鈥淔ifty cents for a pupusa,鈥� says Carolina Reyes, a food vendor in El Palmarcito, El Salvador, as she throws the cornmeal pancakes on the grill. 鈥淏itcoin or cash?鈥�
A growing number of Reyes鈥檚 customers are transferring cryptocurrency into her digital wallet rather than handing over聽bills. 鈥淎mericans, French, Canadians, they鈥檙e all paying in bitcoin for my pupusas,鈥� she says.
Tourists have long been drawn to El Salvador for its surf, but now they are coming to see the world鈥檚 most popular cryptocurrency in聽action. In September 2021, the country鈥檚 president, Nayib Bukele, declared bitcoin legal tender in聽El聽Salvador, making it the first country where businesses are required to accept the digital currency. Bukele argues that using bitcoin will bring Salvadorans who have never held a bank account into the financial system, save hundreds of millions of dollars lost in fees when money is sent home from family members abroad, and make El聽Salvador the聽tech hub of Latin America.
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Tourism has spiked 30 per cent . El Salvador is considering offering citizenship to people who invest more than $100,000 in bitcoin to聽accommodate those who want to live in a crypto economy.
It would be one of Bukele鈥檚 less outlandish plans. His government has teamed up with a company called Astro Babies to launch a virtual casino where guests can gamble bitcoin and trade NFTs (non-fungible tokens), with a physical branch in El Salvador. In November 2021, he presented , a tax-free metropolis to be built in聽the聽shape of a bitcoin logo at the聽base of Conchagua volcano.
Bukele said that Conchagua鈥檚 geothermal energy will power the city and computers mining bitcoin. A billion dollars worth of 鈥渧olcano bonds鈥� are to be issued in March, half of which will be used to fund the project, and the other half to buy bitcoin.
Foreign entrepreneurs seeking to take part in El Salvador鈥檚 crypto boom are already relocating to the surf village of El Zonte, now better . But away from the beachfront hotels and crypto-tourists, many people are hostile to the plans. 鈥淵ou can pay in bitcoin, no problem,鈥� says Evelyn Garc铆a, who runs a grill just off a beach road. 鈥淏ut I鈥檓 not going to serve you!鈥� Her husband lost $60, she says, when a payment sent to聽his Chivo Wallet, the national crypto app, was left hanging.
鈥淥h yeah. That bitcoin thing,鈥� says the manager of the shop next door. 鈥淲e don鈥檛 trust any of that.鈥� The Chivo Wallet has been plagued with identity fraud and technical issues since it was rolled out in September 2021. At least 1000 Salvadorans logged in to the app to聽get their $30 sign-up incentive only to find that fraudsters had already claimed it, says Ruth Eleonora L贸pez at local human rights watchdog Cristosal.
El Salvador鈥檚 government contracted two US tech companies to , but many users have already abandoned it or聽swapped it out for the privately developed Bitcoin Beach app.
Two-thirds of Salvadorans said they opposed making bitcoin national currency and 87 per cent said in February that the move was yet to benefit them. The , some of which were and are mocked for being of use only to stray dogs that lie in their shade.
Many Salvadorans refuse to use bitcoin because its value swings wildly, or they don鈥檛 trust it. Oscar Salguero, a software engineer from San Salvador, says bitcoin鈥檚 decentralised, transparent,
peer-to-peer transactions could be used to usher in a new financial and political order by cutting out the tyrannical governments that have historically run the region, but that isn鈥檛 happening. 鈥淪adly, in El Salvador, it鈥檚 just become another tool for corruption,鈥� he says.
There are concerns elsewhere too. US聽senators to examine whether bitcoin could be used in El Salvador to traffic drugs or launder money.
The World Bank has , and the International Monetary Fund, which is negotiating a $1.3 billion loan with聽El Salvador, is urging Bukele to turn back before it is too late.
El Salvador has spent $180聽million on the Chivo Wallet聽and bitcoin ATMs. The聽value聽of the聽$85.5聽million in聽bitcoin that the country purchased with taxpayer money is聽estimated to聽have dropped to $76.1 million. Ratings agencies have downgraded El聽Salvador鈥檚 bonds to聽below investment grade.
For many Salvadorans 鈥� half of whom don鈥檛 have internet access, and one in five of whom live on less than $5 a day 鈥� Bukele鈥檚 plans seem as intangible as bitcoin itself.
