Tales from the Crypto | Part II: How Bitcoin became legal tender in El Salvador

One year ago, El Salvador made Bitcoin legal tender — the first nation in the world to do so. But how did Bitcoin make its way into this Latin American country? It all started in the coastal town of El Zonte, which earned the nickname “Bitcoin Beach” after being flushed with the cryptocurrency thanks to a mysterious donor.

In the second part of our mini-series, Tales from the Crypto, we take a deep dive into the key players (and controversies) of El Salvador’s wild Bitcoin journey. We also hear from a Salvadoran economist who is a critic of the government’s handling of Bitcoin, especially in the midst of cryptocurrency’s crash in recent months.

Show notes

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Full Transcript:

This content was originally created for audio. The transcript has been edited from our original script for clarity. Heads up that some elements (i.e. music, sound effects, tone) are harder to translate to text. 

(Rooster calls.)

Megan Cattel: Ooh, I hear a rooster.

Ismael: What?

Megan: A rooster!

Ben Brock Johnson: Hey, Amory.

Amory Sivertson: Hi, Ben.

Ben: Who did we just hear? Apart from the roosters.

Amory: That’s one of our Endless Thread producers, Megan Cattel.

Ben: Who is not a rooster?

Amory: Nope.

Ben: Nope.

Amory: No. Unless…

Ben: Megan, are you a rooster?

Megan: No! But I did get some solid rooster sounds thanks to a video tour I recently took of this little town in El Salvador called El Zonte. My tour guide was this 19-year-old guy named Ismael. He’s tall, lanky, has fluffy brown hair and braces, which makes him seem younger than he is. He showed me around via a video call and he was very patient with our language barrier around roosters.

Ismael: What’s that?

Megan: (Yells.) The cock-a-doodle-doo!

Ismael: Oh, yeah, yeah, yeah, yeah. Here, there are a lot of them. (Laughs.)

Megan: (Laughs.)

Ismael: This is something common right here. Yes.

Megan: Ismael is a sophomore in college and lives at home with his sister, two brothers, and his parents. When he goes outside to get a better Wi-Fi connection, his laptop camera shows palm trees clustered around the yard and corrugated metal roofing on top of his house. The blue sky and palm trees really makes it look like the scenery looks like one of those tropical island default screensavers for computers.

Amory: It looks pretty dreamy.

Ben: Yeah, like Hawaii or something. It is apparent why this town attracts surfers from around the world. It is beautiful.

Megan: As a resident of Queens, New York, it made me jealous.

Ben: (Laughs.)

Megan: But Ismael himself wasn’t there for the scenery. He’s always dreamed of becoming a pro surfer and a surf instructor.

Ben: So, just get good at surfing right? That’s all you have to do?

Megan: Well, not exactly. Ismael says that in order to make his surf dreams a reality, he really needs some level of formal education. So he’s been trying to juggle three things. Surfing, taking classes, and taking on a part time job to pay the bills and help his family out financially. One issue? Making that job part-time.

Ismael: It’s not possible because people who give you a job, they want you to work all day.

Megan: But then he found something. A job that was part time and would let him stay in El Zonte. Ismael talked with a youth group leader at a nonprofit called Hope House.

Hope House organizes surf camps and beach cleanups, programs to keep young people from getting involved with gangs. A staff member suggested to Ismael…

Ismael: You can come and join us and you can work.

Ben: This sounds like the perfect set up. Go to school. Work for Hope House in his down time. What did he do?

Ismael: Clean the river, or go to the beach, clean the beach.

Megan: Ismael got paid in US Dollars at the end of each workday. But then in 2019, something changed. Hope House’s leader told Ismael and other employees about a change in their compensation.

Ismael: He said we are going to pay you in Bitcoin.

Megan: A paycheck in Bitcoin.

Over the next few months, Ismael’s hometown would transform. Shopkeepers and locals would be encouraged to adopt Bitcoin by local community leaders. El Zonte turned into Bitcoin Beach.

[News audio:

VICE: For the last 18 months or so, the tiny surf town of El Zonte has been running an experiment with Bitcoin.

BBC: Down on the south coast called El Zonte, and it’s a weird and mysterious origin story.]

Ben: A weird and mysterious origin story that in some ways typifies the real world ambitions of crypto evangelists and wannabe Bitcoin utopia architects. And in other ways, represents the failures of those ambitions.

Amory: Failures that have reverberated way beyond Bitcoin Beach. And impacted the entire country of El Salvador.

[President Nayib Bukele: I will send a bill to Congress that will make Bitcoin a legal tender in El Salvador.] 

Alex Gladstein: You gotta think of all the jobs that this is bringing, I mean, it’s like a, a gentrification on steroids type of thing.

Ricardo Castaneda Ancheta: El Salvador lo que hizo fue salir a un casino a apostar con el dinero de la gente.

Darryl C. Murphy (English translation): What El Salvador did was going to a casino and betting with people’s money.

Mike Peterson: And so I think, you know, ten years from now, they’ll point back that this was kind of a transformational time in the country.

Amory: I’m Amory Sivertson…

Ben: And I’m Ben Brock Johnson, and you’re listening to Endless Thread.

Amory: We’re coming to you from WBUR, Boston’s NPR station.

Ben: And today, with Megan’s help, we’re gonna tell you the little story about Bitcoin Beach, and the big story about El Salvador.

Amory: El Salvador is the smallest country in Central America, nestled between Honduras and Guatemala and the Pacific Ocean.

[Documentary audio:

Narrator: El Salvador. Its primeval beauty is alluring but deceptive. Throughout this land of lakes and volcanoes, a civil war has been raging since 1980, claiming the lives of more than 40,000 people.]

Ben: For much of the 20th Century, the country has either been at war with its neighbors or with itself. A 12 year civil war in El Salvador ended in 1992, one of the most devastating conflicts in recent Latin American history.

[Now This: The junta quickly formed a military dictatorship, killing peaceful demonstrators, assassinating leaders who were trying to form socialist cooperatives among the poor people in the country.] 

Ben: Since then, El Salvador has enjoyed a succession of democratic elections, a period of relative peace for the country.

Amory: But there have been other problems to contend with in recent years, like gang violence in the country, which has spurred a migrant crisis for El Salvador’s neighbors.

[Newsreel audio:

Jouneyman Films: The capital of El Salvador is a battlefield, fought over by warring street gangs.

PBS: El Salvador is a daunting place to grow up. There are few job opportunities for young people. And the specter of gang violence is everywhere.

VICE: Not long ago the infamous MS 13 and 18th Street Gang made this country the deadliest outside of a warzone. But murders have plummeted and one man takes the credit.] 

Ben: In 2019, President Nayib Bukele took office. He is the country’s first leader in nearly 30 years who is not from the country’s two major political parties.

He ran on the promises to get rid of corruption, fight inequality, and crack down on the gangs. In 2019, he told the New York Times that the lack of economic opportunity and gang membership are intertwined.

Bukele: The real way to tackle gang violence is to correct the social dysfunction that we have in our country, with its social injustice, economical injustice, no opportunities.

Amory: Bitcoin Beach was a huge reason why President Bukele made Bitcoin legal tender last year.

Supporters of Bitcoin adoption were thrilled with this decision. 70% of people in El Salvador don’t have a bank account. And to receive Bitcoin, you don’t need an account or even a state issued ID. You just need internet access and a smartphone. This made it easy for people like Ismael to get on board. He’d never had a bank account before.

Ben: When Ismael first got paid in Bitcoin through the Blue Wallet app, he changed the currency to US dollars right away. The other kids in his group did the same thing.

Ismael: He paid us like $50, but we needed to use it for school, for parents to buy things we needed.

Amory: But then in 2020, well, you know what happened. The coronavirus shut down the world. And El Zonte was no exception.

Ben: The town was on lockdown. Meanwhile, Bitcoin advocates at Hope House had an idea. A stimulus plan for everyone to receive money — not in US Dollars — but in Bitcoin.

Ismael: Some of the sponsors…

Read More: Tales from the Crypto | Part II: How Bitcoin became legal tender in El Salvador

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