If El Salvador’s President Nayib Bukele’s grand plans come to fruition, La Unión, a small city in eastern El Salvador, will become a tax-free, geothermally powered volcano and funded by bitcoin bonds.
However, some are skeptical of the plans after the Central American country’s bitcoin wallets malfunctioned and delayed the issuance of “bitcoin bonds.”
According to an outline laid out by El Salvador’s president in November, Bitcoin City will include residential and business districts, restaurants, airports, and port and rail services, with the vision for a crypto haven without income, property or capital gains taxes.
But locals in La Unión have expressed mixed emotions about the plans. On the one hand, they hope that investment will promote economic development. On the other hand, they are cautious about whether the president will deliver on his promises.
Amilcar Alvarado, the manager of a large local shoe store, told CoinDesk that most residents are positive about the Bitcoin City announcement. “In La Unión, there is little commercial activity, just the bay and certain stores. As we saw in San Salvador, La Unión needs more places like Bitcoin City to help the economy grow and change.”
According to Alvarado, La Unión could become an important city in El Salvador, but with so many bitcoin announcements from the government lately, there is uncertainty.
Anxel Miguel Flores Lainez, an agent at La Unión who helps people use the government’s Chivo bitcoin wallet, launched last September, sees Bitcoin City as an opportunity for La Unión to gain foreign investment. “We’ve been put on hold for a long time, and that’s a good thing for the people of La Unión. The port here is idle, there are some things that haven’t been activated, and many people think that La Unión will be able to grow,” he said. .
Michael Peterson, who founded Bitcoin Beach in El Zonte, a beach town in El Zonte, the first Bitcoin oasis in El Salvador, said the Bitcoin City plan may have been hastily created, but it is achievable and will have a negative impact on the significant impact on the world.
Delayed Bitcoin bonds
El Salvador’s government plans to issue $1 billion in bitcoin bonds. As announced by El Salvador’s president in his Bitcoin City speech in November, $500 million of that will be used to help build the energy and bitcoin mining infrastructure needed, and another $500 million will be used to buy more bitcoins.
El Salvador’s finance minister, Alejandro Zelaya, had expected the bond to be issued between March 15 and March 20, but at the time of this article it had not been issued.
On March 11, El Salvador’s finance minister had noted that a war between Ukraine and Russia could slow the process.
US dollar still dominates
La Unión is located in the province of La Unión, the most southeastern part of El Salvador, with a population of 277,700 and a literacy rate of 72.2%. There are signs that plans for Bitcoin City are still up in the air, and it’s unclear if the development there will actually happen.
Local tour guide Javier said Bitcoin City could end up in Conchagua, another nearby town with a port.
According to Alvarado, 50% of the stores there accept BTC, shoe stores, clothing stores, and other stores accept it, and almost everyone supports Bitcoin.
However, the data points to another reality. According to the El Salvador Chamber of Commerce and Industry, 86% of local businesses do not use bitcoin for any sales, while only 13.9% say they do. Meanwhile, 3.6% of local stores said bitcoin contributed to their sales growth, while 91.7% said the implementation of bitcoin had no impact on their business.
About 10 to 15 customers pay with bitcoin every day, most of them locals, said Cecilia Salazar, manager of the La Unión Italia store. The store has been accepting bitcoin since it became legal tender in El Salvador in September.
The government released videos explaining how to use bitcoin and spurred use of its Chivo wallet by airdropping $30 in bitcoin to adults.
Flores Lainez, a Chivo consultant at La Unión, said most people are still accepting it all. “First of all, they don’t understand what satoshis are, what money itself is. Most of the people at La Union don’t have any information about bitcoin,” Flores Lainez said. He pointed out that El Salvador is not a country with high technology penetration.
According to the World Bank, as of 2019, about 50 percent of the population of 6.5 million had access to the Internet. “Older people don’t know how to use bitcoin. In that sense, they have several problems,” said Flores Lainez, who said most people using Chivo wallets are adults between the ages of 20 and 45.
Despite El Salvador’s bitcoin-friendly reputation, a recent survey found that more than 91 percent of El Salvadorans still prefer the U.S. dollar.
“Almost no one likes paying with bitcoin,” said Zayra Cotefani Miranda, manager of Bliss Boutique, a clothing store in La Unión, adding that the dollar will always dominate.