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The Salvadoran seaside town of El Zonte is visibly poor, with dirt roads and a faulty drainage system. But in a way, he’s ahead of the rest of the country: he has bitcoin.
The tropical surf spot’s basic infrastructure offers insight into the potential pitfalls of nationwide popularization of bitcoin for payments and savings, after Congress passed cryptocurrency as legal tender last Wednesday, a world premiere. Read more
Take Zulma Rivas. The 38-year-old mother-of-three started accepting bitcoin payments last year for bags of cut fruit she sells on a platter to tourists, in an experiment called Bitcoin Beach to make the city one of the first bitcoin economies in the world.
President Nayib Bukele cited Bitcoin Beach as the inspiration for his drive to adopt cryptocurrency nationwide. The city’s use of a platform called the Lightning Network to enable smaller transactions has helped overcome some of the technical and practical barriers to using bitcoin as currency, according to the founders of Bitcoin Beach, which could be useful on a larger scale.
But for Rivas, money is king. She rarely uses bitcoin, she says, because like many in the city, her damaged smartphone struggles with the payment app. When Reuters visited last week, the device was broken. Regardless, she often lacks data on her prepaid contract.
Then there’s the internet connection, notoriously spotty in rural areas like El Zonte, which is 49 km (30 mi) southwest of San Salvador, the capital.
A 2020 study by Microsoft and the Inter-American Development Bank found that El Salvador had the second-lowest internet penetration rate among 20 countries in Latin America and the Caribbean. At 45%, connectivity was only weaker in neighboring Honduras. In rural areas, barely one in 10 people has access to the Internet.
Oscar Picardo, director of science, technology and innovation at the University of Francisco Gavidia, said he was excited about the potential of bitcoin to provide poor Salvadorans with an alternative to banking, but that the experience El Zonte was too limited to give him confidence. could work nationwide.
“It’s like a mirage,” he said. “The digital divide is huge, internet access is limited for many poor families and there are other priorities and needs,” Picardo said.
Education and training would be needed to ensure that people are not at risk of fraud when handling the new currency, he said.
Dania Gonzalez, who heads the Salvadoran congressional finance committee, admitted during the bitcoin legal tender debate that there were gaps in internet service, but blamed previous governments.
“This government is trying to reduce the divide, by providing computers with Internet access to communities in the provinces of our country and by training teachers,” she said.
BITCOIN FOR SHAVED ICE
The economy of El Zonte depends on the flow of tourists, especially those who come to surf.
The businesses are small, some set up in palm tree huts. The water does not always flow. The US government is helping to build a sewer system and a wastewater treatment plant.
Despite the rudimentary infrastructure, three young Salvadorans embarked on the Bitcoin Beach project in 2019 supported by Californian Michael Peterson, after an “anonymous donation” of bitcoin.
Salvadorans say the project has changed the lives of El Zonte residents by enabling them to save, invest and earn a profit in a town with no bank branch nearby. During the coronavirus pandemic, bitcoin releases into the local economy have helped people get through tough times without work.
Last year, Peterson told the Go Full Crypto podcast that 90% of the city’s families of 3,000 completed a transaction using Bitcoin, with a boost from the pandemic. He said the young people in the city were more comfortable with it than their parents.
“You showed it’s not just for the rich. I mean, it’s for everyone,” Bukele said on a Twitter Spaces chat hosted by bitcoin advocate Nic Carter and attended by actors. industry, including representatives from Bitcoin Beach last Tuesday, as the law was debated in Congress.
“You are the pioneers here,” he said.
Bukele worked on bitcoin adoption with American Jack Mallers, CEO of Zap, who created an app called Strike to make it easier to transfer money from Salvadorans in the United States to people at home.
Mallers representative in El Salvador, Renato Salazar, who is also involved with Bitcoin Beach, said the project in El Zonte, which has helped fund trainings and workshops, is aimed at education and empowerment, not l ‘enrichment of people.
“The shaved ice cube seller can now be paid via bitcoin,” Salazar told Salvadoran television last week.
Handing out bags of pineapple, watermelon, mango and cucumber to customers at a beach hut, Rivas insisted that many of his fellow vendors still prefer the US dollar, the currency of the poor country of America. central since 2001.
Blanca Ponce, 30, who makes tortillas by the beach, said she doesn’t accept bitcoin because she doesn’t make enough money for a smartphone or internet data plan. She also fears financial risk.
“I find it very difficult to take the little that I earn and put it into something and not know if it’s going to grow,” said Ponce.
Our Standards: The Thomson Reuters Trust Principles.
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