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An afternoon at Bitcoin Beach, the beach in El Salvador that accepts payments with cryptocurrencies

Merchants assure that with the rise of the crypto asset they have done very well and now they accept the currency in their establishments, which has allowed them to improve their quality of life

On a beach in El Salvador frequented by surfers, merchant María Aguirre says that it was "great" to have invested $2,200 in buying bitcoin four years ago because now, with the rise of the cryptocurrency, she has $19,000.

In 2021, El Salvador was the first country in the world to establish bitcoin as legal tender, at the initiative of President Nayib Bukele, who has also made happy accounts in recent days.

Bukele celebrated last week that the government accumulated 5,689 bitcoins, which totaled 406 million dollars, but few Salvadorans use the cryptocurrency, whose price has reached record levels above 72 thousand dollars.

"Today the rise has been great and I am very happy," Aguirre told AFP in her small business selling food and soft drinks on El Zonte beach.

With a broad smile, the merchant serves a customer who buys a soft drink and sweet bread in her "Mary Store", whose facade displays a small sign that says: "Bitcoin is accepted."

Located 58 km southwest of San Salvador, the beach is nicknamed "Bitcoin Beach" for having been the first place in the country that massively welcomed the use of cryptocurrency to make payments.

The place is a popular weekend destination, although it is not a cheap place, and among its three thousand inhabitants there are several foreign hostel owners. "Bitcoin Beach" is also the name of an application used in the area to make transactions.

The cryptocurrency also has many users on beaches near El Zonte, such as El Tunco and El Sunzal, but the situation is not replicated at the national level.

Life change

The house made of bricks and zinc sheets serves as a business and home for Aguirre. It is located on a narrow street, surrounded by other small businesses that also accept bitcoin in addition to the dollar, legal tender since 2001, when El Salvador eliminated its national currency, the colón.

Bitcoin has changed the life of this 53-year-old merchant, as it has given her "better economic stability", so she hopes to "grow" her business.

Aguirre has been able to buy a washing machine, stove, refrigerator, and furniture for the home and store thanks to his cryptocurrency earnings.

In El Zonte, people began using bitcoin long before Bukele legalized it on September 7, 2021, and the cryptocurrency is used to make many payments, even for the purchase of a soft drink or some eggs.

But this popular beach, where many Salvadorans and tourists go to ride boards over the waves, is an exception within the country. A survey by the private Universidad Centroamericana showed in January that 88% of Salvadorans did not use bitcoin during 2023.

Bukele introduced cryptocurrency in order to bankize a population that was mostly outside the financial system, but this situation has not changed much since then.

Profits and risks
In another part of El Zonte, on the side of a road, Blanca Castillo has a store selling artificial flowers and natural juices. She is also happy with bitcoin, as she claims that it has brought her "profits."

However, the 25-year-old trader warns that there is always the risk of losing.

"When you see that the value of the currency will drop, you feel like you are going to lose (...), you have to be aware of how the movement is" of the cryptocurrency, says Castillo.

In fact, at the end of 2022 the cryptocurrency was trading below $17,000.

Sitting in a chair in a small restaurant, its owner Rosalina Franco serves many customers who pay with bitcoin, mostly foreign tourists, every day.

"I can't use the phone to make transactions," so "what I charge in bitcoin I keep, I don't spend it, it's a saving," says the 70-year-old woman, who has "benefited" from the rise. of quotation.

When Bukele introduced bitcoin, he also wanted family remittances from abroad - a key component of the Salvadoran economy - to be channeled through digital wallets to reduce shipping costs, but that did not happen.

In 2023, only 1% of the eight thousand 181 million dollars in remittances arrived through one of the digital wallets, according to the Central Reserve Bank.

"What is clear is that people continue to use more traditional methods of sending (remittances) and this has a lot to do with people's distrust of the volatility of the cryptocurrency. And the accounts have not worked out for the government," independent economist César Villalona told AFP.


Bitcoin in El Salvador, a project that excites some and does not convince the majority

By 2022, the Salvadoran Government was expected to issue bitcoin instruments for $1 billion to finance the construction of Bitcoin City, but neither the budget allocation has been made nor the project has begun construction.

The adoption of bitcoin as legal tender in El Salvador promoted by the Government of Nayib Bukele to promote financial inclusion, attract foreign investment and improve the economy is a project that, three years after its implementation, has not yet convinced the majority. of the population, who rejects its daily use.

El Salvador captured the attention of the financial world in September 2021 with the adoption of the most popular cryptocurrency, without mass employment having been achieved so far, nor the expectations generated by an initiative criticized by some sectors for its opacity.

According to a survey by the University Institute of Public Opinion (Iudop), 88% of Salvadorans did not use the bitcoin cryptocurrency in 2023, and 48.8% disagree with public spending for its implementation.

The Executive has assigned 150 million dollars to a trust for the conversion of the cryptocurrency to dollars, of which 107 million have been used to purchase 2,381 bitcoins. In addition, it provides a $30 bonus to those who download the digital wallet.

Information on the use of these resources is handled with complete confidentiality by state agencies. The only official source are President Bukele's publications on the social network X (formerly Twitter).

“THE EVERYDAY USE OF BITCOIN HAS FAILED”

The Government's main bet was the adoption of bitcoin on a daily basis by citizens, but from the first months "we realized that (that) did not happen," economist Tatiana Marroquín tells EFE.

“Almost three years later, after analyzing and seeing the behavior of the population, we can say that this Government experiment has failed,” says Marroquín.

Another benefit attributed to this model was that it would be used massively to send remittances, but Salvadoran emigrants “have preferred traditional means to continue sending their money,” he details.

According to figures from the Central Reserve Bank (BCR), family remittances received through cryptocurrency wallets in El Salvador registered a drop of 34.5% in 2023 compared to the previous year and barely represented one percent of total remittances, calculated in 8,181.79 million dollars.

The financial inclusion that was intended with the use of Bitcoin also crashed into reality, due to “ignorance of the subject.”

The main challenge to consolidate the financial inclusion of Salvadorans is that the majority work informally and lack regular income. “He does not have access to savings or credit,” says Tatiana Marroquín.

“It is not simply about having an electronic wallet (…) El Salvador has had structural challenges for decades, it is the country that attracts the least foreign investment, the one that grows the least in the region,” a trend that has even worsened in recent years. years, he says.

“There is a large population in a situation of poverty, of economic vulnerability, that does not have the financial, social or mental space to get involved in the bitcoin game,” emphasizes this economist, critical of the use of public funds to encourage the use of bitcoin. and laws to facilitate the management of digital currencies.

“Although reality overwhelmingly says that it is not functional for the needs of the population, the Government continues to use funds and create institutions in a very non-transparent manner,” he states.

By 2022, the Salvadoran Government was expected to issue instruments in bitcoins - known as volcano bonds - worth $1 billion to finance the construction of Bitcoin City, a city project in the east of the country, but the allocation has not even been made. budget nor has the project begun to be built.

THE BEACH WHERE BITCOIN IS KING

Where the cryptocurrency has been successful has been on El Zonte beach, located in the central department of La Libertad, where bitcoin is widely used.

In that place, with a large influx of foreign visitors, you can buy anything with bitcoin, from candy to your hotel bill.

Bitcoin arrived at El Zonte as a project unrelated to the entry into force of the Bitcoin law, although legal regulations have promoted its use, Román Martínez, a resident of the place and a regular user of the cryptocurrency, explains to EFE.

“When President Bukele approved bitcoin as legal tender, he made a dream of many people around the world come true, that of many bitcoiners who dreamed of this (…), El Salvador has benefited a lot,” he says.

Bitcoin Beach in El Salvador inspires this paradise island that now uses BTC
Bitcoin Island is a territory in the Philippines that developed a circular economy around BTC.


A tourist destination several miles away from Latin America is reminiscent of Bitcoin Beach in El Salvador. In the Philippines, an island recognized itself as adept at bitcoin (BTC) inspired by that Salvadoran citadel, to offer lodging, food and tourism services with the first cryptocurrency as the protagonist.

Bitcoin Island (or Bitcoin Island) is the name given to Boracay, an islet within the Philippine periphery, in South Asia. It is a project that seeks to exalt the bitcoiner spirit on that side of the world and that has marked similarities with what is experienced in El Zonte, in El Salvador.

In general, it is a tourist site, with beaches, restaurants, hotels and other services. All payable with bitcoin, in an effort that appears to create a circular economy for itself on the Philippine islet.

On Bitcoin Island, which has been operating for at least four months, there are more than 100 businesses that accept BTC as a means of payment, according to the project developers themselves. That includes large hotels and souvenir shops, as well as tourist and travel agencies.

Payments with Lightning

For payments, merchants use their own application, called Pouch, with which locals can receive payments in BTC. This is very similar to Bitcoin Beach, which is the wallet used by businesses in El Zonte.

Pouch is a wallet that works with the Bitcoin Lightning network, and although it is the most used on the island, payment is also allowed with any other wallet enabled with micropayment channels using the market's pioneering cryptocurrency.

Merchants can directly receive satoshis if they wish. Although, from Isla Bitcoin they maintain that tourists who visit the town can live "90% on bitcoin and 10% with fiat money."

They add that they are working "to close that gap even more." This would mean that everything in general will be canceled with BTC on the island at some point in its history.

Other destinations inspired by Bitcoin Beach
Bitcoin Island in the Philippines is not the only tourist destination extremely far from Latin America that was inspired by the Central American Bitcoin Beach project to carry out a bitcoiner citadel.

As reported by CriptoNoticias, the influence of El Salvador reached Africa, where a complex similar to the one seen in El Salvador and now in the Philippines was erected.

This is Bitcoin Ekasi, a South African village that formally adopted BTC with the intention of boosting its economy. This project has already been going on for more than a year.

That other communities join the creation of bitcoiner citadels makes sense. Especially if you take into account that the founders of Bitcoin Beach themselves made clear the guidelines to follow for the development of a town with these characteristics.

Bukele Effect: how it is the only beach in the world where you can pay with bitcoin

Since Nayib Bukele announced the use of bitcoin as legal currency in El Salvador, the entire planet looked with curiosity and a certain amazement at how a country would restructure its financial system to be able to include a digital currency. In 2021, the town of El Zonte became famous for being considered the first in the world where everything can be paid with that cryptocurrency.

It is a small fishing town on the coast of the Central American country, 45 minutes by car from the capital San Salvador and bathed by the waters of the Pacific Ocean. Before it became famous for the implementation of cryptocurrency, it was known as “the mecca of surfing.”

In fact, the local economy depended largely on tourism, which was driven by the influx of tourists who visited the place, mainly from the United States, Canada, Brazil and Europe, in search of the great waves of the Pacific. The place still depends on excursions and vacations, but now you can pay with bitcoin and there is even an ATM that converts dollars into cryptocurrency and vice versa and has become a real tourist spot, where people go only to take selfies. with the machine.

Now, it is common to hear workers from establishments in the town of the same name asking tourists “if they prefer to pay in bitcoin or dollars.” On repeated occasions, President Bukele himself mentioned that he was inspired by El Zonte to promote the bitcoin bill, approved in June 2021 and which came into effect in September of that same year.

Some El Zonte merchants smile for Bitcoin
One trader made around $17,000 on his investment in the asset. It is an exception in El Salvador, where enormous public spending seems systematically irrelevant.


On El Zonte beach, merchant María Aguirre, 53, says it was “great” to have invested $2,200 in buying Bitcoin four years ago. Now, with the rise of the cryptocurrency, he has $19,000.

He sold them and, with the profits, was able to buy a washing machine, stove, refrigerator, and furniture for the home and store. Those $2,200 were his excess savings, funds he didn't need. Two other traders interviewed by AFP say they have also gained from their Bitcoin savings.

María Aguirre serves a customer who buys in her “Mary Store”, whose facade displays a small sign that says: “Bitcoin is accepted”, something that is no longer common in shops in El Salvador, given its little use by the population in their everyday transactions.

The American magazine Science, one of the most prestigious in the world when it comes to scientific dissemination, partnered with the social polling company CID-Gallup to learn about the use of Bitcoin in El Salvador.

And it published a study with compelling findings: despite all the efforts and the enormous investment of the Government to promote it, it has been impossible for this asset to be adopted as currency in this Central American country.

The specific beach where María Aguirre has her business is nicknamed “Bitcoin Beach” for having been the first place in the country that welcomed the use of cryptocurrency to make everyday payments.

But this popular beach is an exception within the country. A survey by the private Universidad Centroamericana showed in January that 88% of Salvadorans did not use Bitcoin during 2023.

The now president on leave, Nayib Bukele, introduced cryptocurrency in order to bank a population that was mostly outside the financial system, which did not happen.

In the aforementioned Science study, the researchers concluded that Chivo or Bitcoin did not serve to bank a population that was not banked. Those who downloaded the application the most were people who were already familiar with electronic payments.

The bet has not even worked for remittances: in 2023, only 1% of the $8,181 million in remittances arrived through one of the digital wallets, according to the Central Reserve Bank (BCR).

“People continue to use more traditional methods of sending (remittances) and this has a lot to do with people's distrust of the volatility of the cryptocurrency. And the government has not got the accounts in that,” economist César Villalona told AFP.

The useless state investment

One of the most famous jokes from the American series “Big Bang Theory” is about the movie “Indiana Jones and the Raiders of the Lost Ark.” In this, it is argued that the protagonist is irrelevant to the plot: the Nazis would find the ark and, with it, his gruesome death, whether Indiana Jones existed or not.

Something similar happens with the enormous investment in Bitcoin in El Salvador. María Aguirre, the owner of the store in El Zonte, could have made her payments in one of the many Bitcoin wallets that already existed on the market. For her to earn close to $17,000, it was not necessary for Nayib Bukele to divert $200 million from a loan that came to support MSMEs affected by the pandemic.

Nor that the Chivo Wallet was built (which cost $4.7 million in public funds) or that hundreds of ATMs were installed for which the State pays $360,000 a month.

A solid training campaign would have been enough, in which Salvadorans learned to invest in cryptocurrency and manage the technology associated with its use.

Even a direct government investment in Bitcoin, which freezes money that could be used to meet other needs, doesn't make any difference.

“The states managing Bitcoin, nothing seems reasonable to me… The states cannot buy such long-term assets because society has present needs, which are neglected to save that money,” says American economist Aaron Sepúlveda-Cué.
88% of Salvadorans did not use Bitcoin during 2023

For 77.8% of the population in El Salvador, the family economy "has remained the same" after the implementation of Bitcoin

88% of Salvadorans did not use Bitcoin in their transactions during 2023 despite the fact that it has been legal tender since 2021, revealed a survey by the private Central American University (UCA).

When asked "in the year 2023, have you ever used bitcoin to buy or pay for something or have you not used it?", 85% said they did not use it, 3% have never used it, and 12% said that he did use it.

With a margin of error of 2.7%, the survey that was conducted with 1,280 people from across the country from December 9 to 22, established that 77.8% of the population says that with Bitcoin the family economy "has remained the same." 6.8% say it has improved and 8.4% say it has gotten worse. 7% did not respond.

On September 7, 2021, at the initiative of President Nayib Bukele, El Salvador became the first country in the world to legally put Bitcoin into circulation on par with the US dollar, which was established in 2001 as legal tender.

With Bitcoin, Bukele sought to ensure that remittances from abroad flow at a lower cost, and that Salvadorans, 70% of whom were outside the financial system, became massively banked.

The Salvadoran government has publicly said that it has purchased 2,381 bitcoins, without revealing the figures of what was invested. The last purchase was made on July 1, 2022 when it acquired 80 bitcoins.

On Tuesday, the world's main cryptocurrency reached its highest value in 22 months, at $47,914 per unit, after what ended up being a false publication attributed to the US stock market authorities (SEC) on the social network X, formerly Twitter, which announced the approval of ETFs (Exchange Traded Fund) in bitcoins.

Why does bitcoin not convince the majority of the population in El Salvador?

El Salvador captured the attention of the financial world in September 2021 with the adoption of the most popular cryptocurrency, without massive employment having been achieved so far.

The adoption of bitcoin as legal tender in El Salvador promoted by Nayib Bukele's government to promote financial inclusion, attract foreign investment and improve the economy is a project that, three years after its implementation, has not yet convinced the majority. of the population, who rejects its daily use.

El Salvador captured the attention of the financial world in September 2021 with the adoption of the most popular cryptocurrency, without mass employment having been achieved so far nor the expectations generated by an initiative criticized by some sectors for its opacity. .

According to a survey by the University Institute of Public Opinion (Iudop), 88% of Salvadorans did not use the bitcoin cryptocurrency in 2023, and 48.8% disagree with public spending for its implementation.

The Executive has assigned $150 million to a trust for the conversion of the cryptocurrency into dollars, of which $107 million has been used to purchase 2,381 bitcoins. In addition, it provides a $30 bonus to those who download the digital wallet.

Information on the use of these resources is handled with complete confidentiality by state agencies. The only official source are President Bukele's publications on the social network X (formerly Twitter).

“The everyday use of bitcoin has failed”

The Government's main bet was the adoption of bitcoin on a daily basis by citizens, but from the first months "we realized that (that) did not happen," economist Tatiana Marroquín tells EFE.

“Almost three years later, after analyzing and seeing the behavior of the population, we can say that this government experiment has failed,” says Marroquín.

Another benefit attributed to this model was that it would be used massively to send remittances, but Salvadoran emigrants “have preferred traditional means to continue sending their money,” he details.

According to figures from the Central Reserve Bank, family remittances received through cryptocurrency wallets in El Salvador registered a drop of 34.5% in 2023 compared to the previous year and barely represented one percent of total remittances, calculated at 8,181.79 millions of dollars.

The financial inclusion that was intended with the use of bitcoin also crashed into reality, due to “ignorance of the subject.”

The main challenge to consolidate the financial inclusion of Salvadorans is that the majority work informally and lack regular income. “He does not have access to savings or credit,” says Tatiana Marroquín.

“It's not just about having an electronic wallet. El Salvador has had structural challenges for decades, it is the country that attracts the least foreign investment, the one that grows the least in the region”, a trend that has even worsened in recent years, he affirms.

“There is a large population in a situation of poverty, of economic vulnerability, that does not have the financial, social or mental space to get involved in the bitcoin game,” emphasizes this economist, critical of the use of public funds to encourage the use of bitcoin. and laws to facilitate the management of digital currencies.

“Although reality overwhelmingly says that it is not functional for the needs of the population, the government continues to use funds and create institutions in a very non-transparent way,” he says.

By 2022, the Salvadoran government was expected to issue instruments in bitcoins - known as volcano bonds - worth $1 billion dollars to finance the construction of Bitcoin City, a city project in the east of the country, but the allocation has not even been made. budget nor has the project begun to be built.

The beach where bitcoin is king
Where the cryptocurrency has been successful has been on El Zonte beach, located in the central department of La Libertad, where bitcoin is widely used.

In that place, with a large influx of foreign visitors, you can buy anything with bitcoin, from candy to your hotel bill.

Bitcoin arrived at El Zonte as a project unrelated to the entry into force of the Bitcoin law, although legal regulations have promoted its use, Román Martínez, a resident of the place and a regular user of the cryptocurrency, explains to EFE.

“When President Bukele approved bitcoin as legal tender, he made a dream of many people around the world come true, that of many bitcoiners who dreamed of this (…), El Salvador has benefited a lot,” he says.

Bitcoin could be worth $800,000 next year
A famous investor, known as PlanB, projected that Bitcoin will reach $150,000 by the end of this year and $800,000 by next year.
According to the renowned cryptocurrency analyst known as PlanB, the Bitcoin cryptocurrency could reach a value of $800,000 by the end of 2025, which represents an increase of more than ten times its current price, which is around $70,000.

PlanB projected that Bitcoin will reach $150,000 by the end of this year and $800,000 by next year.


Although these figures may seem unrealistic, the analyst claims that these prices would be in line with a model that he has followed for years and that has helped him predict the price of Bitcoin very accurately.

He named this model stock-to-flow (S2F).

Potential risks
Despite the optimism, PlanB highlighted that there are several risks that could affect these predictions, such as hacks of cryptocurrency exchange platforms, scams, and strict measures by governments.

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