Topic: Everything you wanted to know about ES Volcano Bond and were afraid to ask! - page 5. (Read 1724 times)

The logic applied above is explaining bitcoin monopoly, which in actual sense is not practicable. All other countries cannot revoke from mining nor ban completely the use of bitcoin because of the nature of bitcoin. What majority of the country can do is to enforce extreme measures to regulate bitcoin, which will indirectly hinder bitcoin growth.

However, my major concern is about the Bitcoin City. This project might indirectly be promoting centralization of bitcoin or bitcoin users, miners etc.
The logic could be that whenever there is an attack on bitcoin, it will be easy to locate the city of bitcoin and unleash mayhem. The enemies of bitcoin will then intensify their efforts to hunt down the bitcoin city.
Remember, bitcoin is safe on blockchain but bitcoin users and hardwares are not secured by blockchain. They are prone to damages.

The logic says this could even get worst if bitcoin mining load goes to EL Salvador and all the other countries revoke from the mining operations or lets say they completely ban the use of bitcoin. There would be only one country left to mine the coins and use them and thats El Salvador. The thing is, they are using it as the legal tender which means whole thing is official and by few years they will have almost all of the population of their country using it.

Imagine for a sec if other countries started to pull of from the crypto space for X reasons then the whole money that is invested into crypto will be sold off and El Salvador would be buying it as there would be no other buyer of the same.

What will happen to their bonds by then? The value will decrease dramatically causing huge inflation in the country.

Seems terrific idea to go to the sink.

A few more information on the venue where the bond should be traded:

Bitfinex launches new exchange for trading tokenized equities and bonds

Bitfinex opened a new exchange dedicated to tokenised assets, both equity and bonds, named Bitfinex securities:


In the article it is well explained the unique feature of this platform is the possibility to issue new token, not only trade existing ones. This allows customers handle trough BS the whole life cycle of their digital tokens: issuance, trading, settlements, payments, redemptions.

One very important point of this is the fact that BS will be based in Kazakistan, and regulated by the local financial authority:



According to Paolo Ardoino’s statements, Bitfinex believe this is a positive choice:


I have some doubt about this statement. I think they had to apply to Astana because it the “best of the available countries” where to register.

The problem is many potential clients will have problems using that exchange:


A lot of customers simply won’t be able to directly access that exchange. They will have to operate trough subsidiaries, risking sanctions from the regulators, or trough introducing broker-dealers, or even using wrapped bonds.

Then a couple of observations immediately raise to my mind:

• why on Earth a financial investor should embark on such a difficult task of buying that bond, instead of buying directly bitcoin and an USD bond?
  
• is the current turmoil in which Kazakistan has fallen recently hindering the plan for the issuance?

I guess that this "bitcoin city" thing has been tried so many times but usually since we are a global bunch and not something that is we do in just one place, that doesn't work. I mean usually there isn't enough population in just one city to build something like that, even when you consider a nation like USA, if you build a city somewhere, then you are expecting everyone around the USA to relocate there and why would they? Coinbase is fine in California, why would they leave? Gemini is fine in New York, they won't budge. So all in all when we are talking about even a much smaller nation then it becomes even harder to build something like this only because of lack of population.

My guess is most of the majority of bond buyers will be in bitcoin

@fillippone is one of the reasons I fell out of love with travelling.
You can be in your home country and be more informed than the citizens of another country with this kind of detailed research and information.
The Bitcoin legal tender decision and the Bitcoin related bonds project if well managed will surely I no distance time raise the financial situation of El Salvador. They have taken the early spot on the queue, I am so much convinced that many giant countries will join pending the success of what I will  can El Salvador bitcoin experiment. The world is watching.

Our presence and knowledge in this forum should not make us think that bitcoin is an easy investment. Starting from buying, securing to investment aspects of bitcoin is quite complicated. There are so many laymen in the society who wish to invest in bitcoin, but due to the lack of knowledge of it, they are restrained. It is not advisable to invest in what you do not understand.
This is the reason they can be comfortable to buy something related to it.

Take for instance;
I want to invest in Bitcoin but I am unsure how to go about it. Knowing too well the research prowess of @fillippone, I saw him open a bitcoin related bond or investment. I will simply trust him because of his deep knowledge in the project.
That is how the citizens trusts her government. There's a level of comfort when the government decisions fail than when an individual decision fails.
My major worry is that with the level of interference by the US, if president Nayib Bukele exists, will there be continuity of the bitcoin projects? Time will tell!

El Salvador is adapting their legal system to ease the issue, circulation, and management of the Volcano Bond, according to Reuters:

El Salvador plans raft of legislation to cover bitcoin bond issue


Of course, they are dotting the i's and crossing the t's to make sure they don't shoot on their own foot with this issue, which will be closely monitored from abroad, potentially setting up a new paradigm for other sovereigns.

Actually the case is bitcoin don't need them they need profits.They have seen so much profits simply by investing the people's funds into bitcoin and the example is they buying each dip and publicly giving statement about the same like they holds around 1120 bitcoins or more at this time so they planning something big to generate more profits for the state or say for themselves at rational viewpoint.

What I am saying is that I struggle to see a rationale, besides cheering for El Salvador, for buying this bond.

From an economic standpoint of view, it makes no sense.

I even tried to express my concerns to Samson Mow:



I think the answer is quite elusive.
I really cannot see anyone wrapping a digital bond in a traditional fund. Why anyone would do that?

Of course, this doesn't mean it's a bubble. But as you say, Bitcoin doesn't need that to succeed.

No. I didn't say anything about any bubble. All I said was that buying the real deal is the way to go, not derivative things that you don't know what they are and may get you fooled because of too many hidden details.
As simple as that.

It's not nice to put as other's saying things they didn't. And this bitcoin vs .com crap is so old one could have been reading more since it was "launched".

So you are thinking that this will be another bubble like dot com that we have seen earlier in this century. It is true many countries have legal issues with BTC so people want to invest in products related to BTC. But as long as it has a working product behind it and it contains value there should not be a problem. Still, It is not the same as buying BTC and won't serve the purpose of BTC.

An article on the Volcano Bond appeared on Yahoo news today:

Yahoo Finance
Why Bitcoin bulls still think $100K is in the cards despite ugly end to 2021

Avoiding commenting the clickbait title, we have a few interesting lines on the bond, something we know, something we didn't.
Something we knew:


Something we didn't know:


I guess this is exactly the true challenge of this bond.
While having the first issuances of this bond being fully covered by the "bitcoin investors" (whatever this means) will be pretty trivial, the true challenge will be about opening the market toward true "institutional investors", the ones that are relly capable of moving new inflows into the market.

My Guess is that the vast majority of bond-buyers will be in BTC.
I think they won't have any problems having a Bid to Cover Ratio (total demand of the bond over the total issued amount) around 2 or 3.

There is just too much support from whales and the overall community.

The true challenge will be the onboarding of the more traditional finance, who will have huge difficulties onboarding Bitfinex, not exactly the most traditional institution friendly exchange.

Awesome thread !!!

How do we get involved in this and how we can buy ?

Also how citizenship by investment works?

is there roadmap for completion of the actual city?

Thank you!!!

Amazing topic fillippone!
You know what currency will be used as soon as you see that Bitfinex exchange and Liquid network is involved in this, saying that USD, USDT and BTC will be used for funding.
Maybe we can expect to see sudden and huge inflow of USDT coming soon for funding, after being freshly printed by Bitfinex printing machine 

I have a strong feeling that this project will fail because the costs will prove to be higher than anticipated, there will be lots of small problems that would together slow things down significantly, and there will also be political factors, both from inside and outside of the country. Not the first "dream city", not the last.

Why not take an existing city and make it a special economic zone, why should it be a brand new city? Just because of the volcano mining hype?

Of course, and I also think those two will diverge a lot although they are supposed to be correlated. My opinion is clear, that city will not be built with that little amount of money and it will not serve as a cash cow on its own, it's going to lose money for decades.

The bonds, well these are way trickier.

Of course, no matter how they sugarcoated the plan behind it's simple and obvious, you use investors money to grab more bitcoins and at the same time, you pump the price for your own assets (both Salvador and Blockstream and other involved) and then simply wait for 10 years if Bitcoin does an x10 everyone is happy if not, that's all folks. I'm not sure about the investors looking for these, yeah, some still can't get access to physical bitcoins, some don't want physical bitcoins, but these bonds are at this point the most roundabout way to get something that is bitcoin related than everything else, and we're looking at 10 years, much of the legal framework can change in a year, why would you run head-on into this, no idea. But that's the part of getting the money, who knows, maybe they will get it all in one hour, and then, we wait!

Everyone that will put his money into these will look more at the bitcoin price than what's really happening in Salvador, you're not betting on the Salvador economy with it you're betting on Bitcoin, even if Salvador defaults if BTC rises to xxxx you're in the green.

Yeah, and no doubt that's why their credit rating is so deep in the crapper that their bonds are considered junk.  Still, if nothing else I applaud El Salvador for doing something so bold with bitcoin.  I'll stop the applause immediately if and when any evidence of corruption or broken promises starts to appear--and something tells me that said evidence will pop up eventually. 

Maybe, but I'm wondering what those foreign investors would turn the city into.  It might be worse than whatever it turns out to be with El Salvador running it, though that's yet to be seen.  And I am very curious to see what this "bitcoin city" looks like when it's fully up and running.  I guess if nothing else it'll be a neat social experiment, though the cynical side of me is betting that it won't work nearly as well as planned.

Indeed this thread is quite different from my previous thread, which was aimed at breaking the news of the first bitcoin city, this thread is rich with wider information on the El Salvador Bitcoin city. Am glad to see the details I have been searching for on this thread.
https://bitcointalksearch.org/topic/m.58492824

Seriously man appreciate your efforts for this detailed thread about this information which can enlighten all of us about this El Salvador new Bitcoin city as many members would not be able to collect so much information about it easily but you have made it simple through this huge informative wall of text which are more of facts by the way.I have bookmarked the same and will share it with other also.Keep up the work man.

Exactly if you want to invest in something you should directly do the same instead of buying something related to it.They makes no sense to me as well because suppose you are having $2000 worth of bitcoin with you safely stored  in your hardware wallet the returns would be immense in short period of time if you have patience to hold over all those years but on the other side you buy these volcano bonds which are something familiar to the Gold bonds and they are centrally backup which can make them do the changes anytime like the Gold confiscation of 1933 so why people go this way instead of doing it directly?The road that leads straight is sometimes better than covering extra miles to reach the same destination.

He is old renowned author in publishing this books on the forum and the he publish his everything you were afraid to ask editions for members of forum and they are well liked



I think the next elections in El Salvador are going to be conducted in 2024 and the only in the last few months the supreme court made an official order which makes him eligible running for re-elections and the decision was opposed by US government, right group and opposite parties.Considering his past elections :


But after the Bitcoin adoption there were many revolts against him as the small merchants and some groups were not happy with his decision at all so we can foresee he losing some support among them but still there are chances he winning the elections and they are regularly investing in Bitcoin and i think they have accumulated 1220 bitcoins at this time but will see what will happen in next elections as the prices are definitely going to be high in 2024.