With organised crime down and Bitcoin adoption going surprisingly well, things are looking brighter than many might think.
It’s been over one year since the 7th of September 2021, the day Nayib Bukele introduced the so-called “Bitcoin Law”, a bill that not only regulated Bitcoin but also turned Bitcoin into the country's official currency. This included a somewhat controversial article 10, which stipulated that all businesses are required by law to accept Bitcoin as a payment method.
Proponents of Bitcoin were elated, but opponents criticised the president for what they saw as a very risky investment, accusing him of turning El Salvador into a massive casino. The International Monetary Fund was also less than pleased, indicating the agreed $1.3 Billion loan will be in jeopardy if El Salvador keeps pursuing its Bitcoin ambitions. Bukele, however, persisted and with almost one year having passed, I decided to go and see first-hand if the Bitcoin Standard is a miracle or a mirage.
To give readers a general idea, El Salvador is a Latin American country, so if you’ve ever been to one, you should feel right at home. Street vendors sell water and juices not in bottles, but in plastic bags, colourful “chicken buses” drive between cities without any regard for safety and all the guards and security carry big, menacing shotguns. El Salvador is not as wealthy as Panama, but at the same time, it’s faring better than neighbouring Nicaragua or Guatemala. In terms of GDP, it sits somewhere in the middle.
My first chance to experience El Salvador was at this year's Expo. Their pavilion emphasized Bitcoin as a futuristic, business-friendly endeavour. Full disclosure: they also offered free coffee made from local beans. which might be the reason why most people seemed happy to spend some time there.
Either way, a few months later, an opportunity presented itself to visit El Salvador in person, and without much hesitation, I jumped on it.
Right off the bat, I decided to avoid taxis and walk from the airport just to get a feel for what the country looks like. First impressions: it’s an evergreen land, lush with vegetation.
After maybe two hours of hiking, I end up at a roundabout with a couple of hostels. Rooms are simple but cheap and come with air conditioning. Life feels peachy again!
Throughout my travels, I got the chance to sleep in all kinds of motels from the most modest imaginable to ones that resemble Western hotels.
Here’s a very basic motel.
It was only $8. Unfortunately, it didn’t come with a wall socket, so to charge my phone, I had to leave it at reception. Still, it had a ceiling fan and for some reason, I felt very peaceful there. I would give it 5 stars, but obviously, bathroom standards were quite low. Basically cold water only and no mirror.
An upgrade from the previous room. This is what $15 might get you. I’m guessing you could try to haggle the price down to $12-13, but I didn’t bother.
Western-style hotels typically start around $35 but can go up to $100 or more.
It’s nice to have a receptionist always present, ready to sort a room for you. Cheaper hotels usually require having to find the person in charge, either by calling displayed numbers or by banging on the door.
The first thing I tried to do after checking in was install the official Bitcoin wallet called “Chivo”, which in Spanish means ‘cool’. However, I quickly realised only nationals and residents are allowed to use it. This could be because Nayib Bukele promised $30 in Bitcoin to every Salvadorian. Or maybe because Chivo positions itself as an official governmental app that provides financial services rather than just another Bitcoin wallet.
I shared my dismay with one of the boys working in the hotel. He proudly showed me his Chivo wallet as if to prove that everything works fine. While this wasn’t my intention, I also noticed large transaction — a transfer of about $900. I’m guessing it’s some kind of remittance money but could be something else.
El Salvador is known for having large numbers of its population rely on remittances. Some say it might constitute up to 50 per cent of its GDP. This makes Bitcoin a bet of two kinds. The media tends to fixate on Bitcoins price and draw conclusions that El Salvador has lost money on its crypto bet. The other goal, however, is to offer a new, cheaper way to send remittances. Estimates say this can yield up to $400 million in savings. If these numbers are to be trusted, they’re big enough to make any gains or losses from holding Bitcoin a secondary issue.
Throughout my travels, I noticed how people walked up to Chivo ATMs to withdraw some cool cash. My guess is most are there to pick up their remittances in dollars rather than to buy or sell Bitcoin.
In general, almost everyone with a smartphone will also have Chivo, but most ignore the Bitcoin aspect entirely and just use Chivo to transact in dollars, similarly to how CashApp or Venmo work in the West. You want to pay $15 for your meal or your room? The owner will give you their phone number, and that’s all you need to know to transact. I tried asking for a QR code or Bitcoin Lightning address, but most were clueless. And even if I could somehow persuade them to look into the settings and find what I was looking for, my wallet would still not allow the transaction to go through due to lack of compatibility (I was using “The Wallet of Satoshi”).
Onward with my travels. I decided to visit the now famous “Bitcoin Beach”, an area around El Zonte that kickstarted the country’s crypto adoption.
It’s a pleasurable seaside region, dotted with resorts and surfing schools. You can see Bitcoin being referenced in many places, but it’s clear we’re past the hype. Bitcoin is testing new lows, excitement is gone and El Zonte is back to its main business — tourism and surfing. Old Bitcoin Beach t-shirts lie forgotten and neglected, now losing colour. I even spotted two local villagers wearing them as they emerged from their work in the fields. It was clear neither of them had smartphones or any idea about crypto and just wore these shirts as their dirty clothes.
I stayed in El Zonte for two days and throughout that time noticed only one crypto-related group of people. They wore “stack sats” shirts, which is a known maxi motto. It means ignore the price and just focus on saving ("stacking") Bitcoin. The group walked around guarded by two shotgun-wearing officers dressed in blue uniforms. Not sure if they're real police or just security made to look like them, but having guards follow you everywhere you go certainly attracted extra attention, making the whole group look very conspicuous. No way I would feel safer that way, quite the opposite.
As for El Zonte, the whole area is very picturesque. Lots of small coffee shops and restaurants where the time goes by slowly. Some of those spots look very makeshift by Western standards, but these businesses are first and foremost a way of life, profitability comes second. They might not see customers for hours, there might be an odd customer like me who comes for a coffee, there might be a whole family that suddenly pops in and orders a full course meal. Whatever happens, owners will wait patiently and let the hours go by.
I stopped in one restaurant to buy an energy drink. The lady that worked there tried to persuade me to stay and get something more substantial, perhaps a pizza? Unfortunately, I didn’t have cash on me, only a card.
“We don’t accept cards”, she said. “You can pay with Bitcoin!”
She seemed excited at the prospect and I almost felt stupid for not having any crypto ready. Honestly, I didn’t expect such a situation to occur, but there you have it. Small businesses might not have access to banking and consequently to Visa and Mastercard readers, but they do have smartphones and therefore, can accept Chivo wallet transfers without issue.
That’s what a lot of articles about El Salvador seem to miss. If you go around asking “do you accept Bitcoin?” people will say no, but if you ask them about Chivo, they'll often say yes. In general, I didn’t get that feeling described in the media that Bitcoin has been completely forgotten or even worse, that it’s a failed experiment.
After leaving El Zonte, I travelled towards Sonsonate. It’s a very run-of-the-mill city in the middle of El Salvador. There are no beaches, no volcanos and no international tourism. Locals glance at my bag and assume I might be doing some business or that I trade goods. Otherwise, there’s little reason for a gringo like me to be there. Still, I quickly develop a fondness for this city. It’s not perfect, but it’s raw, authentic and even cheaper than the other parts of El Salvador. You can get a glimpse of how it would feel to live as an expat here.
In Sosonate, just like everywhere else, you’ll see official Chivo ATMs. There’s one by the shopping mall, one on the main square and a few others dotted around the city. They usually have some kind of staff on location to help citizens set up their Chivo wallets, answer questions and generally make it look like those ATMs do indeed double as some sort of unofficial bank. Chivo ATMs are also guarded, which means you can withdraw or deposit money only during what amounts to essentially working hours. So again, something akin to how a bank would operate rather than just an ATM for your Bitcoin wallet.
After spending over a week in Sonsonate, I went further north to Santa Ana. It’s a well-known city, famous for its neighbouring volcano that goes by the same name. The city looks cleaner, neater and a bit more expensive. Beautiful churches adorn the streets.
It seems 2022 is the year of Little Caesars Pizza, and locals have fallen in love with this franchise. After dark, the city square is littered with empty pizza boxes, all with the Little Caesars logo. Seems the brand is pushing into the market aggressively, for example, by offering medium pizzas for $5. Until recently, having a pizza would set you back around 15 bucks, so it’s a newly discovered luxury that many could not afford before.
Unfortunately, queues at Little Caesars are never-ending. Instead, I went to a local pizza shop called “OMG Pizza”. They sell by the slice, prices starting from $1.
“Oh, You’ve been to U.S.?” asks the owner in fluent English. “I worked there for twenty years. Started in New York, then Vegas, Los Angeles.”
“I see you support Nayib Bukele?”
“Oh yes, I love this guy. I have his picture here”. He pointed to a picture of Nayib with his family hanging on the wall. “Before he came to power, we had so much trouble with the mafia. People would come to my restaurant, ask questions, is this my place, is this what I do and so, and so, and then come up with a number and tell me this is how much you have to pay us. And what could you do? You had to pay. But not anymore.”
“What about Bitcoin?”
“Before El Salvadore was only known for its crime rates, mafia and trafficking. Nobody really knew anything about us. Nowadays, if you say El Salvador, people think, oh, El Salvadore, you mean that Bitcoin country.”
His attitude is quite representative. Most Salvadorans I encountered held their president in very high regard and only spoke in positives. In its capital, San Salvador, I met a tattoo artist who was quite supportive despite his business being impacted by Bukele’s policies.
“Have you ever heard of MS-13?” he asks.
“Hm, no.”
“What? Really? I mean, well, it’s the most notorious gang in El Salvador, maybe in entire Latin America. Recently, Bukele banned certain symbols, tattoos that relate to gang membership.”
“Like what?”
“Well, mostly numbers, number 13, gang hand gestures, clowns.”
“Clowns? That sounds quite broad. Isn’t El Salvador committed to free speech, freedom of expression?”
“I mean, these are quite specific clown tattoos. Why would you get those if you’re not a gang member? I mean, tattooing was already quite taboo here, and now it’s even more so. Which is a shame, really. There’s so much great art and tattoo artists.”
“I saw how Bukele decided to starve gang members that are already in locked prisons, by giving them very little food.”
“Ha ha ha, yes I saw that as well, one tortilla a day, ha ha. I mean what can you do… country can’t move forward if it’s plagued by gangs and violence.”
Street vendor sells shoes in Sonsonate
As time went by, I became familiar and comfortable with what local street cuisine had to offer. There's a variety of foods that are fit for vegans and vegetarians. All sorts of fruits, either in plastic bags or cups, often mixed with spices and chillies, French fries for a dollar that you can eat with a toothpick and, of course, the nation's all-time favourite: pupusas. These are flatbread cakes with various fillings, meat, beans, potatoes, cheese and even loroco. Loroco is a flower, which sounds like an odd choice, but its chopped flower buds turned out to be a delicious filler.
In total, I spent three weeks in El Salvador. Once I realized I could use Chivo ATMs to withdraw Bitcoin directly, without the need for a Chivo-compatible wallet, I start doing that. It was cheaper than using my Visa and I also didn’t have to worry about any bank fees.
There’s also a bit of innovation coming from the commercial sector. For example, I saw Strike Wallet stickers and QR codes scattered across various restaurants. The way Strike positioned itself was as a competitor to Chivo, together with a sign-up bonus of its own (unfortunately, again, only for Salvadorians). I’m not sure how successful Strike was or is. I expect not very. With the recent slump in Bitcoin’s price, most people have abandoned all crypto-related prospects, but it was an interesting observation nonetheless.
Overall, the hype is gone, but things are far from terrible. People might not be using Bitcoin, but once they realized nobody was taking their dollars away, they stopped protesting as well. Nayib Bukele’s popularity remains unchallenged and everything points to a second term. As for Chivo, it allows for the use of dollars and with the government’s backing, there’s a good reason to suspect it will stick around.
Meanwhile, near El Zonte’s Bitcoin Beach, there’s a different project brewing. Excavators, loaders and dump trucks can be seen everywhere. It’s all part of a big push to create Surf City — a chain of modern, Western-style towns and cities catering to surfers and beach enthusiasts from all around the world. Nobody here talks about the volcano-powered Bitcoin bonds or the futuristic Bitcoin city. It’s all pie-in-the-sky speculation for now. Surf City, meanwhile, is already under construction and poised to be completed sooner rather than later.
And that’s the takeaway. Bitcoin doesn’t need another Mecca: Dubai serves that purpose pretty well with its zero per cent tax. There are plenty of other crypto havens as well. What El Salvador needs is to leverage what it already has: spectacular views, magnificent mountains, thick forests, idyllic beaches, great waves, tasty street food and cheerful locals. And yes, you can also pay in Bitcoin if you want to. Muy bonito.
