitcoin, according to Buckel, who wore a traditionally inverted cap.

Construction will begin 60 days after the financial details are resolved.


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The city will be built on the side of the Konchagua Volcano to facilitate the use of geothermal energy, both for the city and for mining, which takes a lot of time and resources (it takes days to perform complex mathematical calculations to prove transactions).

The state has already completed one similar mining project with Tekapa Volcano. And, the volcano of Konchagua itself is located in the Gulf of Fonseca, southeast of El Salvador.

In addition, the government allocates land and infrastructure to attract investors.


Bills

The only type of tax that will be imposed will be VAT taxes, half of which will be used to pay municipal bond debts. The rest will be spent directly on infrastructure and maintenance. Buckel said no income, property or other municipal taxes will be levied. The city does not emit carbon dioxide at all.

Its certainly hard to hope for a person who posts photos of himself or herself on Twitter, pictures of emperors, or who has a similarly superficial view of the tax economy. Today, the protection of low taxes has become as rare and unfounded in the economy as the idea that vaccines are dangerous (in science) or that there are no objective moral standards (in philosophy).


IMF & Crypto

It is therefore not surprising that, as reported by Reuters, even the IMF advised El Salvador not to use Bitcoin as a legal tender anymore, given the cryptocurrency risks.

This is the IMF that has recently acknowledged that Austerity is a bad decision despite doing its own promotion.


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The IMF said that due to the volatility of Bitcoin, its use as a legal tender entails significant risks related to consumer security, financial honesty and stability; In addition, it generates fiscal contingent liabilities.

The IMF often carries out Article IV missions in certain countries to consult with their governments before they request IMF resources.

In September, El Salvador became the first country to start using Bitcoin as a legal tender, along with the US dollar.

"Because of these risks, Bitcoin should not be a legal tender. We recommend that you reduce the scale of its law and recommend that you strengthen regulations and oversight of the new payment ecosystem," the IMF said.

It was published exactly two days after the story of the city. Buckle says the Bitcoin-funded city will help Salvadoran send extra money from abroad. In addition, in his opinion, this investment will contribute to tourism and development in general.

Although Buckeles policies are criticized by the IMF, he says their analysis is still interesting to him.

According to the IMF, El Salvadors economy will grow by 10% in 2021 and by 3.2% in 2022. And their debt is 85% of GDP by the end of 2021.


The current state of Bitcoin

In general, as for the cryptocurrency leader himself, the difference between short-term and long-term Bitcoin holders has reached a stable level between 1-week and 1-year coins. Which means a more balanced distribution between new and old “smart money” investors and marks the consolidation phase. Price records indicate that a large amount of coins are being held by new investors. The upgrade, naturally, was followed by a wave of sales.

Crypto Investments, however, raised $ 151 million last week. And in the last year, according to CoinShares, this amount has reached $ 9 billion.

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