From "Unbanked" to "Microfinance System": The Bitcoin Community in Surfing Paradise El Zonte

El Zonte, a beach town on the coast of El Salvador known as a surfing paradise with only 3,000 residents. While tourism is the main economic source in El Salvador, this beach town not only lacks financial services, with most residents not even having bank accounts, the situation worsened after the outbreak of the COVID-19 pandemic. However, the locals have taken matters into their own hands and created a microfinance system within the community using Bitcoin.

It All Started with a Mysterious Bitcoin Donation

According to a report by Forbes, the connection between El Zonte and Bitcoin began with an anonymous donor who had a fondness for this surfing paradise. Years ago, the donor bought a USB drive in the area for 5 to 10 cents. Upon discovering Bitcoin inside the drive in 2019, realizing its value, he decided to allocate six-figure donations for the coming years to El Zonte.

After meeting with local charities, plans began to take shape. While the organizations preferred to convert Bitcoin into fiat currency to meet the town's urgent needs immediately, the donor believed in the potential of blockchain technology to enhance financial inclusivity. Thus, he entrusted local volunteer Michael Peterson to manage the Bitcoin, with the condition that he would not cash it out.

This is the origin of the Bitcoin Beach project, aimed at creating a sustainable Bitcoin ecosystem. In addition to El Zonte, another beach town in El Salvador, "Punta Mango," has also joined the project with the goal of increasing Bitcoin adoption across various communities.

What Can You Buy with Bitcoin in El Zonte?

One of the fatal flaws of Bitcoin is the transaction fees (for small payments) and transaction speed, making buying a cup of coffee with Bitcoin impractical. Bitcoin Beach tackles this issue head-on by utilizing the Lightning Network. Michael stated:

We switched to the Lightning Network.

In the town, you can purchase various items using the Lightning Network, including tortillas, hardware supplies, and payment of utility bills.

Other Bitcoin applications include:

• Educational grants, inter-district transportation subsidies.
• Food and basic necessities: Most merchants accept Bitcoin.
• Public utilities: The water department will accept Bitcoin, and the power sector will follow suit.
• Community construction projects: Payment for construction projects such as builders and contractors using Bitcoin.
• Youth employment program: Youths assisting in community organization, road repairs, etc., in exchange for Bitcoin.

In addition to the above applications, there are also disbursements similar to grants. The Bitcoin Beach project distributes Bitcoin equivalent to $35 every three weeks to 600 households, meeting approximately 50% of the average household's basic expenses.

Project and Education Progressing Hand in Hand

Michael mentioned that when they introduced Bitcoin to the community, the elderly were usually more resistant due to its technical nature, while the younger generation quickly embraced it. Especially when the COVID-19 pandemic hit globally, the community's urgency for Bitcoin gradually increased.

In the community of the beach town, where most residents lack bank accounts and rely solely on Western Union money transfers, with the nearest branch requiring an hour's drive, Bitcoin seems to bring about a change.

El Zonte recently received the first Bitcoin ATM provided by the developer ATHENA BITCOIN, as the beach town's community previously did not even have traditional financial ATMs.

As of now, Salvadoran authorities have not intervened in the Bitcoin project, but founder Michael hopes to collaborate with them to promote regulatory transparency, stating:

The President of El Salvador has always been a strong supporter of new technologies, and we believe he will support the progress of this project.