December 7, 2021
In September, 2021, El Salvador made Bitcoin legal tender.
This means that you can use bitcoin to pay for stuff like a torta, haircut or yoga class.
Usually, El Salvador trades and pays with the US dollar. In fact, it’s hard to get much done with a large bill like a 20 or 50, let alone a credit card.
Cash is important. I would know, since I’m in El Salvador with no cash.
And I really needed this bitcoin thing to work.
I had lost my debit card, my only way to access those sweet, crisp dollar dollar bills. I called the bank, but they had already cancelled the card and sent it to my old flat in San Francisco. It could be weeks for it to arrive here.
Now I’m sweating. Well, to be fair I was already sweating.
Luckily, I have an incredible idea. I could buy bitcoin, and exchange it back to cash via one of the many bitcoin ATM’s.
Maybe I could really wander around using a bitcoin wallet for all my transactions and never use cash again?
At an ice cream stand, I ask if I can pay with ‘Strike app’, pointing to the sticker in the shop window. Nodding his head, “yeah just download the app”. I tether to his phone (no data), and the app trickles down from the App Store onto my iPhone.
The onboarding starts simple enough. 2 factor authentication via my email address. Then things get weird. It asks me to select from two countries, United States or El Salvador. However, it won’t let me select United States. I’m offered a free SIM card, and we are able to verify an El Salvador number but it wants an El Salvador phone number, address and drivers license. Both of us are now craning over my phone to see the screen in the midday sun, struggling to verify a drivers license from the wrong country. Insanity slowly seeps in. Sweat keeps pouring off my forehead. Strike is out.
“Bitcoin Beach” is another acceptable wallet in El Salvador, where you can store bitcoins and (I believe) use it for payments to vendors. The UI and branding look like it was knocked up in 20 minutes but worth a shot.
Android only. El Salvador App Store only.
Ok. Final try.
When the President of El Salvador kicked off this bitcoin thing, they rolled out a government wallet named ‘Chivo’, and loaded on $30 of bitcoin for all citizens who use it.
But again, you need an El Salvador license to use it. It would be like an American citizen trying to use the Australian governments ‘myGov’ platform.
In the end, using QR codes, I sent a few hundred dollars in bitcoin to Eli’s (the shopkeeper) wallet (“Bitcoin beach”). He then used a Chivo ATM to take out the amount in USD. There may have been a slight exchange difference. I ended up paying about $3 in fees, no worse than a touristy atm.
This all feels pretty strange to me. Coinbase is an app I trust, but there’s so many platforms, new technologies and concepts that I need to learn before I can ‘grok’ even something simple like paying for a can of beer. What went into that transaction. Is it something special or stupid?
It’s hard to say what are the positive outcomes here. How can we measure successs? If the only thing this project can achieve is improving financial literacy, that’s a win.
Yet, can you really expect bitcoin to take off here as a payment of choice when most Salvadorans can’t afford a smartphone, internet data plan or when the electricity frequently goes out? How could you possibly keep track of the price of bitcoin for one thing?
Hopefully the government here ensures that with innovative ideas and bets like bitcoin they are also focused on the primary needs of the citizens.