The beach town of El Zonte set a trend that culminated in El Salvador’s parliament passing a bill to accept bitcoin as a legal tender – Copyright AFP / File STR
The beach town of El Zonte, on the Pacific coast of El Salvador, is a relaxed haven for surfers with white beaches, palm trees and a small population of 3,000 people.
The low-income community has no banks and only an ATM, but an innovative local economy based largely on bitcoin.
Posters mark the road and urge people to “pay here” with digital currency for anything from utility bills to a soda can.
The city has a bitcoin ATM, the only one in the country, where people deposit cash (the official currency of El Salvador) in a personal “wallet” of bitcoins.
They then use a smartphone app to pay bills, buy groceries or cut their hair with bitcoin, making a direct transfer online to the seller.
“At first, we didn’t know anything about it,” Celina Fuentes, who works at a small restaurant and shop in El Zonte, told AFP.
But introducing bitcoin “has worked very well. We took advantage when the currency increased in value … Now that the value is a little lower, the currency is still used, as we have found the experience to be good. ”
– “Significant risks” –
The Zonte set a trend that culminated on Tuesday with the passage of a bill by the El Salvador Parliament to allow the use of Bitcoin to pay for goods and services.
It became the first country to adopt the famous digital volatile currency as a legal tender, but the move sparked concern from the International Monetary Fund.
“Cryptographic assets can pose significant risks and effective regulatory measures are very important when dealing with them,” said IMF spokesman Gerry Rice.
But in El Zonte, bitcoin has been a lifeline for many.
Two years ago, an anonymous Bitcoin donor started a project called “Bitcoin Beach” to “bank the unbanked” of El Zonte and “return the power of governments and financial institutions to the individual” to the dependent economy of remittances.
The city has only one ATM: in a hotel complex with access reserved for guests. Few residents in El Zonte have bank accounts or cards.
Bitcoin Beach began by introducing cryptocurrency into the economy and getting local companies to accept it as payment.
Billions of satoshi, the smallest unit of bitcoin, have been issued through paid youth work programs, educational stipends, transfers to the elderly and poor, and community building projects, according to the Bitcoin Beach website.
Locals received assistance in creating cyber wallets and were shown how they can receive funds in bitcoins from relatives in the United States instead of using expensive and cumbersome cash transfer services.
Hundreds of businesses and individuals in El Zonte now use bitcoin.
For Hamer Valenzuela, a bricklayer who earns his salary in cryptocurrency, it had been “easy to adapt.”
“Personally, I’m no longer interested in the dollar, I don’t walk around with money in my wallet,” he told AFP as he took a can of soda for which he paid in bitcoins at the Mama Rosa store where Fuentes works.
The currency has found a particular appeal among young people and foreigners who run small businesses in the city.
– Bitcoin tourism and technology –
The popularity of Bitcoin grew under the coronavirus epidemic, with closed people being able to receive money and spend it without having to travel outside of The Zone to withdraw cash.
Since the president of El Salvador, Nayib Bukele, announced last week that he intended to take a legal course in bitcoins, people have been approaching El Zonte to find out how it works or invest themselves in bitcoins.
Between two and five visitors a day, the city’s only bitcoin converter receives more than 25, according to machine operator Jessica Veliz.
Informal trader Jose Rafael Morales traveled more than 100 kilometers to El Zonte to participate in the game.
“I have been investigating practically since the president announced the bitcoin news,” he told AFP.
“I made the decision to buy bitcoin, what I saved I invested in bitcoin.”
On Thursday, a bitcoin was worth about $ 37,000, nearly half of its high historical value reached in April.
Bitcoin Beach’s long-term goals include creating well-paying jobs from bitcoin tourism, attracting investment and turning the coastal region of El Salvador into “a hub for bitcoin-related technology companies,” according to the website. project.
“Our goal is for young Salvadorans to see a future that doesn’t involve having to make the trip to the United States,” he said.