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Bitcoin Beach in El Salvador gets a $203 mn tourism investment

While El Salvador's $203 million investment has attracted remarkable attention, some individuals are hesitant to accept crypto assets as a form of payment

By Shashank Bhardwaj

Published: Sep 5, 2022 04:12:41 PM IST

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Image: Reuters/Jose Cabezas

El Salvador's government has announced a strategic plan to improve the economy of El Zonte, a small beach town that has been renamed ‘Bitcoin Beach’ after its merchants began accepting Bitcoin. According to reports, Bitcoin Beach will have an inflow of investment of $203 million in infrastructural developments, one of the country’s most popular tourist destinations.

El Salvador’s President Nayib Bukele said last week that some of the funds would be used to revitalise 15,000 square meters of El Zonte, which has come to be known as Bitcoin Beach due to the prevalence of crypto asset usage over there. The planned developments include a beach club, shopping center, parking lot, and water treatment plant. However, the Surf City project utilised another part of that investment.

Three years ago, El Zonte residents welcomed the arrival of Bitcoin Beach, a beach town founded on the use of the crypto asset. Entrepreneurs and tourists soon began paying their bills with digital currency, while workers in El Zonte received their salaries in Bitcoin. This quickly gained media attention and led lawmakers to introduce legislation that legalised crypto assets as legal tender in El Salvador. The bill passed shortly after that.

According to an announcement from El Salvador's Foreign Investment and Economic Development Ministry (SENIAT), the current investment plan includes some major infrastructure improvements and investments in the area.

On September 7, 2021, El Salvador became the first country in the world to legalise Bitcoin as a legal tender. Despite warnings from prominent international organisations such as the International Monetary Fund (IMF), President-elect Mauricio Funes has repeatedly doubled his commitment to making Bitcoin legal by 2022.

In addition to enabling the country’s largely unbanked population access to financial services, El Salvador’s Minister of Finance Alejandro Zelaya said last month that implementing Bitcoin as a legal tender had attracted foreign investment and boosted tourism. Earlier this year, the country’s Minister of Tourism revealed that tourism had increased 30 percent since September.

However, some parties have displayed their distrust due to this policy. In June last year, less than 20 percent of Salvadorans were friendly toward the new technology, according to a survey. While many people thought they would struggle to understand it, others believed that it would only act as fuel to government corruption.

In a recent interview, Bukele said that the recovery of El Salvador’s tourism industry was due to Bitcoin and surfers. However, many businesses in El Salvador have been hesitant to adopt the use of Bitcoin. A survey conducted last year found that only 14 percent of business owners had used this new form of payment and have confidently implemented it in their working operations.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash