Bitcoin Economy in El-Salvador
It is no secret that the Covid-19 pandemic has brought along hardships for most of the world other than getting infected with the virus. The economy has been severely affected and continues to diminish even further as shops, markets, businesses and consequently jobs continue to be under lockdown. Although work from home is a thing now and people are finding ways to combat the virus, there is still little salvation for the labor class. Talking about El-Zonte, a small beach town which just over 3,000 locals call home has become a victim of the fallen economy. Present on the coast of El-Salvador, this used to be a great tourist spot filled with natural beauty and that relaxation vibe that attracted so many people before the worldwide pandemic struck. Now with people in quarantine and the tourism industry looking dismal, the El-Zonte community would eventually succumb as well and they would have if not for an anonymous hero & Bitcoin.
The starting point
The year 2019 saw one very unique moment take place. In the early stages of the year, an anonymous donor with a special place in his heart for the town stumbled across a forgotten thumb drive filled with Bitcoin. Originally purchased when BTC was worth about 10 cents each, he had stocked up on it and then forgotten until 2019. After finding out how much worth was in that drive, the donor spent days trying to open up the drive and finally succeeded. Instead of going with the trend of spending it lavishly, he decided to allocate a 6 figure multi year donation to the El-Zonte community with the ambition of making that vital change. The unnamed hero then started to meet up with people holding the same ambition but almost all of them wanted to cash out the Bitcoin immediately. This was something that the Donor wanted to prevent as his vision for the future of the beach town was something that included the use of Blockchain and Bitcoin. After striking a partnership with fellow Philanthropist Michael Peterson who also used to volunteer in El-Zonte, they began to plan out the initiative of creating a Bitcoin economy for the locals teaching them how to use it effectively. The project was labelled the Bitcoin Beach Initiative.
The Bitcoin Beach Initiative
With the objective of creating a sustainable Bitcoin Ecosystem, a proposal was drafted by Peterson for Bitcoin Circular Economy including remittances, tourism, small businesses and transport. Along with El-Zonte, Punta Mango, another community 3 hours away from the beach town was also injected with Bitcoin. With the biggest issue of Bitcoin being the transfer fees especially for small transactions, the Lightning Network was introduced making it faster and more cost effective for smaller transactions. Being a second layer payment protocol over the Bitcoin Network, it would definitely help in alleviating the transaction cost issues of Bitcoin. For keeping the Bitcoins secure, they used Wallet of Satoshi which works for on-chain and off-chain transactions. Now, the locals can pay bills, do small level maintenance’s and even buy groceries for daily needs on the lightning network.
Moving towards the future
With the youth heavily involved in the Bitcoin Beach Initiative, odd jobs such as repairs and recycling were great ways to transfer Bitcoins in exchange for work. These same Bitcoins would then be given to businesses in exchange for goods and the same businesses would outsource help from the community while transferring Bitcoin and hence completing the circle of Circular Economy for El-Zonte. Another Benefit for the youth of the beach town is that educational costs are covered for those wanting to increase their schooling. The local schools in the area end at the 9th Grade and those who want to continue learning more in High School & Universities are not only given Bitcoin as a means of covering their tuition but are also given BTC to overlook their transportation and lunch dues. Families who lost their jobs due to Covid-19 are compensated by a weekly remittance plan. Food and basic need stores have started accepting Bitcoin as well. Utilities are going to follow soon. Long term infrastructure projects are also outsourced and paid for in Bitcoin as the community strives to plan for the future.
The Training Regimen
As expected, Bitcoin and Cryptocurrency was an unknown to the locals and it came as no surprise that the older generations were reluctant to move towards the digital side of things when the proposal was first pitched to the public. The Youth however picked it up immediately as it gave them a chance to be more involved. They would be taught on how to complete transactions using Bitcoins as well as scan QR codes to get their deposits. The same knowledge would be transferred in between them making it a good strategy. Some locals have also chipped in with the initiative helping to make it pan out smoothly with great success. Jorge Valenzuela & Roman Centeno both believe that by investing in the education of the Youth and teaching them about Bitcoin will not only help support the families but also prepare them for the future in a world moving towards digital economies.
“Bitcoin has given them freedom”
With most of the users in El-Zonte not having bank accounts and the closest western union an hour’s drive away from the community, it takes a lot of money to use their services as well as pay for transaction costs. To prevent any more unnecessary spending, the Bitcoin Beach Initiative is also planning the inclusion of a new App called “Strike” which will connect the users Bitcoin wallet with the sender’s bank account making transactions from the US to El-Salvador easier and quicker without having to pay more for it. A Bitcoin ATM has also been introduced in the area. That speaks a lot since El-Zonte does not even have a regular ATM as of yet. With things going smoothly and in the right direction, Michael Peterson hopes that the Government will also get involved with this initiative making it better and promoting local charity as well. With the price of Bitcoin remaining around $9,100 at the moment and expected to go even higher, we can definitely see the locals in a much better condition than before!
