This is how El Salvador is partying with a good price of Bitcoin

03/29/2024

on a beach in eIn Salvador, where surfers frequent, trader Maria Aguirre assured that investing $2,200 in buying Bitcoin four years ago was “very good” because now, with the cryptocurrency rising, she has $19,000.

On September 7, 2021, at the initiative of President Nayib Bukele, El Salvador was the first country in the world to establish Bitcoin as legal tender, which has also created happy accounts in recent times.

Bukele celebrated last week that the government had deposited 5,689 bitcoins, worth a total of $406 million. “It’s not much, but it’s honest work,” he highlighted.

And Bukele announced on November 16, 2022 that El Salvador would buy one Bitcoin per day, and recently said that these purchases would “continue” until “Bitcoin becomes unavailable with fiat currencies”, which the national Are backed by governments (such as the US dollar) and whose value is determined by the countries’ governments.

President announces country has placed millions of dollars in Bitcoin into “cold wallets” Or offline which will be administered in its national territory, this at a time when the cryptocurrency is registering records in its price. “You can call this our first Bitcoin piggy bank,” Bukele stressed

This cold wallet attempts to keep investments in cryptocurrencies secure offline (without an internet connection) to prevent external attacks from hackers.

But even as the government makes a big fuss about recent gains, few Salvadorans are using the cryptocurrency, whose price has hit a record high above $72,000.

“Today the growth has been very good and I’m very happy,” says Aguirre at his small business selling food and soft drinks on El Zonte beach.

With a broad smile, the merchant serves a customer purchasing a soft drink and sweet bread in his “Mary Store,” which displays a small sign that reads: “Bitcoin accepted.”

Located 58 km southwest of San Salvador, the beach is nicknamed “bitcoin beachTo be the first in the country to mass adopt the use of cryptocurrencies to make payments.

It is a popular weekend destination, However it is not a cheap place, and many of its 3,000 residents are foreigners who own hostels. ,bitcoin beach” is also the name of the application used in the field to conduct transactions.

El Zonte also has many users of cryptocurrencies on the beaches, such as El Tunco and El Sunjal. But the situation has not been replicated at the national level.

extraordinary circumstances

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 accept Bitcoins in addition to dollars. Legal tender since 2001, when El Salvador abolished its national currency, the colón.

Bitcoin has changed the life of this 53-year-old businessman as it has given him “better economic stability,” so he hopes to “grow” his business.

Aguirre has been able to purchase washing machines, stoves, refrigerators, and furniture for his home and store thanks to his cryptocurrency earnings.

In El Zonte, people started using Bitcoin long before Bukele legalized it on September 7, 2021 and the cryptocurrency is used to make many payments, even for soft drinks or some Also for purchasing eggs.

But this popular beach, where many Salvadorans and tourists go to ride the waves, is an exception within the country. A survey by the private Universidad Centroamericana in January showed that 88% of Salvadorans did not want to use Bitcoin during 2023.

Bukele introduced cryptocurrencies to bank a population that was mostly excluded from the financial system, but this situation has not changed much since then.

“up and down”

In another part of El Zonte, across the street, Blanca Castillo has a shop selling artificial flowers and natural juices. He is also happy with Bitcoin, as he claims it has brought him “profits”.

However, The 25-year-old trader warns that there is always a risk of losing: “When you see the value of a currency go down, you think you are going to lose (…), you have to be aware how. There is a movement.” Cryptocurrencies, says Castillo. In fact, the cryptocurrency was trading below $17,000 at the end of 2022.

Sitting on a chair in a small restaurant, its owner Rosalina Franco serves several customers every day who pay with Bitcoin, mostly foreign tourists.

“I can’t use the phone to make transactions,” so “I save the fees I charge in Bitcoin, I don’t spend it, it’s a savings,” says the 70-year-old woman, who is also helped by this. Profit has increased. Of quotation.

When Bukele introduced Bitcoin, he also wanted family remittances from abroad – a key component of Salvador’s economy – to be channeled through the digital wallet to reduce shipping costs, but this did not happen.

According to the Central Reserve Bank, in 2023, only 1% of the $8,181 million in remittances came through digital wallets.

“It’s clear 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 cryptocurrencies. And the government has not been held to account in that,” says independent economist Cesar Villalona.