El Salvador is Moving Ahead with its Bitcoin Volcano Bonds

Paigambar Mohan Raj
Source: CryptoSlate

A year after being announced, El Salvador is moving ahead with its Bitcoin Volcano Bonds. As per reports, Minister of the Economy Maria Luisa Hayem Brevé submitted a digital assets issuance bill to the country’s legislative assembly.

The Bitcoin Volcano Bond aims to draw capital and investors to El Salvador. The nation intends to issue $1 billion in bonds on the Liquid Network, a federated Bitcoin (BTC) sidechain. The proceeds of the bonds will be distributed between a $500 million direct investment in BTC and a $500 million investment in the development of local energy and BTC mining infrastructure.

With a two-way peg, Liquid’s sidechain for Bitcoin enables BTC to move between the Liquid and BTC networks. L-BTC is a symbol for BTC that is used on the Liquid network. The network’s participants are in charge of managing and protecting its verifiably comparable amount of BTC.

Furthermore, investors will be able to obtain fast-tracked El Salvadorian citizenship through the bonds, which will yield 6.5%. Once the first $500 million has been monetized, the government will distribute half of the additional gains to investors as a Bitcoin Dividend. Additionally, the asset management platform of Blockstream will be used to distribute these dividends on an annual basis.

Moreover, crypto exchange Bitfinex will receive a license to conduct and list the bond issuance in El Salvador. The exchange’s CTO, Paolo Ardoino, took to Twitter and shared his thoughts on the Volcano Bonds.

How much has El Salvador lost in its Bitcoin investment?

El Salvador recently announced that it would purchase one Bitcoin every day starting November 18th. Since the beginning of El Salvador’s Bitcoin experiment, BTC has fallen by over 70%. An economist at the Central American Institute of Fiscal Studies (ICEFI), Ricardo Castaneda, estimated El Salvador’s losses at about $70 million.

However, at current prices, the country has an opportunity to bring its average cost down significantly. And that seems to be the plan with buying one BTC every day.

At press time, BTC was trading at $16,547.18, up by 4.3% in the last 24 hours.