I'm back from El Salvador and pleasantly surprised with the Bitcoin adoption down there. Hyperbitcoinization could be around the corner, if we all stick together and help the citizens of El Salvador!
We’ve all thought about it at least once. What if Bitcoin becomes the world reserve currency, and we end up living the Bitcoin standard?
A few places in the world where a certain hyperbitcoinization has already happened. Think of your circle economies in Peru, South Africa, or El Salvador. These are hotspots where the entire economy runs on Bitcoin and uses it as a unit of account.
I’ve been lucky enough to go to one of these places; I’m speaking of El Salvador and seeing what life on a Bitcoin standard would be like, what the challenges are, and what we need to improve to have hyperbitcoinization across the globe.
The Situation in El Salvador
It was in 2021 when the government declared Bitcoin as legal tender in El Salvador. The entire community celebrated and eagerly tried to make its way down to Central America. For the first time in Bitcoin’s history, we saw a top-down approach from the Bukele administration.
That approach put El Salvador on the world map, not exclusively positively. Forces like the IMF, BIS, and other central banks criticized the young president for his actions. Bitcoiners are already used to negative feedback, so the community doesn’t care.
What many people don’t know is that there were already Bitcoin hubs in El Salvador, mainly in El Zonte, that accepted it as a means of payment. These hubs had no issue with the Bitcoin law and embraced everyone who wanted to pay his bills in Sats.
Regular citizens are a different story. Many were first introduced to Bitcoin with the wonky Chivo wallet. It is a wallet that has improved since its launch but is still a mix between government oversight and a bad-functioning banking app.
Two years later, I sat on the brink of the Santa Ana volcano, talking to locals about the progress of Bitcoin adoption in the country. Beforehand, I used to read on Bitcoin X that only a handful of people use Bitcoin, and if so, they use Chico. No one is using self-custody solutions, and it’s all a big show.
I’m sorry, but what do these people expect in a country where 70% of the people don’t even have a high school degree and barely get by with $400? It will take time for everyone to get on board. Also, it took us a long time to understand what kind of problems Bitcoin solves, how to properly self-custody, and what to do with it.
For many people in El Salvador, Bitcoin is the first ever possibility to engage with a global financial system or, even crazier, the first-ever bank account in their lifetime. To go from that to full-on self-custody Bitcoiner would be a big ask.
El Salvadorian Bitcoiners Are Amazing!
How is the adoption on the ground, and what were my experiences with payments and wallets? To be honest, I was pleasantly surprised. I engaged exactly twice with a Chivo wallet to pay some locals on the farmers market, and with all other payments, I either paid to a PoS or a homemade solution.
If you pay in big merchant stores, you likely engage with a fully KYC platform. Think of Ibex or Blink, but this is to be expected as these are primarily businesses that must register all of their payments for legal or tax reasons.
The real game changer for me was when I talked to small shops or people selling goods. Exactly one woman showed me a Blink wallet; the remainder used Phoenix or Zeus with their node or BTCPay server. This was amazing to see, as I didn’t expect to see many of these products out there.
Some of them told me that they use these services because they genuinely want to own their Bitcoin but have used custodial services such as Wallet of Satoshi or Blink in the past. One guy even told me that running your own node is hard as an El Salvadorian. Nodes are expensive to build and even more dangerous to protect. When I asked why, he told me it’s more secure for him to have a wallet like Phoenix on his phone than a backup seed somewhere in his home.
He lives in a tiny shed, and he bets if people find out that he owns Bitcoin in a self-custody matter, they would break in or threaten him to get the private key. It’s much more convenient for him to carry the phone on him all day long and remember the 12 words in his head.
Also, he mentioned how it’s hard to get self-custody from the get-go. He encourages initiatives like Hope House or Bitcoin Beach that introduce people to custodian services first. This way, people can use the technology first and then do more and more with it later. It’s a take you don’t often read on Bitcoin X, but one I heard at least four times during my stay in El Salvador.
Obviously, the country still runs on the U.S. Dollar, and it will take more initiatives from within the Bitcoin community to orange pill as many people as possible. But what’s positive to see is the enthusiasm people bring with them, how open they are to suggestions, and especially how interested they are in learning more about Bitcoin.
Give El Salvador and its people another two years, ideally with a Bitcoin bull run in between, and we would see another significant adoption wave with more Bitcoiners out in the wild.
Hope for Billions of People
We often say that Bitcoin is hope and that it might solve many of the problems we face today. You truly start to embrace these statements if you’ve been to countries like El Salvador.
Sure, not everything is perfect. It’s not like you can live with Bitcoin only down there and not bring any Dollars. As a Bitcoiner, you still live in this hybrid world, where you have to have some Fiat money to survive and pay, but you have the possibility to experience hyperbitcoinization in real life.
Paso a Paso - Spanish for step by step - we’ll get there and orange pill more people. Therefore, don’t be frustrated when you first run into a lot of custodial wallets or services with people.
Bitcoin takes time, and we must also give this to the people who’ve just gotten on board. There will be no stopping them once they realize all the possibilities. This is what this is all about—giving everyone the same opportunities and a level playing field.
After all, Bitcoin is hope, and from my experience in El Salvador, I can say that it’s the best tool we’ve had thus far, and we should embrace it even more than we currently do. We’ve come so far with roughly 1% of the world population who adopted Bitcoin in some fashion.
Once we reach 5%, 10%, or even 15%, we’re changing the world and turning countries like El Salvador into new prosperity hubs. The citizens of these countries deserve this. They’ve suffered long enough!
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