El Salvador has displaced Nigeria at the top of the Bitcoin rankings following the Central American country’s plan to build a Bitcoin City. Nigeria’s displacement has also been largely aided by the government’s recent clampdown on the bank accounts of cryptocurrency dealers.
Crypto dealing in Nigeria continues to decline due to restrictions by the Central Bank of Nigeria (CBN). The restriction is in a bid to enhance the use of the country’s digital currency, e-naira.
Nigeria remains Africa’s largest crypto base as it is responsible for more than 50% of trading volume out of Sub-saharan Africa. However, it is now increasingly difficult to trade in cryptos as the country’s apex bank continues to target bank accounts suspected of dealing in cryptos.
Last week, Nigeria’s P2P trading volume dropped by a colossal 43% following the CBN clampdowns. Crypto trading has become increasingly difficult as all crypto transactions are flagged, leading to the suspension of such accounts.
Despite lawyers and magistrates insisting that shutting down accounts without a court order is wrong, Nigeria’s financial regulator continues to clamp down on dealers.
El Salvador’s Bitcoin City
El Salvador, the only country in the world to adopt a cryptocurrency, Bitcoin, as its legal tender, is set to build a city based on the coin. This information was disclosed by the president, Nayib Bukele at Bitcoin week, an event in El Salvador.
According to Bukele, the city referred to as Bitcoin city, will be built in the shape of a coin, with a plaza at the centre. It will have residential and commercial areas alongside restaurants, an airport as well as a port and rail service.
“Invest here and make all the money you want, this is a fully ecological city that works and is energized by a volcano. Residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail – everything devoted to Bitcoin,President Nayib Bukele
The president did not disclose the timeline for the city’s construction but he noted that the city will have no income, property, capital gains or payroll taxes: only value-added taxes. The site of the proposed city is near a volcano along the Gulf of Fonseca, The government plans on locating a power plant by the volcano to provide energy for both the city and bitcoin mining.
Bitcoin in El Salvador
In September, El Salvador became the first country in the world to adopt Bitcoin as its legal tender alongside the US dollar. This measure was presented as a way to boost economic development and create jobs. However, mass protests followed the approval.
Bitcoin is a highly volatile cryptocurrency because its value can fluctuate significantly. This year has seen the coin fall to a low of about $30,000 and rising to an all-time high of $65,000. The move to build a city based on Bitcoins is therefore a high-risk investment.
The president, while announcing the plans for Bitcoin City also revealed that a $1 billion US “Bitcoin bond” will be issued by BlockStream. Half of the funds would be used to build energy and mining infrastructure, with the rest used to buy more of the digital currency.
Bitcoin was originally created to operate outside government-controlled financial systems. When El Salvador adopted Bitcoin as its legal tender, Mr Bukele said it will help attract foreign investment to El Salvador and make it cheaper for Salvadorans living abroad to send money home to their families.
Then, critics warned that the currency’s lack of transparency could attract increased criminal activity to the country and the digital currency’s wild swings in value will pose a risk to those holding it.
Reactions have once again trailed the latest announcement. Bitcoin enthusiasts consider it to be a good development and have even expressed interest to live in the city.
Some are also of the opinion that the move is a huge gamble for a country with a gross domestic product of just over $24.6 billion in 2020. Bitcoin has to maintain an upward trajectory for the idea to pay off. Citizens are also of the mind that other sectors in the country need attention, not just the economy.
And the streets of San Salvador? And the sectors without drinking water and electricity? Illiteracy in our country? The deplorable conditions of public education? I really don’t understand …ToxicaFox
The idea of El Salvador’s Bitcoin city is therefore one that is being studied with keen interest as it could decide future crypto policies based on its success or lack thereof.
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