Right after I hopped out the back of a pickup in El Zonte, El Salvador, I recognized I wasn’t in an ordinary beach town. El Zonte’s welcome sign had two Bitcoin logos, its cafes offered 75% Bitcoin discounts and its trash cans sported the Bitcoin emblem. I’d been hitchhiking my way through the country’s west coast, enjoying its world-class surf conditions last month, and wasn’t looking for its Bitcoin epicenter. But somehow, I’d stumbled right in.
When El Salvador made Bitcoin legal tender last September, many — myself included — reacted skeptically. Nayib Bukele, El Salvador’s president, seemed to be YOLOing away the country’s treasure like a Reddit-addicted crypto trader.
Bukele bought millions of dollars worth of Bitcoin, complained he “missed the f***ing bottom by 7 minutes,” then Bitcoin’s price tanked, costing the country dearly. It seemed like a mess. But the reality on the ground, I found, is more complicated than the narrative. There’s a good chance El Salvador’s Bitcoin experiment works out, at least in some ways.
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Community Outreach Origins
The Bitcoin movement in El Salvador began in El Zonte when a California surfer named Mike Peterson received an anonymous $100,000+ Bitcoin donation for the town’s residents. Peterson had been doing community work in El Zonte for years and accepted the money with a mandate to get it in people’s hands. “We formulated a plan to start injecting Bitcoin into the community,” he told me. “And it kind of just exploded from there.”
Bitcoin took off in El Zonte for a reason: it was useful to its people. The first, most immediate benefit was it helped Salvadorians avoid exploitative remittance fees they paid on the $6 billion that friends and family outside the country sent back each year.
Less apparent, but perhaps more important, was that 70% of the people in El Salvador were unbanked, and a digital wallet would help them start investing. “The Salvadorian people don’t have bank accounts — now they do,” explained Roman Martinez, who works with Peterson in El Zonte. “People are buying an asset for the first time.”
After Bukele took office in June 2019, he caught wind of what was taking place in El Zonte and moved to make Bitcoin legal tender, compelling the country’s merchants to accept it as payment for their goods and services. The law went into effect last fall, turning El Salvador into the first country where Bitcoin is an official currency (the US Dollar works there too) and setting off the world’s largest natural Bitcoin experiment. El Zonte, where it all began, turned into a quasi-Mecca for Bitcoiners worldwide.
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Bitcoin’s Impact Today
For Bitcoin’s true believers, there’s a ton riding on the El Salvador experiment. If Bitcoin is to reach its full potential, it must be both a store of value and something people use to transact. And El Salvador is its crucial proving ground. “Its journey,” said Max Kaiser, an influential figure in the El Salvador Bitcoin scene, “is one that travels through its perception as being first a collectible more or less, and then a store of value, then a medium of exchange and then a unit of account, which is the same path all money takes.”
Alex Kantrowitz is founder and reporter at Big Technology, author of “Always Day One: How the Tech Titans Plan to Stay on Top Forever,” an on-air contributor at CNBC and former senior technology reporter at BuzzFeed News.