Central America hoped bitcoin would attract tourists. It has not worked.

Daniel García, 31, Lagarza’s owner, checks his phone to see how many transactions he has received in bitcoin since El Salvador adopted it as a legal tender along with the US dollar in 2021; he could only count 15.

The voices of crypto-skeptics are getting louder and louder

“The vast majority of guests still prefer to use credit cards or pay with cash,” says García. He remembers that the only few foreigners who have paid like this do so to “say ‘I paid for my beer in bitcoin’, and they are quite excited to see that the transaction was approved.”

Like other countries in the Central American region, El Salvador is trying to become a bitcoin hub to attract tourism and reduce the poverty rate.

Last year, the country became the first to use bitcoin as a legal tender, despite setbacks from residents. While supporters of cryptocurrency say it will boost the economy, skeptics fear it will cause instability, inflation and money laundering in a nation with a poverty rate that reached 36.4 percent in 2020, one of the highest in Latin America and the Caribbean, according to the organization. for economic cooperation and development.

This crypto investment should be “stable”. It’s a wild ride.

According to the World Travel & Tourism Council, tourism accounted for around 6 percent of El Salvador’s gross domestic product in 2021.

Recent bitcoin losses have raised fears that El Salvador will default on its debt after President Nayib Bukele invested hundreds of millions in the cryptocurrency.

About 20 minutes from Shalpa, there is El Zonte, a popular surfing beach. The route to the water’s edge is rural, with unfinished stone roads, small businesses and street vendors. Bitcoin is accepted everywhere; There is a sign at the entrance that reads “Welcome to Bitcoin Beach”, and there is even a bitcoin ATM in the area.

In 2019, two years before bitcoin was adopted as a legal tender, Mike Peterson, a former investment adviser from the United States, moved to El Salvador with the goal of introducing crypto in El Zonte and renaming the area.

Central America is struggling to regain tourism

El Salvador’s government and Peterson hope that this tourist beach will attract investment by finding a way to build a sustainable cryptocurrency community. However, it faces the same challenges as Shalpa.

People “do not really use bitcoin because they do not understand it, and the minority who do are tourists,” said Ismael López, 32, one of El Zonte’s security guards.

“Bitcoin is still in the so-called discovery phase, and its value depends fundamentally on the level of adoption. Cryptocurrencies are the money of the future, but for them to be the money of today, their value must be sufficiently stable,” said Enrique Dans, professor of information systems at IE. Business School in Spain.

Locals living below the poverty line and running cash-based businesses are not familiar with this type of technology and the risks of bitcoin. “These countries should take into account that the use of bitcoin requires the population to have access to digital media, and this cannot be taken for granted in the region,” says Dans.

As in the case of “Bitcoin Beach” in El Salvador, Guatemala and Honduras replicate the same idea by creating a cryptocurrency hub in tourist areas. Patrick Melder, 54, from Houston, recently launched the “Bitcoin Lake” project near Atitlán, a volcanic lake located in southwestern Guatemala. Surrounded by small towns, it also attracts tourists who want to enjoy nature and outdoor experiences.

As the implementation of cryptocurrencies continues in these areas, experts say that a potential solution to educate local people is to work with financial expertise, which means teaching people how to manage e-wallets, show them how to make mobile payments and, most importantly, , create public awareness of the risks of cryptocurrency. “Making a country’s population knowledgeable in the use of cryptocurrencies is something that could have very positive effects on competitiveness in the future,” says Dans.

In Honduras, Juan Mayén is the bitcoin pioneer. The 28-year-old recently started “La Bitconeira”, a business that installs bitcoin ATMs around the country, including La Ceiba, another tourist zone that offers similar facilities to the beaches of El Salvador and Lake Atitlán in Guatemala. “We have taught over 100 Hondurans how to make a wallet, receive bitcoin and deposit money in the ATM,” says Mayén. “We have people who come from rural areas, and we try to explain to them to the best of our ability that anyone who has a smartphone can download an e-wallet.”

But even if locals become more crypto-savvy, will visitors actually use it?

Back in El Zonte, Oscar Nevermann (29) from Sweden and Lauren Shekla (26) from Germany were waiting for the check at the vegan restaurant Colocha Café. Enthusiastically, Shekla picked up the phone and tried to send the transaction “as I saw it”, she says.

“Honestly, we only want to pay with bitcoin because it is the first country in Central America to accept it, so we just want to see out of curiosity if it is as easy to use as everyone claims,” ​​says Nevermann.

Moments later, they had to pay in cash instead of despite the company saying they accepted bitcoin, the waitress did not understand how to use it.