Bitcoin: Will El Salvador's big crypto gamble pay off? – BBC News
Last september, the countrys cryptocurrency loving president took the unprecedented decision to make bitcoin legal tender. This will generate jobs and help provide financial inclusion to thousands outside the formal economy. Around the world, the move is being criticized by the financial establishment and celebrated by crypto fans. So we are following uh developments closely and now salvatore is leading. The wave you know were proud, but are the people here embracing bitcoin bitcoin? Is el salvadors big bitcoin gamble paying off Music el salvadors bitcoin journey didnt start in a city centre, tech hub? It started here in a small town on the south coast called el zonte and its a weird and mysterious origin story. In 2019, an anonymous donor gave this small fishing village. A large donation of bitcoin, one of the first beneficiaries of the donations was catharina contreras, Music pueblo. Music bitcoin is a purely digital form of money, invented by an unknown person or group called satoshi nakamoto. The peer to peer digital cash works without any need for banks or financial authorities. The unprecedented project in el zonte now renamed bitcoin beach, has sparked the imaginations of crypto fans the world over. So this is hop house or bitcoin beach. How people know our project? This is like the first circular economy that we create like three years ago and our president have been saying like many times in public, that bitcoin beach whats the project that inspire than to make bitcoin a legal tender.
What was it like for you the day that buchelle announced hes going to do that in the whole country, its a dream that come true, but not just for us? There are many people around the world that were waiting for this. Everyone was dreaming that this will happen one day, so when bitcoin right here, we see people saving money for the first time we see people transacting digitally for the first time. I born in this community, where the opportunities that we used to have were a few savannah. People are dreaming again. You dont mind that this, the original donation that started this all off, we dont know who it is. You dont mind that no okay, but its like a good message. You know like because when you help, when you create something that will change the world, it doesnt matter, who is because everyone is playing like a really important role in this. Since the legal tender change, businesses here say, theyve seen a big uptick in visitors about 30 percent more according to some locals in the capital. San salvador bitcoin is less accepted by businesses. The governments not enforcing the bitcoin law instead hoping people and businesses will embrace the cryptocurrency gradually key to their plans, is the heavily marketed and heavily subsidised bitcoin app called chevo. The app has been a big success with more than four million downloads, but surveys suggest that, after the initial surge in interest, people have been using chivo less.
This place is a really good example of the lengths the buchelli government is going to to get people to download the chivo app and use it. This is the largest animal hospital in the country. Its brand new people are traveling from all over to bring their pets here. The reason is, if they pay using the app, preferably in bitcoin, they can get all the care, their pet needs for 25 cents, Music, melvin rogel, the director of the hospital says his staff have been flat out ever since the center opened up Music Music. We were told by staff here that the multi million pound center was all being paid for with the profits of bitcoin, but when asked the government couldnt tell us where these profits were coming from Music Applause. Music. President bukele has invested nearly 100 million dollars of public money on bitcoin celebrating each purchase with a tweet. The country now has 2 300 bitcoins, often buying them when other investors are fleeing the market. Most of the coins have not risen in value since being bought and none have been sold anyway, making profit impossible. The chivo app is also costing hundreds of millions to roll out and run tatiana marroquin. Is a salvador salvadoran economist, extremely worried about the money being spent on my adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues. In spite of the criticism, the central african republic has followed el salvador, making bitcoin legal tender there earlier this year.
Other countries, too, are reportedly considering the move. President buchelli is convinced that his plans for bitcoin will pay off. We tried to set up an interview with him, but in recent months hes only done interviews with pro bitcoin youtube channels. The governments tourism minister, was keen to talk about the benefits she says. The countrys seen has spent tens of millions of dollars of public money on bitcoin and the price has gone down. Is there a risk that all that money could be lost, that money could be spent on other things? So, in fact, the buchelle government is doubling down on bitcoin hes planning to build a state of the art city shrine to cryptocurrency. He wants to harness geothermal energy from a volcano to not only power the city but mine for bitcoin. This is the countrys largest state run geothermal power plant and tucked away in the back is a small bitcoin mine, alternative, bitcoin berlin without banks or central authorities. Bitcoin relies on a huge network of volunteers to keep the currency going. Specialist computers are needed to run complex programs to validate each transaction and add it to the public record of payments. The blockchain in return, the blockchain system automatically rewards miners with new bitcoin for free bitcoin mining can be lucrative when the value of the coins is high. While some countries like china have banned bitcoin mining, the salvadoran government is not only allowing it but doing it themselves. Bitcoin city Music, its a further two hours drive east to get to the volcano itself in la union.
The spirit of the mountain lookout point and campsite will look directly onto bitcoin city, luis diaz, owns and runs the business here and is very excited about the presidents plans to familiarize and in dollars like four millions, four millions uh in bitcoin. I try. Amazing version is, but there are fears. The government wont be able to raise the money it needs and it comes as the public finances are in drastic need of improvement. With hundreds of millions of debt due to pay next year. Will bitcoin city ever actually exist at the moment, its too early to say if el salvadors bitcoin gamble could pay off? President bukele is relying on many things going the governments way, including the price of bitcoin, rising and a largely ambivalent and apathetic public getting behind the currency.