“Fifty cents for a pupusa,” says Carolina Reyes, a food vendor in El Palmarcito, El Salvador, as she throws the cornmeal pancakes on the grill. “Bitcoin or cash?”
A growing number of Reyes’s customers are transferring cryptocurrency into her digital wallet rather than handing over bills. “Americans, French, Canadians, they’re all paying in bitcoin for my pupusas,” she says.
Tourists have long been drawn to El Salvador for its surf, but now they are coming to see the world’s most popular cryptocurrency in action. In September 2021, the country’s president, Nayib Bukele, declared bitcoin legal tender in El 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 Salvador the 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 accommodate those who want to live in a crypto economy.
It would be one of Bukele’s 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 the shape of a bitcoin logo at the base of Conchagua volcano.
Bukele said that Conchagua’s geothermal energy will power the city and computers mining bitcoin. A billion dollars worth of “volcano bonds” 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’s 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. “You can pay in bitcoin, no problem,” says Evelyn GarcĂa, who runs a grill just off a beach road. “But I’m not going to serve you!” Her husband lost $60, she says, when a payment sent to his Chivo Wallet, the national crypto app, was left hanging.
“Oh yeah. That bitcoin thing,” says the manager of the shop next door. “We don’t trust any of that.” 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 get their $30 sign-up incentive only to find that fraudsters had already claimed it, says Ruth Eleonora López at local human rights watchdog Cristosal.
El Salvador’s government contracted two US tech companies to , but many users have already abandoned it or 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’t trust it. Oscar Salguero, a software engineer from San Salvador, says bitcoin’s 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’t happening. “Sadly, in El Salvador, it’s just become another tool for corruption,” he says.
There are concerns elsewhere too. USÂ 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 El Salvador, is urging Bukele to turn back before it is too late.
El Salvador has spent $180 million on the Chivo Wallet and bitcoin ATMs. The value of the $85.5 million in bitcoin that the country purchased with taxpayer money is estimated to have dropped to $76.1 million. Ratings agencies have downgraded El Salvador’s bonds to below investment grade.
For many Salvadorans – half of whom don’t have internet access, and one in five of whom live on less than $5 a day – Bukele’s plans seem as intangible as bitcoin itself.
