El Salvador's coastal town rides the crypto wave with surf and Bitcoin.


El Salvador's coastal town rides the crypto

El Zonte, on El Salvador's Pacific coast, is a laid-back surfer's paradise with white beaches, palm trees, and a population of only 3,000 people.

There are no banks and only one cash machine in the low-income neighborhood, but it boasts a pioneering local economy built in large part on bitcoin.

People are encouraged to “Pay here” with cryptocurrencies for anything from utility bills to a can of soda, according to signs along the roadway.

People can deposit cash US dollars — El Salvador's legal currency — into a personal bitcoin "wallet" at the town's bitcoin teller machine, which is the country's only one.

They then use a smartphone app to pay bills, buy groceries, or get their hair cut using bitcoin, which they send directly to the vendor via an internet transfer.

Celina Fuentes, who works at a tiny café and shop in El Zonte, told AFP, "At first, we knew nothing about this."

However, introducing bitcoin has been a huge success. When the currency's value increased, we profited... Even if the currency's value has dropped, we continue to use it because the experience has been positive.”

‘Significant risks’

El Zonte started a trend, and El Salvador's parliament approved a bill allowing bitcoin to be used to pay for products and services on Tuesday.

It was the first country to recognize the notoriously volatile digital currency as legal cash, although the International Monetary Fund expressed alarm over the move.

“Crypto assets can represent significant risks, therefore strong regulatory measures are critical when dealing with them,” said Gerry Rice, a spokesman for the International Monetary Fund.

Bitcoin, on the other hand, has been a lifeline for many in El Zonte.

In the remittance-dependent economy of El Salvador, an anonymous Bitcoin donor established a project called "Bitcoin Beach" two years ago to "bank the unbanked" of El Zonte and "restore authority from governments and financial institutions to the person."

The town has only one cash machine, which is located in a hotel complex with restricted access for visitors. Few people in El Zonte have bank accounts or credit cards.

Bitcoin Beach began by educating the public about cryptocurrency and encouraging local businesses to accept it as payment.

According to the Bitcoin Beach website, tens of millions of satoshi, the smallest unit of bitcoin, have been distributed through paid youth work programs, educational stipends, transfers to the elderly and destitute, and community construction projects.

Bitcoin is now used by hundreds of companies and individuals in El Zonte.

It had been "simple to adjust" for Hamer Valenzuela, a bricklayer who receives his paycheck in Bitcoin.

“I personally am no longer interested in the dollar, and I do not carry money in my wallet,” he told AFP as he sipped from a can of soda purchased with bitcoin at Fuentes' Mama Rosa store.

Younger people and foreigners running small enterprises in the community have taken to the money in particular.

Bitcoin tourism and technological advancements

Bitcoin's popularity surged during the coronavirus outbreak, as persons under lockdown were able to receive and spend money without having to leave El Zone.

People have been rushing to El Zonte to understand how bitcoin works or to invest in bitcoin since El Salvador's president, Nayib Bukele, stated last week that he intended to make it legal tender.

According to machine attendant Jessica Veliz, the town's lone bitcoin converter has grown from two to five visitors per day to more than twenty-five.

Jose Rafael Morales, an impromptu merchant, traveled more than 100 kilometers (62 miles) to El Zonte to participate in the game.

He told AFP, "I've been investigating practically since the president delivered the news about bitcoin."

“I decided to buy bitcoin, and I invested everything I had saved in bitcoin.”

One bitcoin was worth roughly $37,000 on Thursday, less than half of its all-time high achieved in April.

According to the project website, Bitcoin Beach's long-term goals include establishing well-paying jobs from bitcoin tourism, attracting investment, and making the El Salvador coastline region "a hotspot for bitcoin-related innovation businesses."

It stated, "Our goal is for young Salvadorans to see a future that does not require them to travel to the United States."

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