The sleepy surfing and fishing village El Zonte on the Pacific coast of El Salvador is the unofficial mecca for Bitcoiners under the name "Bitcoin Beach". El Zonte, with a population of 3000, is also often seen as the nucleus of Bitcoin's adaptation in El Salvador.
In this article I will tell you what makes Bitcoin Beach special and which famous Bitcoiners you can meet here!
Videos from my trip can be found in the El Salvador Playlist on YouTube.
Sunshine and Satoshis: Welcome to the Bitcoin Paradise El Zonte
The beginning of Bitcoin Beach: Secret Bitcoin Donation
The birth of the Bitcoin Beach project reads like a fairy tale and thus fits very well with the Bitcoin narrative with the anonymous Bitcoin founder Satoshi Nakamoto.
In 2019, an anonymous Bitcoiner contacted Michael Peterson, a US resident of El Zonte for many years. That anonymous Bitcoiner from the beginning wanted to donate a large amount in Bitcoin and use it to build a Bitcoin economy to help people who are otherwise excluded from finance.
On site, I was told the donation amount was 100,000 USD+ in bitcoin. However, the anonymous bitcoiner had one condition.
Building the Bitcoin Community
The donation had to go directly to the local community and could not be exchanged for the only local currency at the time, the US dollar. Under this condition, Peterson accepted the Bitcoin donation and began building a Bitcoin community in El Zonte. With the help of local residents such as Jorge Valenzuela and Roman "Chimbera" Centeno, a local Bitcoin Circular Economy was begun.
Picture here: Jorge Valenzuela. One of the community leaders in El Zonte in front of "the community headquarters", the Hope House.
There are many more people involved in the project, but I have not met all of them. A short overview is provided on their website. However, the initiative is much more than just a community that pays with Bitcoin.
Map of El Zonte via Google Maps
Civil war and gangs: Impact on El Salvador.
If you've ever heard of El Salvador, you may also know that until a few years ago, El Salvador had the highest homicide rate in the world. The small Central American country still struggles with political instability and gang crime due to the civil war in the 1980s and 1990s.
And in El Zonte, too, futureless youth joined the criminal Maras, although far fewer than elsewhere in the country. In the meantime, crime has declined somewhat throughout the country, but still at a high level.
Social initiative in El Zonte
This inspired Jorge Valenzuela to give young people hope and prospects through social projects long before Bitcoin Beach. Because he lost some friends during his youth to gang crime (Video from minute 19).
Even before the Bitcoin donation, trips to distant schools were organized or children were given a social, safe place to gather and learn. There was hope for the youth again.
From then on, this social engagement was an important cornerstone of the Bitcoin Beach project and now offered completely different financial opportunities.
Every Saturday at 8 am there is free surf training "Surf Para Todas" or other activities for the kids.
Here are a few examples:
- Teenagers receive free English and computer science lessons to get better job offers later on
- Teenagers receive new laptops
- Trips to schools or similar are organized
- Free activities for children to keep them "off the streets"
- Beach Cleanup and other non-violent competitions are rewarded with Bitcoins
Bitcoin Beach success
In the first months, the project developed organically and the villagers got to know the technology, which was completely new to them. Very few here have a bank account (Only ~30% in El Salvador have a bank account). The few that do have one have to take a long bus ride to the nearest bank branch to make bank transactions on the spot. This often takes half a day. In Germany, this is unimaginable in times of online banking.
Bitcoin Lightning Payment in Olas Permanentes
Bank the Unbanked via cheap smartphones
However, many have a (cheap) smartphone, which has Internet access. This is exactly where Bitcoin comes in and offers an alternative and complement to paying with cash. In addition, the villagers first learned the concept of saving money. If they did not spend the Bitcoins directly, their purchasing power increased in the future. This is immediately understandable and tangible.
At first, normal Bitcoin on-chain transactions were used to conduct transactions in the community. However, the community leaders around Peterson quickly realized that on-chain transactions did not make sense with the high Bitcoin fees, so the second-layer solution Bitcoin Lightning Network was used.
In 2020, the first reports (e.g. Forbes) about the project followed and Bitcoiners worldwide became aware of the initiative.
Strike and Jack Mallers
In 2021, founder and developer Jack Mallers of bitcoin wallet and payment service provider Strike came to El Zonte from the US with his team. He stayed for several weeks and months. Subsequently, Strike opened its first outlet outside of the United States in El Salvador. Legendary, was his announcement at the 2021 Bitcoin Conference in Miami with President Nayib Bukele that El Salvador would adopt Bitcoin as a currency.
Strike started very successfully in El Salvador and El Zonte. However, Strike has since withdrawn more and more from the country and has been supplanted by the state-owned Bitcoin wallet Chivo. In my seven weeks on the ground, I only saw one Strike advertising banner in San Salvador and a few signs in El Zonte from Strike. Also, no one knew about the Strike app outside of El Zonte, which is a shame.
Bitcoin Beach Wallet
Strike is also hard to find in El Zonte. The state-owned Chivo wallet is not used here either. The local community uses their own bitcoin wallet developed for them called Bitcoin Beach Wallet.
The Lightning Wallet was developed locally by Galoy and is open source and a Custodial Wallet where Private Keys are held by multiple community members in El Zonte via Multisig. A mix of custodial and non-custodial. Shared Custody is the name.
Shared Custody
Bitcoin Beach Wallet Shared Custody: There are X keys held by different residents in El Zonte. Only if all keys are used, one could access the private keys of the Bitcoin Beach Wallet users.
How many residents and which ones have the keys are not disclosed for security reasons. However, if you want to learn more about the Bitcoin Beach Wallet, you should read this article by Galoy.
Merchants use Lightning and receive usernames
What is interesting from a user perspective is that each user and merchant receives a Bitcoin address, a Lightning address, and a username.
The information is viewable at a public Web URL (example: https://ln.bitcoinbeach.com/minutasmario). Lightning Invoices can be created by other Lightning Wallets via it.
Minutas is a typical ice cream of the country. Here I paid for Minutas with ~$1.20 in Lightning.
The merchants have a uniform sign to be able to accept transactions even without a cell phone. In practice, however, it never worked for me without a cell phone, because the Lightning QR code on the sign was not always recognized by my Blue Wallet Lightning Wallet. However, scanning the merchant's cell phone always worked, because the merchant was able to create the Lightning invoice right away.
Bitcoiners conquer El Zonte?
El Zonte and Bitcoin Beach are known as pioneers among Bitcoiners worldwide. The Bitcoin Law of summer 2021 has also contributed to many Bitcoiners keeping an eye on El Salvador and El Zonte in particular. This is because President Bukele announced that Bitcoin investors will not pay taxes on Bitcoin profits and will be able to obtain Salvadorian citizenship with an investment of three Bitcoins. In addition, El Zonte is very safe and paradise-like compared to other places in El Salvador (just my personal opinion :)).
So it's not surprising that you meet many well-known Bitcoiners like Stacy Herbert and Max Keiser in El Zonte. But also Tone Vays or Jimmy Song were on site at the same time. Many US-Americans can be met here because El Salvador is only three hours away from the USA by plane.
Still, El Zonte hasn't lost any of the vibe and looseness I found here back in 2015 and 2019. Only with bitcoin now.
Expensive accommodation costs
El Zonte is popular. This can also be seen in the property prices and accommodation costs. Many luxury hotels have settled here where you can easily leave $400/night. Below $50/night you will hardly find anything. In addition, there is a tourism tax of almost 20%. I still know some property prices, right on the water, from 2015 and 2019. I estimate that these have increased at least three to five times.🥲
You can find a relatively cheap place to stay at Olas Permanentes. Great hostel and restaurant right by the sea, but no luxury. However, you don't need that there, because the luxury is right outside the door.
Photos and impressions
More photos and impressions from Bitcoin Beach
Even before the Bitcoin donation, I had met the two of them in El Zonte. Roman taught me how to surf and Jorge worked at the popular restaurant Olas Permanentes.
This article was originally posted on my German Bitcoin blog kryptokenner.de in January 2022.
