14 | New Scientist | 5 March 2022
Field notes El SalvadorThe world’s first bitcoin republic El Salvador’s adoption of the
cryptocurrency has attracted enthusiastic tourists, concern from
financial institutions and scorn from locals, reports Luke Taylor“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 whohave 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.
Tourism has spiked 30 per cent
since bitcoin became legal tender.
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 presentedhis vision for Bitcoin City, 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 betterknown as Bitcoin Beach. 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
García, 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 patch up the app, but many
users have already abandoned it
or swapped it out for the privately
developed Bitcoin Beach app.
Two-thirds of Salvadorans
polled last year said they opposed
making bitcoin national currency
and 87 per cent said in FebruaryAn advertisement for
bitcoin on a roadside
in El SalvadorCA
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Salvadorans opposed to making
bitcoin national currencyNews
that the move was yet to benefit
them. The country plans to
install 1500 Chivo ATMs, some of
which were torched in protests in
September 2021 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,” he says, “it’s just become
another tool for corruption.”
There are concerns elsewhere
too. US senators introduced a bill
to examine whether bitcoin could
be used in El Salvador to traffic
drugs or launder money.
The World Bank has refused
to support Bukele’s bitcoin
experiment, 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. ❚A store owner in surfing
hotspot El Zonte, now
known as Bitcoin BeachJOSE^ CAB
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