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Bitcoin catapults businesses on a beach in El Salvador

EL ZONTE, El Salvador.

ANDn El Zonte, a Salvadoran beach popular with surfers for its intense waves, a non-governmental organization with the financial backing of an anonymous donor has promoted the use of cryptocurrencies to alleviate the poverty that afflicts its inhabitants.

Some 500 families of fishermen and farmers who did not have access to a bank account or electronic transactions became “small rural investors” and experts in bitcoin.

The El Zonte mini-bitcoin economy, 43 kilometers from the capital, emerged in 2019 through an anonymous donor. Supporters of financial change see it as a demonstration case of how digital currency could help in a country where 70% of the population does not have bank accounts.

President Nayib Bukele, who promoted the bitcoin law, claimed that it is a way to help the many Salvadorans who lack access to traditional banking services and a way to attract foreigners who have bitcoins to invest in El Salvador, the first nation of the world to make cryptocurrency legal tender.

Conceived as an alternative to government-backed money, bitcoin relies primarily on complex math, data-scrambling cryptography – hence the term “cryptocurrency” – lots of processing power, and a global ledger called blockchain, which records all transactions.

Last week at El Zonte beach, Hilario Gálvez, a worker, came to the María store to buy a soft drink and sandwiches. But he didn’t take out his wallet, instead he paid through an app on his cell phone.

The owner of the small store, María del Carmen Avilés, said that she is now an expert in bitcoin transactions.

When a client comes I ask him if he is going to pay with the application or in cash. Most pay with the Bitcoin Beach app. I look for it on my cell phone to charge them ”. The process does not take more than two minutes.

To the people who ask me if I recommend bitcoin, I tell them that I have won, but I have also lost, ” said Aviles. When bitcoin hit $ 60,000, “I won and bought this cold room for the store, but then it fell apart and I lost.”

REINFORCE SYSTEM

Román Martínez was one of the pioneers in the use of bitcoin in El Zonte. He said an anonymous American donor found out about the community projects through the nonprofit Hope House and started working with another American who lives in El Zonte. Hope House shares a building with Strike, a Chicago-based start-up that is enlisting with the government in launching bitcoin nationwide.

The Strike app is meant to empower people in all countries, expand the financial system to include those who have been excluded, and increase economic opportunity around the world, ” said Strike.

El Salvador has used the US dollar as its official currency since 2021, and Strike said adopting bitcoin “as legal tender will help reduce its dependence on the decisions of a foreign central bank.”

The adoption in El Zonte was slow, but it took off during the covid-19 pandemic, when the strict confinement measures.

Our donor made three deliveries of 40 dollars converted into bitcoins, for each of the 500 families in the community, and they were trained to use the application and now it is normal to buy with bitcoins, ”said Martínez.

The only bitcoin ATM works in El Zonte, which gives dollars in exchange for the cryptocurrency or takes dollars and gives credits in bitcoin.

Edgar Magaña, a 26-year-old young man, arrived from San Salvador to convert $ 50 to bitcoins. He inserted the dollars into the machine and was surprised to see only $ 47 in fractions of bitcoins credited to his account.

They took three dollars from me in commission, ”said the young man. “This is like in the banks.”

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