Bitcoin as legal tender: report from El Salvador
Bitcoin in El Salvador: Success or failure story? Only time will tell.
I was streaming the “Bitcoin Miami 2021” conference when the law to make bitcoin legal tender in El Salvador was announced. Experiencing that moment live, I immediately felt like I was witnessing a historic moment. The first thought I had was “This is just the beginning, this is just the first country”.
But, immediately, I realized that I knew nothing about El Salvador. I didn’t know its history, its culture and I could barely point it out on a map. I never would have imagined that, a little less than a year later, I would decide to first make a “long stopover” there and then spend an entire month in the country.
But let’s start from the beginning.
The bitcoin law
After being announced by President Naiyb Bukele on stage at Bitcoin Miami 2021, the bitcoin law was subsequently brought to parliament and passed on April 8, 2021, making bitcoin legal tender in El Salvador, along with the U.S. dollar.
It was a proposal that divided public opinion, between those who called President Bukele a true pioneer, who could see El Salvador becoming the new Singapore of Central America, and those who attacked him saying that he plays with his country’s money, that bitcoin is too volatile, and it will never be a currency.
Personally, after studying the history and economy of El Salvador, I realized that Bukele had nothing to lose. He could definitely boost the economy and tourism of the country, and if he did well, El Salvador could become a powerful country like Singapore and get into the history books—but maybe he’s already in them.
The idea and the mission
The idea was born during a lunch in Buenos Aires between me and my girlfriend Becky. We were talking about El Salvador, about the fact that, despite the law already having been passed a few months ago, we knew very little about what was going on. The only videos circulating were of people paying with bitcoin at McDonald’s terminals.
The idea was to go there and discover the country, a country that 5 years ago had a record high number of homicides, a country that was in the hands of gangs and that has always had a bloody history of massacres and abuse.
We wanted to know how many people use bitcoin among the common people, how the prices are displayed (only in dollars or also in bitcoin), how was it possible to pay for your groceries in bitcoin given the high costs and slowness of transactions in the bitcoin network—but, most of all, we wanted to understand the kind of change the country is going through and how this law is affecting it.
Our idea was to go there in person to find out a bit more, and an even bigger dream was to make a documentary film about it. For this reason, I instinctively wrote a message to my friend Uptin, a former CNBC journalist who now has his own YouTube channel, which I closely follow. Lately, Uptin had been covering very interesting and related topics, such as inflation in Lebanon and Turkey, so he seemed an even better fit to join us in our dream to discover the country.
After a few days, I realized that I wasn’t the only one who had this idea. Two people from Bitcoin Italia Podcast (bip) were about to embark on a 45-day trip to El Salvador trying to live only with bitcoin, without using dollars or credit cards.
One half of this expedition, Laura, is a girl I had already met during an event in Lisbon so I got in touch with her to see how they were doing and get more information.
Reading the Bitcoin Italia Podcast blog during the early days of the mission, a blog that I recommend everyone to read, I realized how the adoption of bitcoin was definitely not as simple and immediate as I was picturing it in my mind, but, still, I wanted to go and see for myself!
The first week: living using only bitcoin
After my adventure in Argentina, I was headed to Mexico, but decided to make a stop in El Salvador. It was the last week of my Bitcoin Italia podcast friends’ experiment using only bitcoin, and I really wanted to understand from them what they had experienced during the last month, get some experience, and, of course, live only using bitcoin.
Buoyed by their experience, especially in the first few days, I had to make much less effort while looking for places or people that accepted bitcoin. In fact, at the airport, I was picked up by a driver, Napoleon, who I had contacted on Twitter. Napoleon calls himself the “bitdriver” and he accepts payment in bitcoin and is an enthusiast about the cryptocurrency, a topic we talked about throughout the trip to El Zonte, the famous bitcoin beach. Although his first impressions of the bitcoin law were very positive, especially after I told him about the situation in Argentina, where citizens can’t even change their Pesos into other currencies without state control, he too has some concerns about the events that led to this law. First of all, President Bukele’s very first announcement was made in English, at that conference in Miami, so it seemed totally not intended for local people, who speak Spanish and were not in Miami. Nonetheless, he’s hopeful about the future of Latin America, and he recognizes the potential of this land and its people, and I can’t help but agree with him, especially now that they’re all getting a little bit untethered from U.S. political oppression.
Napoleon is also part of an association, Mi Primer Bitcoin, which is dedicated to giving free classes about bitcoin to local citizens, starting with the basics, to promote the culture in the country and make sure that people from every background can understand this technology and benefit from it.
When I arrived in El Zonte, it was already dinner time, but first I checked in at the hotel that I had already contacted via Whatsapp and made sure they accepted bitcoin. My second bitcoin transaction in less than an hour, I was quickly getting used to it.
Riccardo and Laura from bip took me to a local pupuseria. They also accepted bitcoin and have a sign to let people know.
I started to get to know them better personally and listened to their tales of what they have experienced in the last month, even though I had already avidly read their blog (by the way, I highly recommend you to read it)! The conversations continued until late in the evening. Two local guys in the hotel who had heard us talking wanted to have their say, and they were very skeptical about bitcoin, especially the combination of bitcoin and politics, but, anyway, they bought some bitcoin!
El Zonte is called bitcoin beach because everything that led to today’s current bitcoin law started here in 2019. In fact, an anonymous donor began to donate bitcoins to make this place develop and create an economy centered on bitcoin. The famous Hope House was built here, with the money fromthis donor. This is a school that gives free classes in English, computers, and bitcoin, especially to younger people. To this day, teachers’ salaries are still paid from donations.
This place was starting to enchant me. It could very well be Bali 30 years ago, without mass tourism, but with a lot of tranquility and many surfers.
In my explorations, I also found some places that do not accept bitcoin, although they are limited. Riccardo and Laura assured me that, in the rest of the country it is not like that at all. It is very difficult to find places that accept bitcoin anywhere else, but, at bitcoin beach, the situation is different!
The second night, we realized that the pupuseria closed at 8:00 p.m., and there were no other restaurants open, or at least restaurants that accepted bitcoin, so we went to bed without dinner, or at least with only a couple of beers and chips since the little kiosk did, indeed, accept bitcoin!
After the tranquility of El Zonte, the following days were more intense. First, we went to San Salvador for a meetup where Max Keiser and Stacy Herbert, two longtime bitcoiners and now main exponents of bitcoin law in El Salvador, were also present. During the evening, I met a lot of expats but also a lot of locals who have realized the potential of their country. Unfortunately, this group is still in the minority, but they are working hard for the rest of the population.
I spent the following days in Santa Ana, a small town in the northwest of the country full of markets and nature. Here, the adoption of bitcoin is definitely behind compared to the capital or the bitcoin beach, but, following the advice of those who had already been there, I managed not to skip a single meal!
On my last day, I went back to San Salvador and did a tour to understand the history of this country even more. El Salvador was often plagued by wars and murders, and one of its most famous “heroes” that emerged was Monsignor Oscar Romero, to whom the airport is also dedicated, a Catholic priest who often condemned the violence and injustice that existed in the country because of the internal conflict. One day, he was assassinated while preaching mass, making him a martyr and a role model for citizens who were also exasperated by the endless conflicts.
El Salvador is one of those places that sucks you in with its charms. In fact, Riccardo and Laura, at the conclusion of their mission, decided to stay another month here in El Salvador, this time with the exception that they would use dollars to be able to visit those places they were originally denied access to! But, for me, it was already time to leave after an intense and beautiful week.
The return: shooting a video with Uptin
My trip to Mexico was immediately interrupted by an email from Uptin, who read the email I sent him from Argentina and started to seriously consider my proposal to shoot a documentary about El Salvador. It was time to pack my bags again and return to a country that I sincerely wanted to explore more.
This time I was joined by Becky, the one who first had the idea to explore this country and film the adoption of bitcoin. Upon our arrival, we realized that the car we rented was much too small for 4 people and their suitcases, so, as experienced backpackers, we decided to leave our big suitcases in a hotel in San Salvador and travel only with a backpack.
Uptin and his cameraman Dylan joined us the next day, and we set off in the direction of the beach, this time a beach called El Tunco, 15 minutes from El Zonte. We immediately realized that El Tunco is a place with much more life, tourism, and restaurants compared to El Zonte. In El Tunco, the adoption of bitcoin is widespread, and there are restaurants that offer a 50% discount to those who pay in bitcoin. We later understand that they are sponsored by Strike, a U.S. app that reimburses them for discounts made to customers as a marketing strategy.
We also went back to El Zonte to film the Hope House, and we met many more crypto enthusiasts. Some of them were even filming a documentary on El Salvador, and they are not the only ones, since, besides us, many YouTubers have come here in the last few weeks or will be coming soon. I’d say bitcoin tourism is taking over!
The stops we made this week were similar to those from my first time. We event went to San Salvador the next day and attended another meetup of the association Mi Primer Bitcoin along with a visit to the local market. We also made the inevitable stops at McDonald’s, Starbucks, and other fast food chains to film the different and much more advanced technologies that these multinational corporations have created to when handle the bitcoin payments.
We ended the tour, and the documentary, in Santa Ana, where we took advantage of the quiet town to meet friends and start sorting through all of our footage. It was already time to say our goodbyes. For my part, I’m really grateful to have participated in such a project and to have seen up close the life of a successful Youtuber like Uptin.
By the way, you can watch the full documentary here: https://www.youtube.com/watch?v=iAQWvhn-lWg
The last weeks
I spent the next week, my next to last, with Becky, driving around a bit, enjoying the beautiful natural scenery that El Salvador has to offer, including volcanoes, lakes, and beaches. We wanted to take time for us, in order to relax and enjoy this spectacular country. At this point, paying in dollars or bitcoin didn’t matter. However, the curiosity to ask every merchant if they accepted bitcoin was always there and so we kept asking and trying to pay in bitcoin wherever we could.
My last week was all about me unplugging and relaxing, reading books and writing this article. Becky left and I stayed in El Tunco. The atmosphere in El Tunco is very peaceful, life is very slow and simple, just what I needed before my next trip! Two events caught my attention. On Tuesday, there was a meetup where many Salvadorans gathered to talk about bitcoin, the state of adoption and the numerous job opportunities that bitcoin is bringing to the country. Of course, there were also many non-local people who were there for the same reason.
My adventure in El Salvador ended with an event organized by Max Keiser and Stacy Herbert for Valentine’s Day called “Bitcoin is for LOVERS … of economic freedom” where I had the opportunity to say goodbye to a lot of the people I had met in the last month, with the promise to see each other again soon—because I will definitely return to El Salvador. I want to see how this situation evolves and how the country will improve year by year with the adoption of bitcoin, plus I met some great people to whom I wish only the best for the future.
Post-trip considerations
At the end of the journey, it’s time to put ideas together and draw conclusions, even temporary ones, given that this law was enacted so recently that it makes no sense to judge it yet. But it is interesting to take stock of the situation and understand what has worked and what can be improved.
First of all, local citizens, after the law was passed, all received $30 in bitcoin, and most of them converted it to dollars and immediately withdrew it through one of the many Chivo ATMs installed in the cities by the government. They didn’t know what bitcoin was or didn’t trust it. They saw its value fluctuating and preferred to still hold their old dollars.
One thing that everyone agrees on, and I also strongly agree with this point, is that this $30 given away like this did not help anything. It was like a Christmas present or a bonus income for the citizen, but it did not improve the conditions of the population or their understanding of what was going on at all. What the citizens are actually asking for precisely is education, only with that will they progress, only with that will they be able to understand the true potential of bitcoin and take full advantage of it.
Then, there are those people who think that bitcoin is the currency of Bukele, the president, that he created it, and he can even print new ones. They heard about the project with the volcano! Here, again, the political hatred and the blind cheering led people to identify a currency absolutely unrelated to any government with a political party. Bitcoin is not politics, bitcoin is not Bukele, bitcoin actually frees people from politics.
In local markets, people don’t accept bitcoin or, if they do, it’s because they once downloaded the app to redeem the $30 and so, instead of losing a customer, they accept his bitcoins, which will be converted immediately into dollars and withdrawn from the ATM. Again, a little education could really make a difference. Throughout our journey in El Salvador, we tried to educate the people we met, and many local associations are also trying. In fact, many people are grateful, but we are still a minority. It will take time, but the path for bitcoin is being made.
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