El Salvador issues the first public bond in BTC

El Salvador has decided to issue the first Bitcoin-denominated government bond. The El Salvador * Bitcoin bond has an issue of $ 1 billion and will be split into two parts. Half of the bond will be used to begin construction of a "Bitcoin city". The second half of the bond will be used to purchase $ 500 million worth of Bitcoin. So, ultimately, it's a mix of speculation and investment. The $ 500 million that will be invested in Bitcoin will lead to a purchase in early 2022, presumably, and then will be locked into a wallet for five years. So the doubling of BTC could, by itself, guarantee the return of the title.

El Salvador therefore makes a bet on BTC: after 5 years it will start reselling currencies to return investment and interest, but, if indeed the value of BTC had a growth over 100%, it might not even be worth dissolving it. The difference with a direct investment in BTC is that the stock promises a steady return of 6.5%, which BTC certainly cannot do.

It remains a while to understand what it will mean to invest the other 500 million in the "City of Bitcoin", which can be a great idea, like a colossal waste of money. At the same time, for five years, El Salvador will surely have at its disposal a sum of money that it could never have thought of borrowing in foreign currency, without expropriation rates. Obviously the idea is extremely dangerous, based on a series of assumptions all to be verified: will Bitcoin really grow in value? How much? Will it be able to return 6.5% after five years? However, at the same time, perhaps the only opportunity for a poor and tormented country to get out of misery.

---

---

The article El Salvador issues the first public bond in BTC comes from ScenariEconomici.it .

---

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/el-salvador-emette-il-primo-bond-pubblico-in-btc/ on Tue, 30 Nov 2021 10:00:26 +0000.