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> Bukele came onstage to an animation of beaming down from a flying saucer and outlined his plans for Bitcoin City: a new charter city to be built from scratch,

by CPLX 5y ago

> Bukele came onstage to an animation of beaming down from a flying saucer and outlined his plans for Bitcoin City: a new charter city to be built from scratch, centered on bitcoin mining—and powered by a volcano. Bitcoin City would be paid for with the issuance of $1 billion in “volcano bonds,” starting in mid-2022. The 10-year volcano bonds would pay 6.5 percent annual interest. $500 million of the bond revenue would be used to buy bitcoins. The bitcoins would be locked up for five years, then sold to recover the $500 million purchase price; any profit on the sale would be paid out as an additional dividend. Holding $100,000 in volcano bonds for five years would qualify investors for Salvadoran citizenship. Seems legit.

xwolfi 5y ago
Yeah, would vote for the clow...man.
detaro 5y ago
Matt Levine had a good take on it: https://www.bloomberg.com/opinion/articles/2021-11-22/be-careful-with-volcano-bonds https://www.bloomberg.com/opinion/articles/2021-11-22/be-car... (TL;DR: it's a good marketing play targeting people who want this to be a thing, it's actually better to buy "normal" El Salvador bonds and invest in Bitcoin yourself: the normal bonds give better interest and you'd get the full gains from the bitcoin profit, not just a share)
- xiphias2 5y ago
  How can institutions that have obligations for performance but limitations in what they can buy get exposure to Butcoin? For normal people this bond doesn't make sense (except for the residence that they get), but regulated institutions may want a piece of it. We'll see.
  - notahacker 5y ago
    I think if you're a regulated institution that wants exposure to Bitcoin you buy a Bitcoin ETF, not El Salvadorean government tokens on an unregulated iFinex marketplace which returns strictly less than an equivalent allocation of Bitcoin and El Salvadorean securities you can buy on regulated marketplaces.
astoor 5y ago
Furthermore "Blockstream first proposed the volcano bonds ... issued as tokenized securities on Blockstream's proprietary Liquid blockchain. Samson Mow of Blockstream assured Bloomberg that all the numbers would work out, under Mow's rosy assumption that the price of one Bitcoin would hit $1 million within five years ... The bonds are set to be issued via Bitfinex Securities, a new unit of iFinex, which runs the Bitfinex cryptocurrency exchange and the Tether stablecoin". The thing is, when Bitcoin City fails, it won't make cryptocurrency advocates question their assumptions (like basing your planning on your ROI being 2000%, or that it is perfectly fine to entrust the running of major components vital to its success to convicted fraudsters), it'll make them feel more victimised by the "global elite" conspiracy theories and more aggressive in pursuing future schemes, as happened with the The Crypto-Currency Seasteaders (https://news.ycombinator.com/item?id=28441794 https://news.ycombinator.com/item?id=28441794). Can't see how this can end well for the people of El Salvador, and there do seem to be some parallels with Albania in 1997.

by CPLX 5y ago

xwolfi 5y ago

Yeah, would vote for the clow...man.

detaro 5y ago

Matt Levine had a good take on it: https://www.bloomberg.com/opinion/articles/2021-11-22/be-careful-with-volcano-bonds https://www.bloomberg.com/opinion/articles/2021-11-22/be-car... (TL;DR: it's a good marketing play targeting people who want this to be a thing, it's actually better to buy "normal" El Salvador bonds and invest in Bitcoin yourself: the normal bonds give better interest and you'd get the full gains from the bitcoin profit, not just a share)

xiphias2 5y ago
How can institutions that have obligations for performance but limitations in what they can buy get exposure to Butcoin? For normal people this bond doesn't make sense (except for the residence that they get), but regulated institutions may want a piece of it. We'll see.
- notahacker 5y ago
  I think if you're a regulated institution that wants exposure to Bitcoin you buy a Bitcoin ETF, not El Salvadorean government tokens on an unregulated iFinex marketplace which returns strictly less than an equivalent allocation of Bitcoin and El Salvadorean securities you can buy on regulated marketplaces.

astoor 5y ago

Furthermore "Blockstream first proposed the volcano bonds ... issued as tokenized securities on Blockstream's proprietary Liquid blockchain. Samson Mow of Blockstream assured Bloomberg that all the numbers would work out, under Mow's rosy assumption that the price of one Bitcoin would hit $1 million within five years ... The bonds are set to be issued via Bitfinex Securities, a new unit of iFinex, which runs the Bitfinex cryptocurrency exchange and the Tether stablecoin". The thing is, when Bitcoin City fails, it won't make cryptocurrency advocates question their assumptions (like basing your planning on your ROI being 2000%, or that it is perfectly fine to entrust the running of major components vital to its success to convicted fraudsters), it'll make them feel more victimised by the "global elite" conspiracy theories and more aggressive in pursuing future schemes, as happened with the The Crypto-Currency Seasteaders (https://news.ycombinator.com/item?id=28441794 https://news.ycombinator.com/item?id=28441794). Can't see how this can end well for the people of El Salvador, and there do seem to be some parallels with Albania in 1997.