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On September 7th, 2021 El Salvador made history by becoming the first country in the world to adopt a digital currency as legal tender, and no one seemed to notice. The crypto community showed interest, but it’s a 3rd world country and Bitcoin is has already mooned. So my personal opinion is that even a nation state adopting won’t make it go up much. Which is probably why you don’t hear too much news or interest any more.
I’m an entrepreneur and it looks like something big is happening in our culture. Something that even the crypto community isn’t fully aware of but playing a major part. So I decided to move to El Salvador for 2 months and see whats up. These are the insight’s I had. I hope this proves a valuable document to anyone interested in helping guide this boat we call society.
It’s still new and most people don’t really know what it is. With big change there’s always pushback. This section will seem a little negative and that’s OK. My goal here is to uncover opportunities that would have been otherwise overlooked, and to provide valuable insight. What better place to look?
This seemed to be the main concern of everyone I talked to. This is a big one for sure. The average income in El Salvador is $300 per month, and the cheapest rent is around $150 per month. Bitcoin dipping 20% makes it ‘too risky’ to accept as payment. This is definitely the biggest cause of friction keeping people from using it.
There was a bitcoin conference while I was there called LaBit Conf, and I brought this up to someone I met there and he pointed out to me that this was because it’s being based off the dollar standard and not the bitcoin standard. A really good point, and really interesting, but not going to change anyones mind until we actually move toward the bitcoin/satoshi standard, and away from the fiat standard. More on this later.
Most things happen locally. The local restaurant gets food from the local farmer and serves food to people in the neighborhood. There are bitcoin ATM’s to easily switch between bitcoin and cash, but they charge 5%. It doesn’t matter who you are, that’s too high. Because everything happens locally, most food is inexpensive and margins aren’t very high. Having to pay the extra fee to get cash to buy your supplies means you would have to raise your prices. This is a dealbreaker, especially in a country where people barley make enough to live as it is.
Obviously this wouldn’t matter if everyone were using it. The exchange friction is a lot, but a small barrier to overcome for small business owners to get get access to the wild world of defi, and all it’s benefits.
This was most obvious during LaBitConf on the beach in El Zonte. You would see Bitcoiners taking private helicopter rides up and down the coast. This definitely sent the message that you have bitcoin because you’re rich and not the other way around.
Most people don’t have computers and have limited knowledge of cell phones. So the only way they know how to get crypto is through the ATM. Who is going to pay 5% just to use this new currency? Who would be willing to loose half your money in a week due to volatility? Who has enough money to hold it in crypto for a long time without needing to spend it? Rich people. Definitely not the street cart vender in a 3rd world country.
There are many kinks to work out. The issues here are just a small glimpse into how things can be improved. Both in crypto and in the world overall, there’s a lot of opportunity right now. Some people might read this and think “I knew it, crypto will never work as a currency. This whole thing is stupid, banks are awesome for society and we should let them hold all the money.” However, if you’re like me you would see that anywhere people are complaining is an area ripe with opportunity. That means there is something here for anyone who has the entrepreneurs spirit and is willing to put in the work. In the coming posts I’ll detail more lessons learned, what opportunities I can see and what I have personally been building since the trip down. Give me a follow on twitter @dill_eth. :) GM and GN! #WAGMI