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El Salvador Village, El Zonte, Adopts Bitcoin As Money

There is a little rustic beach town on the coast of El Salvador called El Zonte, where lives about 3000 people. 

This is a surfer's paradise, visited by those looking genuine and rustic vibe. This little town was hit hard by the COVID-19 pandemic, like many Central-American beach towns. People of El Zonte have forged their own path forward, thanks to its newly formed Bitcoin economy while other tourist hot-spots remain to struggle as borders remain closed. 

Bitcoin Donation in 2019

A secret donor with a fondness for El Zonte found a forgotten thumb drive loaded with Bitcoin sometime in early 2019. He had first purchased the asset when it was priced at around 5-10 cents and put it aside for several years. Upon realizing what his holdings were now worth, the donor spent several days trying to unlock his wallet. After several futile attempts, the donor was eventually able to remember his passphrase and retrieve the funds. A believer in using blockchain technology to boost inclusion for the unbanked, he decided to seize this stroke of luck and put the funds to good use by allocating a multi-year six-figure donation to El Zonte. 

The secret donor partnered with Michael Peterson, a San-Diego local who was volunteering in El Zonte for 9 months, after meeting with several philanthropies in the district, all of which wanted to take the funds and convert them into fiat to cover the community's immediate needs.

Michael was given the chance to administer the Bitcoin on one condition - he would not cash it out. Beneficiaries of the digital currency had to study how to use the Bitcoin itself, building a Bitcoin economy. This was the birth of the Bitcoin Beach initiative. 

The Concept

Bitcoin Beach started to build a sustainable Bitcoin ecosystem, where the majority of residents are unbanked and the local companies don't satisfy the requirements that would enable them to accept credit cards. 

Michael Peterson developed a plan for a Bitcoin circular economy that factored in remittances, tourism, public service, and small business. 

Bitcoin was also injected into another beach community 3 hours away, Punta Mango. The aim is for Bitcoin adoption to grow in various communities and fill the gaps in overtime. 

A common criticism of Bitcoin is the huge fees and slow processing speed of the system. For example, using Bitcoin can be ineffective when purchasing a cup of coffee. The Bitcoin Beach initiative addressed this challenge head-on. 

Michael Peterson, Founder of Bitcoin Beach told that: 

“Originally, it didn’t make sense for 25 cent transactions but did for 5 dollars. But when the transaction costs ramped up again, we switched over to the Lightning Network.”

The Lightning Network is a second layer payment protocol that operates on top of the Bitcoin network and allows instantaneous and affordable transactions. The group chose the Australian-based Wallet of Satoshi as its wallet of choice, as it works for both on-chain and off-chain transactions.

So what can you do with Bitcoin in El Zonte?

Right now you can use the Lightning Network to purchase anything from tacos to hardware supplies to paying your utility bill. 

Youth Work: From cleaning the El Zonte River from trash to repairing the water system destroyed by a recent storm, to road renovations and trash removal, the youth of El Zonte contribute to their community in trade for Bitcoin deposited to their wallets.

Education: Bitcoin Beach gives educational grants in Bitcoin to students who choose to continue their studies to high school and university.

School Transportation: One of the difficulties in El Zonte is that its local school stops after 9th grade. In order to resume their education, students have to commute to high school in a different town. Bitcoin Beach helps students with funds to pay for the bus and also to purchase snacks in schools. 

Universal Cash Transfers: As borders remain closed and unemployment is an all-time high, the COVID-19 pandemic forced the initiative to build direct Bitcoin transfers to households most in need. Transfers of $35/family are made to 600 families every 3 weeks, which covers 50% of basic needs per family. 

Primary Needs: As shops and businesses became desperate for income during the pandemic, they began to accept Bitcoin. Now, you can use Bitcoin at various grocery stores, three restaurants, barbershop, nail salon, and two hardware stores. 

Community Construction Projects: Financing in long term infrastructure, Bitcoin Beach created a system to pay contractors, builders, and suppliers for construction projects in Bitcoin.

Utilities: The district water department will allow payments in Bitcoin, with the electric department quickly to follow. 

Everything Is About Education

“As we injected Bitcoin into the community, we also taught local businesses how to accept it and helped educate them on the advantages and drawbacks of accepting Bitcoin...There was a lot of resistance among the adults, [it was] too technical. So we moved on to youth, they picked it up right away. The key is to get them to start transacting right away, then they want to learn more about it, the security of it, and how it works,” explained Michael Peterson. 

Bitcoin training stations in El Zonte. Residents scan a QR code to get their deposits.

Society became more open to learning about Bitcoin out of necessity when COVID-19 hit,  to maintain social distancing, Bitcoin Beach created a Facebook group with ‘how-to’ videos to further its education efforts.

Jorge Valenzuela is one of the local who has been working closely with Michael on facilitating the Bitcoin economy. Jorge has concentrated on local youth philanthropy initiatives for numerous years and manages all training funded by the initiative, as well as the universal cash transfers during COVID-19. 

“It’s great to see youth excited and dreaming about their futures in El Salvador and seeing a path forward here, instead of thinking they need to go to the U.S.  They are able to work, help support their families, and go to University...Bitcoin has helped me understand what money really is and has given the resources to impact the lives around me,” told Jorge Valenzuela.

Another local volunteering with the initiative is Roman “Chimbera” Centeno, who after living in Italy for many years, got back to his hometown to find his society using Bitcoin:

“It is amazing what is happening here in El Zonte. We are preparing the kids for the future. They are used to it now - they can check their money on their cell phone, they are excited to save. This financial education is important. We never got that opportunity, and it’s incredible the opportunities children have now. It makes them believe that there is a future in El Salvador. That they don’t have to leave and go somewhere else to succeed...Our kids start dreaming again. They have time to be kids, to swim, and to play. Bitcoin gives them freedom.”


Bitcoin is located to disrupt the remittances industry in El Salvador, rated at about $5 billion annually. Many families in towns like El Zonte do not have bank accounts and rely on services such as Western Union WU +0.4%, which take 5-10% in fees. The closest Western Union is about one hour by bus, wanting the recipient of the cash transfer to take the bus back with cash on hand, building a safety issue. 

Blockchain Beach is trying out a fresh product, the Strike app, which also runs on the Lighting Network, and connects to the recipient’s Bitcoin Wallet and the sender’s bank account, obtaining a transaction from the U.S. to El Salvador quick and cost-effective.

El Zonte also lately got its first Bitcoin ATM powered by Athena Bitcoin. Notably, the town still does not have a steady cash ATM. 

So far, the project has not seen any interruption from the government, but the founder expects to engage the authorities to help and to promote regulatory clarity. 

“The president of El Salvador is a big proponent of new technology and we believe he will support the efforts,” tells Michael Peterson.

At the time of writing, the price of Bitcoin is $9160,48.

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