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Originally Posted by BigJohn
Then there is El Salvador which wants to build a city by a volcano funded by bit-coin and use the heat from the volcano to generate power for mining, etc. The city apparently will only have a value added tax and money from mining to fund the operation(s). Should be interesting to see if it ever gets off the 'ground'.
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ElSalvador is selling Bitcoin backed bonds wort 1M USD. 500M for Bitcoin treasury and 500M for Bitcoin mining. The big Bitcoin whale are going to buy the bonds for a 6% return.
The mining income mitigates the risk from Bitcoin price fluctuation, and the Bitcoin city they are building will generate massive tourism from Bitcoiners who are very rich. Lots of jobs created. The real estate sales will be worth Billions mostly paid in Bitcoin...
It's a pretty good idea. ElSalavdor will soon own lots, and lots, of Bitcoin...
The reason it is a smart play is Bitcoin is starting to be an institutional asset. The institutional buyers at this early stage are just buying - not selling - because they are betting on being early and want to ride the wave. If Bitcoin dumps they will buy more. If it goes up they will keep buying. Once they buy it they are holding. They are not going to put it back on the market. Bitcoin has a finite supply. This means the number of Bitcoin traded on exchanges will 'dry up'. IOW the available supply will shrink and the upward price pressure will amplify.
Otherwise they could stick with 100% USD which will definitely decrease in value over time
I think the ElSalvador president understands this. It's actually a pretty genius move.