What's happening now to the village that once accepted Bitcoin as a payment method?

On the coast of El Salvador lies a small rural beach town of 3,000 locals known as El Zonte . A surfer's paradise, this village is frequented by those seeking an authentic and rustic atmosphere.

Like many beach towns in the Americas, El Zonte has been hit hard by the COVID-19 pandemic. While other tourist hotspots have struggled due to border closures, the people of El Zonte have forged their own path forward, and it’s all thanks to its newly formed Bitcoin economy .

Secret Bitcoin Donations

Sometime in early 2019, an anonymous donor with a soft spot for El Zonte discovered a forgotten drive containing Bitcoin. He had originally purchased the asset for 5-10 cents and had left it there for a few years. After realizing the value of what he now held, the donor spent days trying to unlock his wallet.

After many attempts, the donor was finally able to remember his password and retrieve his funds. A firm believer in using blockchain technology to increase inclusion for the unbanked , he decided to seize his luck and put the funds to good use by making a multi-year six-figure donation to El Zonte.

After meeting with several charities in the area, all with the desire to take the funds and convert them into fiat to meet the immediate needs of the community, the donors partnered with local man Michael Peterson, who spends nine months of the year volunteering in El Zonte.

Michael had the opportunity to manage Bitcoin under one condition, and he would not cash it. The beneficiaries of the digital currency had to learn how to use Bitcoin itself, which is how the Bitcoin economy was created, and the Bitcoin Beach project was born.

Vision

Bitcoin Beach aims to create a sustainable Bitcoin ecosystem in an area where most residents do not have bank accounts and local businesses do not consider them eligible to accept credit cards.

Michael Peterson presented a proposal for a circular economy for Bitcoin that considers remittances, tourism, public services, and small business services . In parallel with El Zonte, Bitcoin is also being brought to Punta Mango, another beach community 3 hours away. The goal is for Bitcoin adoption to grow in different communities and gradually fill in the gaps.

A common criticism of Bitcoin is the network’s high fees and slow processing speeds, which can make it impractical to use Bitcoin when buying a cup of coffee, for example, and the Bitcoin Beach initiative addresses this challenge head on.

“Initially it didn’t make sense for a 25 cent transaction, but it made sense for a $5 transaction. But when transaction costs started to rise again, we switched to the Lightning Network,” said Bitcoin Beach founder Michael Peterson.

The Lightning Network is a second-layer payment protocol that runs on top of the Bitcoin network, enabling instant and affordable transactions. The organization chose Australia's Satoshi Wallet as its wallet because it works for both on-chain and off-chain transactions.

It’s all about education

“As we infuse Bitcoin into the community, we also teach local businesses how to accept Bitcoin and help educate them on the pros and cons of Bitcoin. There is a lot of resistance among adults because it’s too technical, so we choose to go into the youth market and they pick it up right away. The key is to get them to start transacting right away, and then they want to learn more about it and know how secure it is and how it works,” said Michael Peterson.

When COVID-19 hit, the community became more open to learning about the need for Bitcoin . To stay connected to the community, Bitcoin Beach launched a Facebook group with “how-to” videos to further its educational efforts.

One local who has been working closely with Michael to promote the Bitcoin economy is Jorge Valenzuela. Jorge has focused on local youth philanthropy programs for many years and oversees all training funded by the program as well as cash transfers during COVID-19.

“It’s great to see young people excited and dreaming about their future in El Salvador and seeing a path forward, instead of thinking they need to go to the U.S., they are able to work, help their families, go to college . Bitcoin helped me understand what real money is and provided me with the resources to impact the lives around me, ” said Jorge Valenzuela.

Another local volunteer initiated by the program is Centeno, a Roman who, after living in Italy for several years, returned to his hometown and found his own community using Bitcoin.

“It’s amazing what’s happening in El Zonte, we’re preparing our children for the future. They’re now used to being able to check their money on their phones, they’re happy to save money, and this financial education is important. We never had this opportunity, and the opportunities the kids have now are incredible, and it’s making them believe that there’s a future in El Salvador . They don’t have to leave to be successful somewhere else, our kids are starting to have dreams. And they also have time to spend with their kids, to swim and play, and Bitcoin gives them freedom.”

money transfer

Bitcoin could disrupt El Salvador’s remittance industry, estimated at around $5 billion per year.

Most households in towns like Zonte do not have bank accounts and rely on services such as Western Union, which charges a 5-10% fee. The nearest Western Union is about an hour away by bus, which requires the recipient of the cash transfer to bring the cash on hand back to the bus.

Blockchain Beach is testing a new product called Strike , an application that also runs on the Lightning Network and can connect to the recipient’s Bitcoin wallet and the sender’s bank account , making transactions from the U.S. to El Salvador faster and more cost-effective.

El Zonte also recently received its first Bitcoin ATM powered by Athena Bitcoin enthusiasts, notably as the town still has no regular ATMs.

So far, the project has not received any intervention from regulators, but the founders hope to work with authorities to help and promote regulatory clarity.

The original text is from the English version of Forbes, with some deletions, and compiled by the Bluemountain Labs team. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.

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