El Salvador surpasses Nigeria in the global Bitcoin rankings with the establishment of a proposed Bitcoin City
El Salvador surpasses Nigeria in the global Bitcoin rankings with the establishment of a proposed Bitcoin City
Following the announcement of plans to build a Bitcoin City in El Salvador, the Central American country has surpassed Nigeria to become the world's leading Bitcoin country. It is also important to note that the government's recent crackdown on cryptocurrency dealers' bank accounts has played a significant role in the country's dislocation.
The Central Bank of Nigeria's restrictions on cryptocurrency trading have resulted in a continued decline in cryptocurrency trading in Nigeria (CBN). The restriction is intended to increase the use of the country's digital currency, known as the e-naira.
Nigeria continues to be Africa's most important cryptocurrency hub, accounting for more than half of all cryptocurrency trading volume in Sub-Saharan Africa in the last year. As the country's central bank continues to target bank accounts suspected of dealing in cryptocurrencies, trading in cryptocurrencies has become increasingly difficult for investors.
Nigeria's peer-to-peer trading volume dropped by a whopping 43 percent last week as a result of the Central Bank of Nigeria's restrictions. Trading cryptocurrency has become increasingly difficult due to the fact that all cryptocurrency transactions are flagged, resulting in the suspension of trading accounts.
The Nigerian Financial Regulator continues to crack down on dealers despite the fact that lawyers and magistrates have repeatedly stated that closing accounts without a court order is illegal.
El Salvador’s Bitcoin City
Salvador, the only country in the world to have made Bitcoin legal tender, has announced plans to develop a Bitcoin-centric city. This information was revealed by the president of El Salvador, Nayib Bukele, during a Bitcoin Week event in the country.
In the words of Bukele, the city dubbed Bitcoin city will be shaped like a coin, with a central plaza in the center. Residential and commercial areas, as well as restaurants, an airport, a port, and a rail station, will be included in the development.
The president did not provide a specific timeline for the city's construction, but he did note that the city will be exempt from all federal, state, and local taxes, including income, property, capital gains, and payroll, relying solely on value-added taxes to fund its operations. An active volcano in the Gulf of Fonseca is close to the proposed city's location. The government intends to construct a power plant near the volcano that will supply electricity to both the city and bitcoin mining operations.
El Salvador and Bitcoin
With the adoption of Bitcoin as legal tender alongside the US dollar in September, El Salvador became the world's first country to do so. This policy was promoted as a means of promoting economic development and job creation in the United States. In response to the approval, however, there were widespread protests.
Bitcoin is a cryptocurrency with a high degree of volatility, as its value is subject to large fluctuations. It has fallen to a low of around $30,000 this year and risen to an all-time high of $65,000 in just a few months. In this context, the decision to build an entirely Bitcoin-based city represents a high-risk investment.
BlockStream will issue a $1 billion US dollar "Bitcoin bond" in conjunction with the announcement of the plans for Bitcoin City, according to the company's president. Half of the funds would be used to expand energy and mining infrastructure, with the remaining half going toward the purchase of additional bitcoin and other cryptocurrency.
Reactions
A primary goal of bitcoin's development was to allow it to operate independently of government-controlled financial systems. Mr Bukele stated that the adoption of Bitcoin as a legal tender in El Salvador would help to attract foreign investment and make money transfers to Salvadorans living abroad more affordable, which he believes has occurred.
Critical voices expressed concern that the currency's lack of transparency would encourage an increase in criminal activity in the country and that its wild price swings would put holders of the digital currency at risk of losing their investments in the digital currency.
For the second time in as many weeks, reactions have lagged behind the latest announcement. As a result, bitcoin enthusiasts have expressed interest in relocating to the city, which they believe will be a positive step forward.
A fascinating investment strategy based on the assumption that bitcoin's value will continue to rise is being promoted right now. It is necessary to have a high enough hush rate of bitcoin production in the event that the value of bitcoin decreases. This will compensate for any possible decline in the value of bitcoin.
Some also believe the move is a huge gamble for a country with a gross domestic product of slightly more than $24.6 billion in 2020, which is a significant increase from the current level. In order for the concept to be successful, the price of bitcoin must continue to rise. Citizens are also of the opinion that other sectors of the country, other than the economy, need to be addressed.
As a result, the concept of a Bitcoin city in El Salvador is being closely scrutinized, as its success or failure could have ramifications for future crypto policies.
