Record price of bitcoin transforms lives on a beach in El Salvador

On a beach The Savior frequented by surfers, the merchant María Aguirre assures that it was ““very good” having invested US$2,200 in buying bitcoin four years ago, well now, with the rise of the cryptocurrency, it has US$19,000.

In 2021, El Salvador was the first country in the world to establish bitcoin as legal tender, at the initiative of President Nayib Bukele, who has also made happy accounts in recent days.

Bukele celebrated last week that the government accumulated 5,689 bitcoins, which totaled 406 million dollars, but few Salvadorans use the cryptocurrency, whose price has reached record levels above US$ 72,000.

“Today the rise has been great and I am very happy,” Aguirre tells AFP in his small business selling food and soft drinks on El Zonte beach.

With a broad smile, the merchant serves a customer who buys a soft drink and sweet bread in her “Mary Store”whose façade displays a small sign that says: “Bitcoin is accepted.”

Located 58 km southwest of San Salvador, the beach is nicknamed “Bitcoin Beach” for having been the first place in the country that massively welcomed the use of cryptocurrency to make payments.

It is a popular weekend destination, although it is not a cheap place, and among its 3,000 inhabitants there are several foreign hostel owners. “Bitcoin Beach” It is also the name of an application used in the area to make transactions.

The cryptocurrency also has many users on beaches near El Zonte, such as El Tunco and El Sunzal. But the situation is not replicated at the national level.

Exceptional case

The house made of bricks and zinc sheets serves as a business and home for Aguirre. It is located on a narrow street, surrounded by other small businesses that also accept bitcoin in addition to the dollar, legal tender since 2001, when El Salvador eliminated its national currency, the colón.

Bitcoin has changed the life of this 53-year-old merchant, as it has given her “better economic stability,” so she hopes to “grow” her business.

Aguirre has been able to buy a washing machine, stove, refrigerator, and furniture for the home and store thanks to his cryptocurrency earnings.

In El Zonte, people began using bitcoin long before Bukele legalized it on September 7, 2021, and the cryptocurrency is used to make many payments, even for the purchase of a soft drink or some eggs.

But this popular beach, where many Salvadorans and tourists come to ride boards over the waves, is an exception within the country. A survey by the private Universidad Centroamericana showed in January that the 88% of Salvadorans did not use bitcoin during 2023.

Bukele introduced cryptocurrency in order to bank a population that was mostly outside the financial system, but this situation has not changed much since then.

“Up and down”

In another part of El Zonte, on the side of a road, Blanca Castillo has a store selling artificial flowers and natural juices. She is also happy with bitcoin, as she assures that it has brought her “Profits”.

However, the 25-year-old trader warns that there is always the risk of losing. “When you see that the value of the currency will go down, you feel like you are going to lose (…), you have to be aware of how the movement is going” of cryptocurrency, says Castillo.

In fact, at the end of 2022 the cryptocurrency was trading below $17,000. Sitting in a chair in a small restaurant, its owner Rosalina Franco serves many customers who pay with bitcoin, mostly foreign tourists, every day.

“I can’t handle the phone to make transactions,” so “I save what I charge in bitcoin, I don’t spend it, it’s a saving,” says the 70-year-old woman, who has “benefited” from the rise in prices.

When Bukele introduced bitcoin, he also wanted family remittances from abroad – a key component of the Salvadoran economy – to be channeled through digital wallets to reduce shipping costs, but that did not happen.

In 2023, only 1% of the $8,181 million in remittances arrived through one of the digital wallets, according to the Central Reserve Bank.

“What is clear is that people continue to use more traditional methods of sending (remittances) and this has a lot to do with people’s distrust of the volatility of the cryptocurrency. And the government has not gotten the accounts in that regard,” independent economist César Villalona told AFP.

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