Three years ago, an idea to bring bitcoin to an impoverished country to spur economic transformation was born.
This is an opinion editorial by Mike Peterson, a lifelong entrepreneur, philanthropist and author who is director of the Bitcoin Beach project.
Three years ago I attended a meeting that changed the trajectory of my life. The meeting was with the advisor of an early Bitcoin adopter and philanthropist who wanted to see Bitcoin used in meaningful ways to change lives. I left the meeting energized with a sense that something radical was being birthed. I have always seen the world very differently, which can sometimes be alienating. Leaving this meeting felt the opposite. I sensed I understood what this donor wanted to see, maybe even more than the advisor explaining it to me. I returned home and banged out the following unpolished proposal. I had a hunch this donor wanted something very different. I don’t care about the procedure or the right way of doing things (or even correct grammar or spelling if you follow me on Twitter). I sensed this visionary early Bitcoiner was a kindred spirit. They just wanted someone who could get the impossible done and not give them excuses as to why it couldn’t be. They wanted to see the world’s first Bitcoin circular economy sparked into existence, and our team was crazy enough to think we could make it happen. The following fevered proposal was sent out that night: a proposal light on details and loaded with naive idealism. Reflecting three years after writing this — 2.5 years after the project launched — it is shocking that it has all played out according to plan.
The only fundamental divergence was shifting the initial location from Agua Fria/Punta Mango to El Zonte for the first community. We actually started in Punta Mango but realized orange-pilling a community was not something we could do remotely. So, we shifted gears and decided to focus on our hometown of El Zonte — Punta Mango is about four hours by car. Coming full circle, I am happy to report that we are currently building our second Hope House in Punta Mango, using the lessons we learned in El Zonte to hyperbitcoinize the community. As Bitcoin Beach shifts into a global movement, we will be releasing an updated white paper highlighting our vision to see Bitcoin circular economies spread worldwide and showcasing some of the projects we are supporting. Before we release our updated vision, I wanted to reflect on where we came from and help others realize how a simple idea and a little audacity can bring change and hope.
The Original Bitcoin Beach White Paper
“We have the opportunity to use Bitcoin to transform one of the poorest and most isolated villages in El Salvador. El Salvador is the smallest and most densely-populated country in Central America and consistently has the highest murder rate in the world. The citizens of El Salvador are desperately fleeing in record numbers, with over 20% of Salvadorans now living in the U.S. because of this.
On the underdeveloped eastern coast of this troubled country sits an isolated village that we hope will become the poster child for how Bitcoin can be used to improve the lives of the unbanked poor throughout the world. Agua Fria is a remote coastal village left mostly undeveloped because the region was the epicenter for the civil war that only ended in the 1990’s. This is slowly changing as surf tourism brings adventurous foreign travelers to the zone. Unfortunately, the local population has benefited very little from this influx as most guests currently stay at the two all-inclusive hotels owned by people from out of town. We see bringing Bitcoin to the people as a way to provide local business capital and help promote the area beyond the one surf location.
“We think the following characteristics of the area provide the ideal conditions to use Bitcoin to transform lives.
“The area is highly impoverished but full of potential for future tourism. A targeted Bitcoin injection can potentially change the trajectory of this entire region and help the locals participate in tourism growth. Recent studies have shown that cash transfers are more efficient at alleviating poverty than complicated aid programs. However, the cash transfer comes with many logistical and safety concerns and is often very costly to implement. Bitcoin overcomes this because it can be transferred quickly, safely, and efficiently. We think this program could transform the future of aid and charity work worldwide. In addition, the relative isolation of Agua Fria means we can clearly document and identify the impact of the injection of Bitcoin into the local economy.
“Because of both the physical isolation and the extreme poverty, most of the population is unbanked. The adoption of Bitcoin allows them to leapfrog the fiat banking system.
“Most of the villagers have family members in the U.S. that send them remittances to help them survive. However, it is a significant challenge for the village members just to travel to a bank to pick up a transfer, and the bank fees and charges take a considerable percentage of what is sent. We believe that once introduced to the ease and efficiency of transferring Bitcoin, that this could pave the way for it to become the default method for immigrants sending money home without risking losing it to bandits or greedy government bureaucrats.
“Because of the recent influx of adventure travelers, the word will quickly spread around the world about ‘Bitcoin Beach.’ It will become known as the small, beautiful beach village in El Salvador where you don’t need to carry cash because all the local stores and businesses prefer Bitcoin.
“What we are proposing goes way beyond just giving a few bitcoin to a nonprofit and having them find a way to spend it. What we want to do is create a circular Bitcoin economy that will transform a region, demonstrate the ability of Bitcoin to end poverty, and bring in journalists from around the world to marvel and write about the village that runs on Bitcoin.”
“To provide a sustainable Bitcoin ecosystem:
“Bitcoin will be distributed to families with children attending the local school. This allows the bitcoin to be widely distributed, gets the resources where they are most needed (families with children), and encourages the continued education of the local kids — most students in this area often drop out before fifth grade because the parents start having them work in the field to help provide for the family. We will work with the local business owners to teach them how to accept bitcoin and explain how the injection of bitcoin in the local community will provide opportunities for increased sales. We will also work with the local water project that provides all the village’s water services to ensure people can pay their bills in bitcoin. Finally, we will have someone living in the community helping the people download phone wallets and holding their hands through the initial use of bitcoin to purchase goods and pay bills.
“The second stage will come in the second year once bitcoin is being widely used for local commerce. At this point, our staff will focus on helping people show their relatives how they can send them bitcoin easily and cheaply rather than trying to wire money down. In the initial year, we will have to provide an exchange in town to allow the stores to convert some of their Bitcoin into fiat so that they can pay their suppliers. We will do this at a small discount to the current market rates to encourage them to begin to transact with their suppliers in Bitcoin. The hope is that, over time, their suppliers will actually prefer to be paid in bitcoin because they realize the benefits of using bitcoin. Lastly, we will make sure that tourists know that the best way to pay for everything is in bitcoin so that they will also increase the village’s transactions that happen in bitcoin.
“We will put Agua Fria on the map as the world’s first ‘Bitcoin Village.’ I have extensive experience in getting media coverage and I know that the media will not be able to get enough of this. We will have journalists from all the top publications coming to write about this Bitcoin Village. I have been featured in numerous TV programs in my business ventures, from The Food Network to The History Channel to “Good Morning America,” because we have unique food items. With something as revolutionary as this, I believe this will be the story everyone is talking about. We think that the rebranding of Agua Fria as ‘Bitcoin Beach’ will increase tourism as people read the stories and flock to the beautiful beaches while having the opportunity to be part of this Bitcoin revolution.
“Our goal is that by the end of three years, people worldwide will know about Bitcoin Beach and want to see similar transformations in their communities. By year three, we believe that most of the transactions in Agua Fria will be happening in bitcoin and that most of the resources sent by relatives in the U.S. will be sent using bitcoin.
“Furthermore, Agua Fria’s businesses will pay employees in bitcoin, and suppliers will accept bitcoin as payment for supplies sold to the local businesses. Moreover, we believe that the increased tourism will benefit locally-owned businesses because the local population will have the resources to start small businesses. Finally, we think that after three years, the system will be strong enough to go forward on its own and that we can begin to withdraw the monthly bitcoin stipend without impacting the ecosystem. By that point, bitcoin will be entrenched, and everyone will have seen the benefits of transacting in bitcoin rather than fiat.
“As I mentioned, what we want to do is revolutionary, and we believe it will impact the poor and bitcoin in a way almost nothing else can. We realize this is far beyond the scope of your current projects, but we think the impact will be genuinely world-changing.”
It is one thing to have a vision, and it is another thing to be able to implement it. The reason Bitcoin Beach became a success story rather than a cautionary tale comes down to the Salvadoran team on the ground grinding and putting in the work to make it happen. 100% of the credit goes to these ambitious community-minded leaders who were able to take a silly dream and turn it into a world-changing reality. We also give huge credit to the president of El Salvador, Nayib Bukele. He has taken a huge political risk to do what is needed to bring lasting transformation to El Salvador. The Bitcoin Beach team is now focused on continuing to transform El Salvador, but also finding other young servant leaders worldwide that want to transform their communities. We cannot wait to see what happens in the next three years.
This is a guest post by Mike Peterson. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.