[Nelson Rauda]: The first time I heard the word Bitcoin, I heard it from the mouth of a young gringo named Jack Mallers, who announced to the world and to me that we, Salvadorans, were going to have a new currency.
[Eliezer Budasoff]: This is Nelson Rauda, a Salvadoran journalist. He writes for El Faro about politics, violence… But in recent years he has become a kind of correspondent for Bitcoin, this new currency he is talking about.
[Nelson Rauda]: I’ve written over 40 Bitcoin articles in the last three years, so I never know whether to say sorry or have people thank me.
[Silvia Viñas]: That moment Nelson just mentioned, when a young American announced that El Salvador was going to adopt Bitcoin, was Saturday, June 5, 2021, at a Bitcoin conference in Miami. The young man is Jack Mallers. In his twenties he launched an application called Strike to make payments in Bitcoin. In 2021 he appeared on Forbes’ “30 under 30” list.
Mallers announced from the stage that El Salvador would have a new currency. He was wearing a sweatshirt with a hoodie and a cap. Under that, he would later reveal, he was wearing the jersey of the El Salvador soccer team. Mallers told a little of what went on behind the scenes…
Archive Audio, Jack Mallers: They asked me to help write a bill, and that they viewed Bitcoin as a world-class currency… and that we needed to put together a Bitcoin plan to help these people
[Eliezer]: He says that the Bukele Government, which saw Bitcoin as a world-class currency, requested his support to write a bill. They said this plan was to help Salvadorans. He continues talking, and you can sense the emotion in his voice. He says this project was to give people hope. Quality of life.
Archive Audio, Jack Mallers: To give them hope, to give them a quality of life, so that you can live where you’re born and you don’t have to leave and when you send money home they’re not going to take fucking half of it [applause].
[Silvia]: Mallers says this is so that Salvadorans can stay where they were born, and so that, when they send money, half of it won’t be taken away. He is referring to commissions for remittances. This is important, because every year the country receives millions of dollars from Salvadorans living abroad. In 2023, for example, remittances were 9 billion dollars. That is more than 20% of the country’s Gross Domestic Product.
Mallers says that he worked very hard on this project, that he lived in El Salvador and made friends who, he hopes, will one day come to his wedding. And then, he introduces Bukele:
Archive Audio, Jack Mallers: I’d like to invite now someone I’ve spent some time with to share a message.
[Eliezer]: A video of Bukele begins, with the volume a little low at the beginning.
Archive Audio, Bukele: My name is Nayib Bukele and I’m the President of El Salvador…
[Eliezer]: He announces, in English, that he is going to send a bill to the Legislative Assembly for El Salvador to adopt Bitcoin as legal tender. As a second currency, because the main currency, since 2001, has been the dollar. The audience in Miami is so excited that they start applauding before he finishes explaining everything.
Archive Audio, Bukele: ….outside the formal economy. And in the medium and long term…
[Silvia]: Bukele had just made a historic announcement for Bitcoin fans. And in the end, it was a message for them, that’s why it was in English. The Salvadoran president was opening the doors for them so they could fulfill their crypto dreams. How it would affect Salvadorans seemed secondary. They found out that Bitcoin would be their legal tender that day as well, in this announcement that was made in Miami, in English.
[Nelson]: This is not a public policy made for us. We pay for it. We finance it. It is done with our resources. But it is directed at other people.
[Silvia]: This is El señor de Los sueños, a podcast from Radio Ambulante Estudios. I’m Silvia Viñas.
[Eliezer]: And I’m Eliezer Budasoff. Episode 4: The Crypto-Evangelist President.
[Nelson]: Bitcoin is one of Bukele’s first policies that he made after democracy was dismantled. You couldn’t do this in a democracy.
[Eliezer]: Let’s remember that the month before this announcement, in May 2021, the new Legislative Assembly had begun in El Salvador, controlled by the Bukelists. And the first thing the representatives did was to dismiss the magistrates of the Constitutional Court and the Attorney General. You see, the judicial power made Bukele uncomfortable. The judges had blocked some of his policies to combat the pandemic, and the Prosecutor’s Office was investigating the Government for its negotiations with gangs and for irregular contracts during the health crisis. In their place, the representatives appointed people connected to the Government.
It was the end of the separation of powers, and a triumph for Bukele, although it came at a cost: the international community criticized these moves as authoritarian. So Bukele, as he had done at other times, found a way to distract from this negative attention. And, in true style, he did it quickly. Three days after that announcement in English that we heard a moment ago, Bukele sent the Bitcoin Bill to the Assembly.
[Nelson]: I remember I was at my father’s house. We are watching a soccer game with the Salvadoran team. The game was just starting and I was about to sit down to watch the game, when my boss calls me, and he said, look, this is happening at the Assembly, get on it. And I said, ok.
[Eliezer]: So Nelson went to the Assembly and began to listen to the representatives, to see what this bill was about. One said that it was not going to be mandatory to adopt Bitcoin. But Nelson realized that at the same time, there was a live conversation in Spaces, on Twitter, that contradicted what was being said in the Assembly. President Bukele and his brother Karim were participating there, speaking in English…
[Nelson]: Explaining to investors and other people, gringos and Europeans: Well, yes, this is going to be mandatory. At McDonald’s they will have to accept your Bitcoin. So I… while in the Assembly, I stopped listening to what the representatives who were going to approve the bill were saying and I started listening to Space, and they were saying much more, giving more valuable information.
[Eliezer]: The committee in charge of examining the law took 85 minutes to review it.
[Nelson]: And the soccer game thing was on purpose because a soccer game lasts 90 minutes plus stoppage time, right? So the game started, it wasn’t over yet, and they had already finished discussing it, and even after they finished, El Salvador scored another goal and we were 3 to 0. I think we won, which I think was the only victory that day for the country.
[Eliezer]: The Assembly approved it in 5 hours, total.
[Silvia]: What has been the most complex, the most difficult part of this whole process?
Nelson: Understanding it. I mean, this is a super, super complex topic. That is, cryptocurrencies do not have any inherent value; they are pieces of computer code not tied to anything in the real world. I mean, yeah, if you talk about the shares of a company like Apple, well, Apple produces iPhones and computers and I don’t know what, so those are… it’s tied to something real. What is cryptocurrency tied to? Nothing. In the case of Bitcoin, in the case of other things, right? Because there are more than 20,000 cryptocurrencies. So it was like that pressure of having to understand, and having to understand it in spite of the fact that I was looking at this with a lot of skepticism and sometimes with anger. I mean, as a Salvadoran it did make me very mad and angry that a little gringo guy at a conference in Miami, who was weeping, wearing the jersey of Salvador’s national team, would say we are going to change the world, everything is going to be wonderful, whatever. When I know what this country is, I am from here; when, when I know the situation, the inequality, when I know this government quite well.
[Eliezer]: We’ll talk more about the Bitcoin Act in a moment, but first, like Nelson when he started covering this topic, we need to understand the basics…
[Silvia]: How do you explain what Bitcoin is in one or two sentences to someone who doesn’t know what Bitcoin is?
[Nelson]: In one or two sentences. Bitcoin is a financial alternative, let’s say. It is an alternative in which if you distrust the banks and the monetary system, you can use this alternative thing, as an experiment, you see? Let’s say that the simple way these people explain it to you is that with Bitcoin you are your own bank, you get these things and the central idea, let’s say, of its creator or creators, which is an anonymous entity that calls itself Satoshi Nakamoto, is a peer-to-peer exchange, an exchange between people without any entities as intermediaries, such as a bank or something else. That is basically the idea.
[Eliezer]: Bitcoin is considered the first cryptocurrency. It began operating in January 2009, but was born in 2008, in the midst of widespread discontent due to the global financial crisis. Many people lost their homes, their investments and savings because of bad decisions by the people who control the financial system. And then the US government bailed out the banks, at taxpayers’ expense. So, Bitcoiners are convinced that the financial system does not work, that it is unfair.
[Nelson]: And they propose this other way that in theory is a… I mean, it has its logic, it has its appeal.
[Eliezer]: In Latin America, the countries that have adopted this cryptocurrency the most are those with the highest inflation: Argentina and Venezuela.
[Tatiana]: The roots of Bitcoin are very different from how it works now. Bitcoin does not mean that the roots have been good.
[Eliezer]: This is Tatiana Marroquín, a Salvadoran economist. She worked in the Legislative Assembly as a technician on fiscal and Treasury issues and is now an independent consultant. Tatiana explained to us that, in general, in the world, Bitcoin is now mostly used as a speculative asset, that is, an investment that involves a risk.
[Tatiana]: That’s why a friend could come up to me and say I want to invest in Bitcoin because that’s the logic, right? You don’t say I want to invest in dollars, right? At least on a day-to-day basis, that’s not the case. So, what I would say to my friend would be, well, only invest what you are willing to lose because you can win a lot, but you can also lose a lot. So if you want to invest in that, go ahead. Or here are other slightly less risky options.
[Eliezer]: The risk exists, in part, because the price of Bitcoin is very volatile. In 2023, for example, its value fluctuated between 16 thousand and 44 thousand dollars per unit. But that is not the only risk.
[Nelson]: As an alternative to the traditional financial system, well, there are some things about the financial system that I think are not superfluous. That is, all its money-laundering preventions. When you mention KYC to a Bitcoiner, which is the banks’ know-your-client policies to prevent money laundering, they make a face because that is like a way for them to control your money. Also Bitcoin has to do with a lot of libertarian ideology, Ayn Rand and this type of freedom to the end thing.
[Silvia]: So, is there an ideology behind Bitcoin? No? What is it that moves people to get into this? What are their motivations?
[Nelson]: I think they believe they are going to change the world. I have a Christian background, that is, I have been in evangelical churches all my life. So, listening to these people, I saw many similarities and then there are people who said so directly. I was beginning to hear phrases like a Guatemalan who told me that it was easier for the sun to go out than for Bitcoin’s price to reach zero. There are people who compared it directly to Christianity. They call themselves evangelists. There are apostles, that is, great gurus on this subject, who go around the world preaching the gospel of Satoshi Nakamoto. So, when I began to understand it as a cult, I said ok, I understand them.
[Eliezer]: And in his attempts to understand the philosophy behind this cryptocurrency, there is a question that Nelson asks Bitcoiners:
[Nelson]: “Bitcoin is supposed to be a way to separate the currency from the State because you don’t trust the State. That’s the philosophy. So why are Bitcoiners so quick to embrace an authoritarian government? That is, did you want the State or did you not want the State?” Bitcoiners always say— their slogan is always, «don’t trust, verify», because that is what the system is supposed to do: it doesn’t trust an intermediary, so it verifies through mathematical transactions conducted by computers. So why do they trust Bukele’s government so much? And why don’t they verify what he says? Bukele has tweeted that he buys one Bitcoin every day. Have you verified it? Do you think he is telling the truth? Why do all the governments in the world lie, but this one is suddenly honest and wonderful and sincere and God’s gift to the world? And I still haven’t found one Bitcoiner who can satisfactorily answer that for me.
[Silvia]: What is known about when or how Bukele became interested in cryptocurrency?
[Nelson]: Very little, because the Bukeles, of all the virtues that people attribute to them, transparency is not one of them. Since the Bukeles have not expressed, and the President has not explained, that origin, much of what we know in El Salvador we know from the mouths of Bitcoiners who have confessed or said, in English, how this happened. The first thing was Jack Mallers.
[Eliezer]: Mallers was in El Zonte and one of Bukele’s brothers contacted him. In an interview, Mallers said he was very scared because he didn’t know what they were going to say to him.
[Nelson]: But he went to the meeting, and from that point on he began to talk with them, and that is where the talks began that led to that announcement in 2021.
[Eliezer]: Two weeks after this announcement at the Bitcoin conference in Miami, which we heard at the beginning of the episode, Bukele gave an interview to Peter McCormack, an Englishman who has a podcast about Bitcoin.
Archive Audio, McCormack: Hello again. Mr. President, thank you for having me here, you’ve made quite some history…
[Eliezer]: McCormack asks him what led him to make El Salvador the first country to adopt Bitcoin as legal tender. Bukele says that there are two types of decisions. Some have to do with historical debts, such as fighting the gangs. And others are decisions that look forward, towards the future…
Archive Audio, podcast, Bukele: Not to foresee the future, but at least to know where the world is going and to get there first, so your people will get some benefit out of it.
[Eliezer]: Not to predict it, says Bukele, but to see where the world is moving, to be able to get there first and have the people benefit from it. Bitcoin, of course, is this second type of decision. Bitcoin is the future.
Archive Audio, podcast, Bukele: The Bitcoin system is so perfect, I think it’s going to be the future.
[Eliezer]: He says there are also practical reasons for doing this, such as being able to receive remittances immediately, with almost no fees, or reaching the 70% of people who do not have a bank account. He also says that this will bring investments in tourism, and that it will make the country, which is dollarized, less dependent on the production of new dollars and the inflation of those dollars.
[Silvia]: So, to achieve this, make it public policy, and there is the Bitcoin Act, which, as Nelson told us, was expressly approved by an Assembly controlled by Bukele. It is a brief. It has sixteen articles and they are quite general.
[Nelson]: The law essentially says that Bitcoin is legal currency and that all of us who make transactions are obliged to accept it the way we accept dollars, which is our currency, American dollars.
[Silvia]: A few weeks after the Assembly approved the law, Bukele went on a national network to explain what it was all about.
Archive Audio, Nayib Bukele: This law was made to generate employment, to generate investment, and it will never affect anyone, as the opponents have tried to say with their dirty campaign and trying to confuse Salvadorans by making them believe that they are going to be affected by a law that has no other objective than to benefit them.
[Silvia]: It lasted almost an hour… More than once he refers to Article 7, one of articles that caused most concern, because it seemed that the law forced people to use Bitcoin.
Archive Audio, Nayib Bukele: By taking it out of context and putting only Article 7, well yes, it would seem that everyone is obliged to accept Bitcoin as a form of payment and therefore receive the Bitcoin. But it’s not like that. Economic agents, that is, businesses, are obliged to accept Bitcoin but not to receive it.
[Silvia]: Accept, but not receive. People began to joke on social networks about what the difference would be between accepting and receiving. It made more sense when Bukele announced, on that same national network, an electronic wallet called “Chivo” or Chivo Wallet. Chivo in El Salvador means something similar to “cool.” With this wallet, which is an app that you download to your cell phone, people can send you Bitcoins and if you want, you convert them to dollars. So, Bukele was saying, don’t worry, you have no obligation to receive Bitcoins because with this app, this Chivo electronic wallet, you can convert them to dollars automatically. So, if you are a seller and someone wants to pay you in Bitcoin, you have to accept it, but since the Chivo Wallet can convert it to dollars, what you receive can be dollars, if you want, rather than in Bitcoin.
Bukele announced an incentive for people who downloaded the Chivo Wallet: everyone would receive $30 in Bitcoin.
[Nelson]: Then people used the Chivo Wallet to get their $30 and many of them never used it again. The Chivo Wallet was a spectacular failure. People gave it a chance. The app was horrible, it crashed, transactions were not recorded, people lost money. There were many people like me who couldn’t get the $30 bonus because someone used our DUI, someone used my DUI, my ID, to get those $30 and transfer them to their account. That happened to thousands of people. The government has taken prosecuted people very discreetly—this was published by Factum Magazine—people who committed fraud with the Chivo Wallet. People who, for example, one day transferred $20 from their Chivo Wallet to their bank account, but the $20 was not debited from their balance in the wallet, so they did it again and it worked again, and they kept on doing it until they got thousands of dollars from people because the app was very defective, so the prosecutor’s office went after them. So people are very patient in El Salvador and have allowed Bukele and consented to everything. When he got involved with money, they said look, we don’t have that much.
[Nelson]: The first major protest that took place on September 15, 2021 was days after the Bitcoin Law went into effect. Bitcoin was one of the reasons why people went out to protest, not the only one, but one of the reasons why they went out to protest. Then, as he realized that it was unpopular, that people didn’t like it, and that his Chivo Wallet had been a failure, he started talking less about Bitcoin. He no longer mentions Bitcoin. Not in Spanish.
[Silvia]: Bukele went almost a year and a half without tweeting about Bitcoin in Spanish. In June 2022 he tweeted, quote: “I see some people are worried or anxious about the price of Bitcoin on the market.” His advice is to stop looking at the graph and enjoy life because, if you invested in Bitcoin, your investment is safe and the value will grow… He says the key is to be patient. This, by the way, is similar to what we’ve seen him do before: he takes something negative and changes its meaning to make it seem like a victory, or at least something logical. When the price is falling, he talks about Bitcoin in Spanish as an investment. But the law he promoted does not refer to Bitcoin as an investment… The law made it legal tender. An official currency is used for daily transactions, not for investing. But if people are not using it in their daily lives, all there is left is to tweet about Bitcoin as an investment.
The next time he tweeted in Spanish about Bitcoin was in December 2023. Again, almost a year and a half later. He shared an explanatory video—in Spanish with English subtitles—about why El Salvador does not sell its Bitcoins. This video, by the way, was posted when the price of Bitcoin was rising.
[Silvia]: Nelson told me that when Bukele talks about Bitcoin, he does so in English, like it is a more outward-looking policy. Do you see it that way too?
[Tatiana]: Yes, yes, yes. In El Salvador, to talk about Bitcoin is to remember the failure of the government. So I think where they are in Bitcoin, apart from the business that the government has with some people, which we know very little about, Bitcoin, the part of the government that has remained is the tourism attraction. So I think they have held on to that and that’s why continue to speak to this niche of people.
[Silvia]: How does the fact that this Bitcoin law exists and that on paper, it is legal tender, affect the average Salvadoran?
Tatiana: I think that at this point, the way it affects you, well, first, that there are many components of the law that can be applied and that have not been applied, such as the payment of salaries, for example.
[Tatiana]: So let’s say the law is still a risk, even if it’s not being enforced that way. But in practical terms it clearly affects the public funds.
[Silvia]: The Government says that it has been buying Bitcoin with public funds since 2021. But we do not know how much it has bought. And that is only part of the expenses, because the Chivo Wallet, the ATMs, the bonus, the propaganda—all that It costs money.
[Tatiana]: We do not know how public funds are being used. We know that they are being used, that there are new institutions, that they have created institutions related to Bitcoin, that they continue to create laws for cryptocurrencies, etc. And all that involves state offices, state personnel, etc. The same goes for what was invested in Bitcoin, we don’t know where all that money is, and it is not being used for priority issues for the Salvadoran population economically, for example. So I think that is where it’s affecting us the most.
[Silvia]: Do you by any chance accept Bitcoin here?
Seller 1: No, we haven’t implemented that yet…
Seller 2: Bitcoin? No.
[Silvia]: Really, oh ok. It’s fine.
[Silvia]: One question, do you accept Bitcoin here? If someone wanted to pay in…
Hotel employee: Yes, of course
[Silvia]: Oh okay. Got it.
[Silvia]: When I was in San Salvador, almost every time I bought something, I asked if they accepted Bitcoin. Only two places said they did. The one you just heard, which is a hotel belonging to an international chain, and a Mexican food restaurant in a mall.
[Silvia]: Out of curiosity, do you accept Bitcoin?
Restaurant employee: Yes.
[Silvia]: You do? Ok, but is it common for people to pay in Bitcoin?
Restaurant employee: No, no, it’s about one person every two weeks.
[Silvia]: It can’t be heard very clearly, but she says it is not common. That one person pays with Bitcoin every two weeks.
[Silvia]: And foreigners, I imagine?
Restaurant employee: Yes, just like you.
[Silvia]: Yes, foreigners, “just like you,” she said.
[Eliezer]: This, of course, is not a very large sample, nor scientific. But surveys and studies have been carried out on the use of Bitcoin in El Salvador. An early 2023 survey by the University Institute of Public Opinion found that 74% of Salvadorans did not use Bitcoin to buy or pay in 2022. Of those who did, a third had used it only once. And according to a study by the National Bureau of Economic Research, only 20% of companies operating in El Salvador accept Bitcoin.
After the break. We’ll go to the beach that promises to immerse you in a Bitcoin economy, where it all began: El Zonte. We’ll be back after a pause.
[MIDROLL]
[Silvia]: Where are we, Nelson?
[Nelson]: Entering El Zonte. Well, Surf City, but on the dirt road.
[Silvia]: The road from San Salvador to El Zonte, especially as it gets closer to the beach, is modern and a very comfortable drive. That, in July 2023, changed once you entered El Zonte. I’m with Nelson in a rental car. We’re going down a dirt road with a lot holes. That explains the noise, and our trembling voices.
[Silvia]: Surf City is the name Bukele gave it.
[Nelson]: Yes, Surf City is… He has this tendency to name things in English.
[Silvia]: Before becoming Surf City, what was El Zonte?
[Nelson]: I think it’s still more or less the same. It’s a surf beach that has now a little more infrastructure, a little more… a few restaurants, some hotels, but essentially it is still what it is. [Because when you hear Surf City, you say, how developed, that tourist enclave. Acapulco, right? It’s not that. This is Surf City: the women carrying crates on their heads, selling mangoes or selling something else, the man gardening on that piece of land. That’s Surf City.]
[Silvia]: Surf City is actually an area of several beaches that includes El Zonte. But we are in El Zonte because, as we said, this is where the history of Bitcoin in El Salvador began. It is a very nice, small spa, where on some streets you see modest one-story houses and other modern hotels with signs saying they accept Bitcoin.
[Nelson]: I mean, here we are in front of Palo Verde, which is one of the famous hotels. “Say Zonte”, which is “The Spanish Learning Experience”, right? In other words, it is a language academy. But it sounds nicer that way.
[Silvia]: Of course.
[Nelson]: So here it was… This is what people like to call, the… the crypto brothers like to call it Bitcoin Beach, because this was what we might call the birthplace of Bitcoin Beach.
[Silvia]: This is where an experiment began. In 2019, two years before the country adopted cryptocurrency as legal tender, there was an anonymous donation of Bitcoin in El Zonte. This person—who people few know who he is—gave the Bitcoins to Mike Peterson, a Californian surfer who has lived in El Zonte since 2005. We tried to get an interview with him, but it didn’t work out. We did speak with one of the people from the town who, together with Peterson, launched the Bitcoin Beach project.
[Román Martínez]: Bitcoin Beach showed that Bitcoin could be a tool for communities that had never had access to a financial system, to a bank account, because here in the community we saw changes. When Bitcoin started being used, people’s mentality changed.
[Silvia]: That was Román Martínez, one of the founders of Bitcoin Beach. I interviewed him the day I visited El Zonte with Nelson. Román was born in El Zonte. And he describes Bitcoin Beach as a social project.
[Román]: Where we were focused on giving tools and knowledge to the children of our community with different projects in the area of education, in recreation, in the spiritual area, in the empowerment part. And three and a half years ago we began to use Bitcoin in the project as a form of payment, where initially the students got a prize for being good students, for cleaning the river, for cleaning the beach…
[Silvia]: And then the pandemic arrived, and it hit El Zonte quite hard because many families live off tourism, and that stopped completely.
[Román]: That’s when the project changed direction and we started helping local families with a donation in Bitcoin. El Zonte has about 500 families, so all the families helped each other out for a period of time. Every month they received a donation in Bitcoin and that opened the door to what is known today as the first circular economy within a Bitcoin ecosystem.
[Silvia]: This circular economy is something I heard a lot that day at El Zonte. Román explained it to me in simple terms.
[Román]: You come to the community and you can pay, you can live with Bitcoin, you can pay for the hotel, you can pay at the restaurant, for the electricity, the water, the telephone, whatever you can think of, right?
[Silvia]: I asked Román what the connection is between Bitcoin Beach and the step the country took to convert Bitcoin into legal tender.
[Román]: I think it was just like a link, is is just… Bitcoin Beach showed that Bitcoin could be that inclusive tool to provide more opportunities, to bring more tourism, more investments.
[Eliezer]: This look at Bitcoin Beach is the most “official”, let’s say. And of course, it makes sense that this is how one of its founders describes it. The Government has pointed to Bitcoin Beach as a model, and it has worked, because Nelson says that El Zonte has become a kind of Mecca.
[Nelson]: In other words, again with the religious symbolism, we are going to go on a pilgrimage here because we have finally arrived at a place where we can find a case of real-life use of this thing. And then people started going to El Zonte to try to buy things with Bitcoin. And they did, and still do. They are delighted with the possibility of turning their codes into a beer, a coconut, a hotel stay, into whatever.
[Tatiana]: [With Bitcoin], as long as it is in the wallets of everyone in El Zonte or on some beach, it will work for them. Which was the same thing we saw at the beginning when they said look, on this beach it works in the sun. Does it work for you? Of course, because El Zonte is a few kilometers. So if they agree to do transactions with buttons, they will manage. The issue is when it is taken to a larger economy.
[Nelson]: The idea was that this would be replicated throughout El Salvador. I invite all Bitcoiners who believe that the media lies, that journalists lie: Come to El Salvador and do not bring cash or any card, just bring your Bitcoin wallet and try to stay in this country for a week, a few days, just paying in Bitcoin. Don’t believe me. Check, and try to do that, and you will find the answer there. This did not happen and in fact does not happen in El Zonte. The Zonte is not a circular economy where there is Bitcoin. El Zonte is a beach where in some places, and where I think it is the place with the highest concentration in El Salvador where you can pay with Bitcoin, in addition to paying with dollars. Cross the street in El Zonte, you leave your hotel in El Zonte, which has the big Bitcoin logo and you cross the street and try to pay the lady in the store in Bitcoin. Then you tell me. What I’m saying is, El Zonte is not what it is said to be.
[Wilfredo]: The truth is that we knew very little about Bitcoin. Currently it can also be said that we know very little about the subject.
[Eliezer]: This is Wilfredo Urias, a community leader from El Zonte. Silvia and Nelson interviewed him at a hotel that, by the way, did not accept Bitcoin. He works there doing various things. When they spoke, he was tending the poolside bar. But Wilfredo was also the president of the local Community Development Association. Those are organizations that are in charge of managing drinking water and bringing projects to benefit the community. They can be about sports, education, infrastructure…
Wilfredo mentioned what Román said a while ago, that the people of Bitcoin Beach helped the townspeople during the pandemic. And that Bitcoin supports community projects. But he also says that the use of Bitcoin has decreased… That the situation of Salvadorans from El Zonte like him, who have lived there before Bitcoin arrived, has in part become more difficult.
[Wilfredo]: A little more difficult because of the investments, which at the moment have not been inclusive. So there are more opportunities for investors and less opportunities for the locals.
[Eliezer]: Wilfredo refers to investments in, for example, land for hotels.
[Wilfredo]: Yes, they are buying quite a bit in the community. So it is a touchy issue, because currently there are still many people who do not have their own properties, who live in State areas, in areas—land that they have taken by right. And that now, with the appraisal of properties, is a problem.
[Silvia]: The value has gone up.
[Wilfredo]: A lot. It’s excessive. In other words, a piece of land that five years ago could cost you $20,000, today costs you $200,000.
[Silvia]: Wow.
[Eliezer]: Some Bitcoin Beach real estate agents said a property would go from $125,000 to $200,000 in one week. And in Bitcoin City, which is 200 kilometers away, there were neighbors who agreed to sell their land to the government for $8,000 but to relocate to the same area they had to pay more than $40,000.
[Nelson]: The price of housing has skyrocketed, in part because there are many people speculating in land, wanting to live in this wonderful country called El Salvador, and a lot of places are being gentrified. People are being displaced.
[Eliezer]: In El Zonte there are 25 families under threat of eviction because they live on land where a public park called Bitcoin Beach Club de Playa is going to be built. It will have a volleyball court, a commercial area, massage rooms… When he announced the project, Bukele said it was necessary to invest in that beach because it is modest, the business for people there are the tourists, because they buy things from them, he said.
Archive Audio, Bukele: It is all about maintaining the atmosphere of the area. We don’t want to modify it, but we want to maintain the place. But no, people not living in a tin house, but people with houses, always suited to the surroundings, or a nice business, always suited to the surroundings.
[Eliezer]: In November 2023, the media outlet Mala Yerba revealed that, according to audio recordings of meetings to which they had access, the Minister of Housing contradicted this promise that they would improve the houses of the people who live on the park land. The minister said that they cannot have people living there, and gave them the option of moving three kilometers away, across from a sewage treatment plant.
But these types of evictions don’t only happen in El Zonte…
[Nelson]: For example, in the area of La Unión, in Condadillo, in Flor del Mangle for the construction of the airport, an airport that appeals mainly to Bitcoin investors coming to this country, to participate in a scheme in which President Bukele has they won’t pay taxes.
[Eliezer]: This airport Nelson is referring to is for bitcoiners to get to Bitcoin City, which we mentioned a moment ago. It is a new city, the first Bitcoin city, that the Government is building. It is on the coast, at the foot of the Conchagua volcano, where according to Bukele, the geothermal energy of the volcano will be used to power the computers that will mine Bitcoin there. In Bitcoin City, no one will pay taxes.
[Nelson]: I mean, Bitcoin is very good in El Salvador, if you are not Salvadoran.
[Tatiana]: One of the things that the Bitcoin law included was that there would be no taxes. Now, there are very few, very few ways around the world to trace Bitcoin transactions. So El Salvador is just being even more permissive than any of the Bitcoin dynamics. So, of course, if you come to El Salvador with money that has come from who knows where, well, you can continue doing transactions in El Salvador without saying where it originates.
[Silvia]: But then, if I am a foreigner who has $250,000 in Bitcoin and I want to buy a house in El Zonte, nobody is going to ask me where those funds come from, right? So it’s a completely different transaction than if I were to buy a house with dollars.
[Tatiana]: Of course, because first he or she would have to declare where the money they brought was coming from, if it was brought it in cash or in what way. Yes, totally.
[Nelson]: In El Salvador, houses are sold in Bitcoin, that is, you can buy land in Bitcoin, do the transaction in Bitcoin and that poses several problems for me. What kind of people have money and do not want it to be known in a system that prevents money laundering? Bitcoin is a good alternative for people who don’t want others to know where their money comes from and what they do with their money.
[Eliezer]: In addition to allowing these types of transactions and giving tax benefits to those who use Bitcoin, the Government has created a program to attract foreign investors interested in developing a «Bitcoin country», as the official website says, which is in English. The program is called “Visionary Freedom Program,” and it offers a Salvadoran passport to investors who meet certain requirements.
But not only that, in December 2023, the Assembly reformed the migration law so that foreigners can apply for Salvadoran nationality if they participate in government programs aimed at investing with capital in “legal tender”… which in El Salvador , as we know, is dollars and Bitcoin.
Investments in El Zonte are not only affecting the prices of land and houses… Or the people who are in danger of being displaced. This development is also having an impact on the water supply, as Wilfredo explains.
[Wilfredo]: [The population is growing and so the water flow diminishes.] Improving the water supply system is one of the biggest challenges in providing for the community and, especially everything that has to do with El Zonte.
[Eliezer]: El Zonte has a self-managed water system, which was built almost 50 years ago because the national authority did not supply it. And the community, which manages this water supply, grants licenses only for domestic use, not commercial use.
[Wilfredo]: Because we take care of it. It’s gold. Having water right now is gold. It is like having gold in your hands.
[Silvia]: That’s what Wilfredo told us as we left the hotel where he works.
On the way back to the car, I asked Nelson to explain in more detail what this water supply problem is about. He told me that the Assembly, controlled by Bukele, passed a law two years ago recognizing the human right to water, and creating something called the Salvadoran Water Authority, which oversees all of the country’s supplies. The law allows anyone who has the ability to pay to exploit the water commercially, to get a permit without limits.
[Nelson]: The country has a very serious water supply problem. So people like him tell you that it is like gold because they know that in communities you can walk ten, ten kilometers here or to the communities nearby and there is no water.
[Silvia]: Wow.
[Nelson]: And because water is not a guarantee. In other words, ANDA, which is the National Administration of Aqueducts and Sewers, does not provide water to everyone, especially in the interior, far from San Salvador, so then people have a self-managed project like that, an alternative, artisanal project, because the Government never solved that problem. So now, the Salvadoran Water Authority, the law that the Assembly approved, says basically that they have authority over all bodies of water and I don’t know what else. And then what the Government wants is to generate tourism, commerce, all the environmental permits, what they call expediting. But at what cost? At the cost of local people who are running out of water so that tourists in the hotels can always have water.
[Silvia]: So now they would control this system…
[Nelson]: They would control the system…
[Silvia]: Wow.
[Nelson]: That is, yes, that is a problem and a concern people here have.
[Silvia]: That makes sense.
[Silvia]: After meeting Wilfredo, we headed out to a Bitcoin Beach “meetup.” It is a monthly event, free and open to anyone who wants to attend. The invitation promised a talk and the opportunity to ask questions to guests, a welcome drink, gifts and discounts on food and beverages… if you paid with Bitcoin.
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[Nelson]: And of course, these people are going to tell you… Right now we are going to go to this thing and they are going to sell it to you: this is the best thing that has happened, and so on, but you come to El Zonte and you don’t think about the farmers who are on the other side of the street.
[Silvia]: Sure.
[Nelson]: With all this it’s like… don’t think about those invisible people, don’t think about the people who are being affected by this. And that is, in other words, it is a pattern that I see all over the country and that we are seeing all over the country, that this type of development is prioritized and the other is like, eh.
Ambi Meet up: Testing, testing, one, two, testing…
[Silvia]: The event is on the terrace of a hotel called Palo Verde. There are tables where you can sit and have your complimentary drink, order food… and chat with foreigners curious about Bitcoin. In fact, the vast majority of us are foreigners. The host of the event is Román Martínez, one of the founders of Bitcoin Beach and whom we heard before. He wears a black t-shirt with the Bitcoin Beach logo and walks around the tables, greeting those of us who came to see what this is all about.
While I wait for it to start, I hear that there is a group of three people speaking Spanish, so I approach. They are university students who are doing a study on Bitcoin. I sit with them, we chat, and after a while, Román stands in front of us. Behind him is a sign for Bitcoin Beach and another for a real estate consultant: “For people interested in investing or moving to El Salvador” says the sign. Everything in English. Román grabs the microphone, and the first thing he asks is if there are people there who don’t speak English.
[Román]: Aside from you, who else doesn’t speak English?
[Silvia]: We had agreed that those who did not speak English could sit with us, so that I could translate for them. But no one else comes.
[Román]: Welcome. And so we’re going to do it in English because I think it’s it’s more… it make more sense.
[Silvia]: Román says the event is going to be in English, because it makes more sense. But first, he addresses our small group of four who speak Spanish:
[Román]: But have you ever used Bitcoin? Have you? Have you done a Bitcoin transaction yet? Have you? Okay, well even better, so we don’t have to give it to them. Thanks for being honest. Thank you for being honest. So, welcome, guys. Welcome. We have this Bitcoin event… Once every month, so feel lucky you are here tonight.
[Silvia]: Román says that the purpose of these monthly events is for new people to meet people who are already in El Zonte, so they learn about the Bitcoin Beach projects… And what follows is more than an hour of different people taking the microphone and talking about Bitcoin… For example, one Salvadoran from Bitcoin Beach says that every Friday, they visit schools to teach students about Bitcoin. Between one guest and another, Román makes comments. He is a good presenter, he looks comfortable, not nervous at all. At one point he refers to coverage of Bitcoin by the media who claim it’s not working.
[Román]: This is a bullshit that the media is, is, is, is trying to, to say…
[Silvia]: And that is why this meeting is important, he says, because it means that more people will learn about Bitcoin and will be able to go tell their friends, back in their countries, that the media are lying.
[Román]: Our next speaker is Miss El Salvador…
[Silvia]: After a while, Román introduces the person who at that time was Miss El Salvador.
[Alejandra Guajardo]: Hello. My name is Alejandra Guajardo, and I’m the actual Miss El Salvador. I will give my crown this Sunday, but that doesn’t mean that I will continue to spread education about Bitcoin, of course…
[Silvia]: You may remember her. She is the contestant who dressed up as a giant Bitcoin coin in the Miss Universe 2022 pageant. Alejandra Guajardo, who by the way is Mexican-Salvadoran, was going to hand over her crown that Sunday, but she says that doesn’t mean she’s going to stop educating others about Bitcoin. She has become a Bitcoin influencer of sorts. An evangelist, or crypto-evangelist, as Nelson told us a while ago, the self-proclaimed, people, who encourage others to adopt the cryptocurrency. In fact, as the minutes pass, it becomes clearer that the purpose of this meeting is just that, evangelizing about Bitcoin.
A Canadian investor says he sees El Salvador as a unique place to do business…
Canadian investor: As someone who’s invested in early stage companies, I look at this as investing in an early stage country. It’s very kind of similar in the whole way it’s approached and so on.
[Silvia]: And as someone who has invested in companies in their initial stage, he considers that investing in El Salvador is like investing in a country in its initial stage… Then, a woman who says she has a blog, in English, which translates to: Becoming a Butterfly, says she had been looking for a place to move to for a year. She sold her house and bought a one-way ticket to El Salvador.
Blogger: So. Yeah, Yeah, I’m not leaving. It gives me a lot of hope. And I’m looking for a sense of hope. Bitcoin gives me hope.
[Silvia]: She says, Bitcoin gives her hope.
[Silvia]: At the end of it all, while the people who had gone to the event stayed chatting among themselves, Román and I moved away from the noise and I was able to ask him some questions.
[Silvia]: You said that the media says Bitcoin didn’t work, right? That it failed. Why? Why did you mention that?
[Román]: Because that’s what the majority of the media is saying. The media. But I believe that education is key. Making radical changes in people’s mindsets takes time. It took us two years, three and a half years now, working for this community, and even in the community you find people who don’t want to, that is, they don’t understand it, they are closed-minded. We knew that it would take time for people to see a benefit, for people to learn.
[Silvia]: After saying this, Román starts asking me questions: where do I live, when was the first time I heard about Bitcoin… I didn’t remember… I think 2018, 2019…? Before the pandemic. And I tell him that I don’t have Bitcoin.
[Román]: That’s the point. You are a person who has grown up with technology. Access to a bank account, access to assets, access to being able to make transactions. And if you haven’t bought even a small portion of Bitcoin yet, since you first heard it in 2018, that means you don’t understand it. It takes time. It takes time. The only thing I do hope is that the Salvadorans don’t take too long, as you have for so long.
[Silvia]: Today I met someone who said that he is worried about investments and that prices are rising a lot and it is becoming very expensive for the locals.
[Román]: Correct. And that’s one of the things that we say can make people worry, it’s true. But… development brings good things and things that are less good, you know? And that’s the story.
[Román]: But that is something we have to be aware of. We have to do our part, our part. Because if we just complain but do nothing, nothing is going to change. Our situation is not going to change. So, I think that what is happening is true, but it is also a time of many opportunities.
[Eliezer]: In early December 2023, Bukele tweeted—in English—a triumphant announcement about Bitcoin. The price had risen, and he said that if El Salvador sold its Bitcoins at that time, the country would recover 100% of its investment. In addition, it would have a profit of 3 million dollars. He clarified that they do not plan to sell because that was never the objective and they know that the price will continue to change. He said this does not affect his long-term strategy.
[Silvia]: The message that Bukele sends in this tweet is for the people who he says “ridiculed” his supposed losses, for the authors of critical articles. He says the responsible thing is for them to retract, to apologize, or at least recognize that El Salvador is now making profits.
[Eliezer]: Bitcoiners celebrated the announcement, but the economists and experts cooled things down. For several reasons. Including something we have already mentioned: what it has cost to implement this policy, the public funds that have been used for the government’s electronic wallet, to create new institutions—funds that could have been used to deal with other problems of the population, such as access to water.
[Silvia]: And Nelson and Tatiana, whom I interviewed before Bukele made this announcement, pointed out several promises that have not been kept.
[Nelson]: Everything they told us Bitcoin was going to be didn’t happen. They promised us that it would make remittances cheaper; it didn’t.
[Silvia]: When someone sends remittances in dollars to El Salvador, they have to pay a commission of almost 3%. If you use Bitcoin, you pay a 5% fee for selling Bitcoins, and the person receiving them has to pay the costs associated with withdrawing the money in dollars at ATMs. Sending remittances in cryptocurrencies has remained between 1.2 and 1.5% in 2023.
[Eliezer]: The Government also said that Bitcoin would bring foreign investment.
[Tatiana]: Well, since mid-2021 and all of 2022, El Salvador has been one of the only countries in Central America and the region that has had negative foreign investment, that is, there has been disinvestment in El Salvador; investments are being lost.
[Nelson]: They told us it was going to create jobs. I remember I went to an accountability of crypto companies and they said they had generated 400 jobs in one year, which is marginal for an economy like ours.
[Eliezer]: And, in fact, those 400 were indirect jobs. There were fewer direct jobs.
[Nelson]: So jobs weren’t created. And that it was going to generate tourism. The increase in tourism, which has happened, not as they claim, but if there has been an increase it is not attributable just to Bitcoin.
[Tatiana]: For example, Costa Rica is the country that attracts the most tourism. So there are ways to do it successfully and without all the risks and negative things that come with it.
[Nelson]: When everything they told us was going to happen didn’t happen, they changed the rules and said no, that Bitcoin has been a re-branding of El Salvador, from previously the country of gangs and homicides, to the country of Bitcoin and financial innovation. First. You are changing the rules. That’s not what you promised us. Second, it is the most expensive re-branding in history. And if it has worked, it has worked in those sectors. But it is an advertising investment and it is a lie. We are not a Bitcoin country. And I say again. Come on, try to buy using Bitcoin in this country.
[Silvia]: And Nelson says everything that has happened with Bitcoin is thanks to the fact that Bukele’s power as President has no control.
[Nelson]: This was a disaster in this country and no one has been held responsible. That can only happen in a place that is not a democracy, in a place where power is exercised without restrictions and in a place where there is authoritarianism. I mean, it wouldn’t be possible… In Finland you couldn’t do this.
Credits
Produced and reported by: Silvia Viñas and Eliezer Budasoff
Produced and reported on site by: Nelson Rauda and Gabriel Labrador
Digital Production: Desireé Yepez
Edited by: Daniel Alarcón and Camila Segura
Editorial Consulting: Carlos Dada
Fact-checking: Bruno Scelza and Desirée Yépez
Production Assistant: Selene Mazón
Music and Sound Design: Elías González
Graphic Design and Art Direction: Diego Corzo