El Zonteaka Bitcoin Beach, El Salvador has many touristy sights, including El Zonte surf-town sites. There are also garbage barrels with the Bitcoin B, and signs at dirt-floor restaurants that advertise, Bitcoin accepted here. The Salvadoran government is now looking to expand this experiment nationally.The El Zontes Bitcoin journey started in 2019, when Michael Peterson, an ex-pat, received a proposal: A mysterious donor had a stash of Bitcoinbut instead he wanted it to be used to create a Bitcoin circular economics. Although Peterson loved the idea, others joined the fray only after the pandemic and the collapse of the town's tourist economy. It started by giving $35-$50 worth Bitcoin per month to 500 families in El Zonte. The cryptocurrency was soon accepted by local businesses. Around 90% of the residents use Bitcoin regularly. Strike is an app that allows you to send international Bitcoin transfers at a fraction of the cost. This is crucial for El Salvador, which receives nearly $6 billion annually in remittances each year from Salvadorans living in America.AdvertisementAdvertisementAdvertisementEzra Fieser from Bloomberg recently spoke to me on Friday's episode of What Next. She discussed what happens when one beach town becomes a crypto-utopian utopia and makes it national policy. This conversation has been edited for clarity.Lizzie OLeary. One thing you mentioned in your story was that Bitcoin Beach is a place where people are trying to solve problems. Let me know a bit more about their problems.Ezra Fieser - I met a woman who owns a small pizza place and she said she had six children. Four of their children have immigrated to the U.S. They were consistently sending money to her before the project. It was a daily struggle for her to travel to the nearest bank or office to collect the money. She had to pay a large fee and then leave her business. She began using Bitcoin, and was able to save so much she started using it to send money her child in the U.S.Wow.AdvertisementAdvertisementInstead of getting money back. This is just one example of the remittance problem. It also includes the travel time to pick it up and the associated fees. These organizers are trying solve the problem by using Bitcoin to make these transactions easier.Your article covers Latin American economies. There have been many financial crises in Latin America, with currency fluctuations, inflation, devaluation, and other central bank interventions. It is possible that there is something in Latin American's financial history that makes it more suitable for crypto experiments.As you pointed out, the region is characterized by volatility in its currencies. This makes it easy for people to experiment with crypto. El Salvador was dollarized 20 years ago, which is what makes it interesting. It is also a benefit in crypto terms because no one is there to protect the local currency.AdvertisementThat's right. It doesn't matter. It's the U.S. Dollar.Yes. These other countries have their own currency, even though they may experience extreme volatility like Argentina. There is more potential for experimentation with crypto than there is in more developed countries.AdvertisementPresident Nayib Bukele submitted a bill to Congress in June to legalize Bitcoin in El Salvador. El Salvador became the first country to legalize Bitcoin with 62 of 84 legislators voting in favor. This means that taxes can now be paid in Bitcoin, and companies must accept it if they have the technology. However, the government has stated that it will establish a $150 million cash fund to allow people to exchange their Bitcoin for dollars. Let me know a bit more about Bukeles embrace for Bitcoin.AdvertisementWe know this about Nayib Bukule: He is a younger president. He is now 39 years old. During his political career, he had really disrupted El Salvador's political system. He was once mayor of San Salvador. After being kicked from his party, he started his own. He tweeted that he would use Bitcoin in 2017, when he was San Salvador's mayor.AdvertisementHe has a strong pro-Bitcoin presence on social media.Yes. From talking with people in government during my time there, I learned that he and others in the party had held Bitcoin for some time. We also know that he closely followed El Zonte's progress at Bitcoin Beach shortly after it started. He was very interested in what I saw while I was there. He understands how important it is to be the first in such an endeavor. But, it was still unclear when he would do it.AdvertisementDo you think it is possible to gauge the appeal of Bitcoin to individuals across the country?The announcement sparked a lot of interest. You saw downloads of Strike and Bitcoin Beach apps increase tenfold. Michael Peterson said that transactions started to increase after the announcement, even though Bitcoin's price had fallen. There is clearly interest.You have said that it is unclear how this interest will translate into reality. El Zonte, a small town that has received money from a mysterious donor, and an app specifically for Bitcoin, is not surprising.AdvertisementAdvertisementAdvertisementIt will be much harder to launch something as successful in some communities of El Salvador because you don't have the other elements. You won't find as many tourists in these small towns of El Salvador. El Zonte might feel more isolated than you. However, banks and other infrastructure are still available to you. Because of all the other elements, El Zonte's experience is quite unique. To do it across the country, you will need a lot of effort from both the government as well as people like the ones who work out at Bitcoin Beach.AdvertisementBitcoin's volatility can reach up to 50% in just a few months. It seems risky to use the dollar as your reserve currency, and instead use Bitcoin. What did the Bitcoin evangelists have to say about that?From the moment they started to really start in earnest, until my time there, there were some dips, momentary dips but it was actually up six-fold or sevenfold from the previous year.AdvertisementEverything is going well?Everything is going well. It's easy to convince people to use Bitcoin. One day it is worth $500, and the next month its worth $800. A podcaster was there that week and said, "It's cool when it goes up to $30 or $50. But what about when it drops $20 or $15?" I don't think anyone I spoke to said it was smart for you to keep everything in Bitcoin, whether you are the owner of the pupusa or other shop. They recognize volatility is a risk so they say, "Take 10 percent, Take 15 percent, take what you want, and then put it in Bitcoin." You'll still be using dollars.AdvertisementYou say it and you mention someone who saves a bit and then watches the price rise. What happens to them when Bitcoin falls?Elon Musk's tweet about Tesla not taking Bitcoin was posted the last day I was there. It had been stable that week and I was like, Oh, this week is unusually stable for Bitcoin. But then, in just a few days, there was a drop of 8 to 9 or 10 percent. This will be a big question for El Zonte, not only in terms of their success, but also for El Salvador, who is trying to implement this in this period with higher volatility and even an extended down cycle. It will be interesting to see how fast they can get people to take it up.AdvertisementAdvertisementThis is the story you have.People who are involved in this project are already Bitcoin believers. I believe that there is no way for them to go back. People who have been exposed to it locally over the past couple of years think they've gone through the same process. They think they see it as a long-term investment. It will be part Bitcoin and part dollars.Future Tense is a collaboration between Slate, New America and Arizona State University. It examines emerging technologies and public policy.
