A bankless El Salvador beach town turned into a Bitcoin experiment
Future. El Zonte, a beach town in El Salvador, is now known as “Bitcoin Beach” after it became the site of an experiment to transform the local economy through the adoption of Bitcoin. The pilot program has radically changed the community, and it was a key factor in the country making the cryptocurrency legal tender. It also may act as a blueprint for revolutionizing third-world economies that are under-banked.
Sun, Sand, and Crypto
The town of El Zonte has no bank and only one ATM… and it’s used to buy and sell Bitcoin.
- El Zonte is known as “Bitcoin Beach” because, 18 months ago, an anonymous donor from California donated a huge cache of Bitcoin to the community because he wanted to create a local economy that ran on the crypto.
- The only stipulation was that the donated Bitcoin couldn’t be cashed out for fiat currency.
- The plan was carried out by another Californian, Michael Peterson, whose family was known in the country for supporting missionaries and funding small development projects.
- Peterson has interacted with the donor through an intermediary and still doesn’t know his identity.
Peterson kickstarted the project by paying teenagers in Bitcoin to clean up trash, and then giving families monthly stipends of $35 in crypto after the country’s economy collapsed. Peterson eventually created the Bitcoin Beach Wallet when more stores started to accept the currency.
Now, 90% of the town’s residents use Bitcoin daily, with workers receiving their salaries, families paying their bills, and community projects financed all using the cryptocurrency. They use “the Strike app, the ATM, and peer-to-peer transactions to move money back and forth between Bitcoin and cash.”
El Salvador is, unfortunately, the perfect place to have carried out the Bitcoin experiment — 70% of its population is unbanked, many people get their income through remittances that have heavy fees, and the country ditched its own currency to adopt the U.S. dollar. It’s no wonder that many migrants trying to reach U.S. soil are from El Salvador.
And now the Bitcoin Beach experiment will play out on a larger scale. President Nayib Bukele, who has been a Bitcoin believer for years, was able to push a bill through the legislature that made the crypto a legal tender. When explaining the rationale behind it, he cited El Zonte, saying, “You guys demonstrated that a community can actually benefit from Bitcoin. Now we’re going to demonstrate it on a countrywide scale.”