El Salvador’s El Zonte is now commonly known as “Bitcoin Beach,” for being the first town to use cryptocurrency as a form of payment for services, products, and wages.
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El Salvador’s El Zonte is now commonly known as “Bitcoin Beach,” for being the first town to use cryptocurrency as a form of payment for services, products, and wages.
Juan Carlos for NPR
SAN SALVADOR, El Salvador – The President of El Salvador is betting big on bitcoin with his country’s coffers. President Nayib Bukele hopes to launch bitcoin-backed bonds to raise 1 billion dollars for country.
Bukele wants to raise funds through international crypto traders and to avoid his criticism in the United States, including at the International Monetary Fund.
Last year, Bukele made El Salvador the first country accept bitcoins as legal tender, right next to the national currency, the US dollar.
The bitcoin bond launch will mark another first of its kind. But while these moves were welcomed by crypto enthusiasts, they have raised concerns among detractors about the popular, unregulated asset market.
El Salvador’s finance minister had announced the launch would take place in mid-March, but on Tuesday he said it had been postponed because of Russia’s war in Ukraine and the volatility of cryptocurrencies, Reuters reported.
María del Carmen Aguirre talks about the benefits of using bitcoin and a digital wallet for her business, a convenience store named after her, in the beach town of El Zonte.
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They renamed it Bitcoin Beach
At El Zonte beach on El Salvador’s Pacific coast, María del Carmen Aguirre is a fan of the president’s crypto-backed schemes. A sign outside her small shop lets customers know that cryptocurrency is welcome to purchase. Signs like this have popped up all over this small Central American country.
“Thanks to my bitcoin income, I was able to buy a lot of things for my little shop,” she says, like a new grill for pupae, El Salvador’s signature stuffed tortillas and a new fridge. .
As three large cows swam across the sandy path outside her store, the 51-year-old grandmother says she’s not an early adopter like many here in the community that has since been renamed Bitcoin Beach. She waited until the president launched a legal bid for bitcoin last September.
“If I had come first, I could have bought a car with my hard-earned money,” Aguirre said.
A beachfront restaurant in the seaside town of El Zonte.
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Left: A sign informing costume professionals that bitcoin is accepted for payment in a large chain of gas stations. Other businesses including fast food chains also use digital cryptocurrencies. Right: The María convenience store accepts bitcoin and digital wallets in the beach town of El Zonte.
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Bukele Becomes World Crypto Star
This is the exact demonstration that President Bukele loves to encourage. He asserts bitcoin helps millions of people here who do not have a traditional bank account, especially those affected by high fees for transferring money from relatives abroad.
The 40-year-old leader, a voracious tweeter who prefers jeans and a baseball cap to a suit, has become a star among crypto advocates around the world.
Jaap Jan van Hengel said: “We like him because when you follow him on Twitter, he’s really funny – right? – with all crypto memes”. He and his brother Martin, both in their 20s, are visiting from the Netherlands. They say they can buy almost anything on vacation with bitcoin.
Brothers Jaap Jan and Martin van Hengel talk about using bitcoin in the beach town of El Zonte.
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“We wanted to come here to support bitcoin adopters … and to see how it works. It’s pretty cool,” said Martin van Hengel.
But despite last year’s strong economic recovery, El Salvador is having a real money problem. Bukele asked the IMF for a loan but negotiations broke down after the institution protested his bitcoin craze, quote risk for markets and consumers.
Undeterred, Bukele continued with the tie. He plans to use half of the proceeds for infrastructure, including what he calls Bitcoin City, a tax-free zone at the foot of an extinct volcano. He hopes new bitcoins can be mined there using geothermal energy from the volcano.
An advertisement for the Strike digital wallet, used in El Zonte, El Salvador, as a way to conduct bitcoin transactions. Through the app, users can buy and sell bitcoins or make and receive different types of payments.
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Analysts say “it’s a gamble”
But Jaime Reusche, vice president of Moody’s sovereign risk group, is among the skeptics that bitcoin can save El Salvador.
“It’s a terrible gamble. It will be the first of its kind worldwide,” Reusche said.
Moody’s estimates El Salvador may have actually lost as much as $22 million as the volatile currency recently plunged. Bitcoin has lost more than a quarter of its value since El Salvador’s legal tender last September, financial news site FX Empire said on Monday.
Reusche said that traditional investors are wary of Bukele’s speculative use of the National Treasury and other ways he is ruling.
“However, the president seems to be encouraged by the fact that his popularity remains sky-high in the country,” he added.
President Nayib Bukele of El Salvador gestures during his speech at the closing ceremony of the Latin American Bitcoin and Blockchain Conference at Mizata Beach, El Salvador, on November 20, 2021.
Marvin Recinos / AFP via Getty Images
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Marvin Recinos / AFP via Getty Images
Bukele is widely accepted
ONE CID Gallup polls in January and February listed Bukele as the most popular president in Latin America, with an approval rating of 85%.
“That’s because Bukele’s message was simple – that he overthrew the corrupt elite that looted the country,” said Alvaro Artiga, a political scientist at the University of Central America in San Salvador. “. “And he portrays all of his critics as former elites desperate to return to power.”
But there are also many critics who say Bukele’s rule has become increasingly authoritarian. Since taking office, he has fired independent judges and prosecutors, while cornering the Supreme Court with justices that have cleared the way for him to be re-elected in 2024, despite a constitutional ban. . He has also been charged Follow journalists.
NPR attempts to interview Bukele, his spokesman and several leaders of his political party were turned down.
Santos Antonio Franco Valle, 23, wears a shirt commemorating the day news broke about bitcoin becoming the legal tender of his country, El Salvador. He runs a convenience store in El Zonte.
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US officials also interested in Bukele sanctioned top assistants suspected of being undercover pay gang membersand some Congressman from both sides are concerned El Salvador’s use of bitcoin could hurt the US financial system.
Bukele returned fire on that last point, tweets“OK boomers… You have 0 jurisdiction over a sovereign and independent country. We are not your colony. Stay away from our internal problems.”
The state gave Salvador $30 worth of bitcoins to try
Bitcoin is still his big game and he has advertised it many times on national television.
But many Salvadorans are still reluctant to accept it. Many of them immediately cashed out the $30 that the government gave away in bitcoin last year to start using the cryptocurrency.
People get help with problems or setting up their digital wallets at a Chivo Wallet ATM. The Salvadoran government has offered residents $30 worth of bitcoin to use with the new digital wallet, although some Salvadorans say they take the money out instead of using bitcoin.
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Strolling along El Zonte — aka Bitcoin Beach — Laura Castro says she pulled out her bitcoins and took her mom to dinner.
Castro, a marketing student in her 20s, said she enjoys a lot of what the president does, especially building bridges.
But laughing nervously, she said, “it’s worrying that we don’t know what’s good for our country’s economic future.”
