Hello fellow HIVErs & LEOFinancers. After spending some months away from the country, I figured it's about time to give you an update on the Bitcoin situation here in El Salvador.

With worldwide inflation continuing to spiral out of control (despite the official numbers), and the Federal Reserve holding steadfast on their projected future interest rate hikes (despite major corporate layoffs), what can nations do to prepare for the impending financial crisis and/or hyperinflation of fiat currencies?

Back in late 2021, the government of El Salvador decided to boldly go where no nation had gone before, and adopted Bitcoin as legal tender. Before that, the US dollar was the only form of legal payment in the country. They were also the first nation state to invest in the cryptocurrency, holding roughly 2301 Bitcoin.

And despite the supposed "bear market" we are in right now, president Bukele recently doubled-down and announced on Twitter that the nation will continue buying one Bitcoin per day into the foreseeable future.

https://twitter.com/nayibbukele/status/1593113857261965312

Despite its intrinsic neutrality, Bitcoin has become politicized in El Salvador. If you state your support for Bitcoin, that could be interpreted as support for the president, Nayib Bukele, who is a controversial figure here. Not everyone is happy with the government's decision to adopt Bitcoin.

I've heard varying opinions from locals, from those who are pro-Bitcoin in every way, to those who say it was a bad idea entirely, arguing that the majority of the population doesn't have the education required to use it. And then there are those who don't mind the adoption of Bitcoin as legal tender, but oppose that government funds are being used to purchase it.

Chivo Wallet

The national Bitcoin app is called "Chivo", and many Salvadorans installed it last year to collect a free $30 from the government. In order to create an account within the app, you need a "DUI", which is the national ID card in El Salvador, and only available to residents of the country. Coming as a tourist, you will likely be using a different Bitcoin wallet, and there can be some compatibility issues between Chivo and other wallets, as I'll describe later on.

The Chivo wallet accepts Bitcoin, lightning Bitcoin, and a digital form of the USD (not to be confused with a decentralized stablecoin). This causes some confusion when you tell the staff that you want to pay with Bitcoin, because they often equate Bitcoin to the Chivo app, and may assume you intend to pay with digital USD.

The app has a setting that converts Bitcoin payments immediately to digital USD, to address the concern of Bitcoin's volatile price. However, even with this option available, some businesses have a policy to refuse Bitcoin payments, and will only accept digital USD within Chivo.

Chivo is a custodial wallet, meaning there's no option to write down a 12 or 24 word passphrase to backup your funds. By default, the government has custody of their citizen's Bitcoin, however it is possible to send Bitcoin to a self-custody wallet if one chooses to do so.

Arriving in El Salvador

When you arrive at immigration in the airport you must pay a $13 fee in order to obtain a tourist card to get into the country. It can be paid with cash, credit card or Bitcoin. When I asked to pay with Bitcoin, the officials had to take the machine out of the cabinet drawer, dust it off, and fiddle with it for a few minutes before they showed me a QR code, indicating that not many people are using this form of payment when passing through immigration. The transaction was on-chain and we had to wait a few minutes for confirmation of payment.

Paying with Bitcoin

Although there are many restaurants, cafes and other businesses that accept Bitcoin in El Salvador, the process isn't always flawless, and it depends on several factors such as the experience of the cashier you're working with, the state of their Bitcoin wallet, and the company's policy. You should definitely carry cash as a backup form of payment in case you run into any obstacles.

In San Salvador, there's a McDonalds at the Bambu shopping complex in San Benito that accepts Bitcoin payments, and the process has been very consistent and simple. You can use one of the touch machines to place your order, and at checkout you can choose to pay with credit card, Bitcoin, or cash.

If you select Bitcoin, a QR lightning code is presented, which you can scan with your lightning wallet to make the payment. You will receive a ticket which you present to the staff for your meal, and the receipt will indicate that you paid for the meal with Bitcoin:

If greasy McDonalds burgers aren't your cup of tea, there are plenty of other restaurants around San Salvador that accept Bitcoin. Notably, in an outdoor shopping area called La Gran Via, there are several restaurants which have posted Strike signs, indicating that they accept Bitcoin lightning payments.

When asking for the bill, simply tell the staff that you would like to pay with Bitcoin, and they will fetch the tablet which accepts Strike payments. After they enter the amount (which includes the tip), scan the QR code with your lightning wallet and the payment should go through instantly.

There have been a few obstacles when it comes to paying for meals with Bitcoin. Despite being official legal tender, many businesses will simply say no, they don't accept Bitcoin, while others say that they are currently in the process of integrating it. Some say that their Bitcoin device is currently out of order, and others say they only accept digital USD with Chivo, as per their company policy. Carrying an alternative form of payment is a must, just in case you run into these problems.

One time the staff presented a QR code generated by the Chivo wallet to which I sent Bitcoin, but even after one confirmation on the Bitcoin network the Chivo app didn't acknowledge the payment. The manager had to be called, who verified that the payment went through, and advised the staff that a different wallet at the restaurant should be used for non-Chivo payments. To avoid this situation, it's a good idea to tell the staff that you're not using the Chivo app when paying with Bitcoin.

Although the process of paying with Bitcoin can sometimes be frustrating, we need to be kind with the staff as they are still figuring out how this all works! And despite the technical challenges that I've encountered throughout my time here, virtually all staff I've interacted with have been very accommodating and helpful when I've tried to pay with Bitcoin.

And yes, you can pay for your morning coffee with Bitcoin as well. At most Starbucks locations they are accepting Bitcoin at at least one register, and the more experienced cashiers know to ask whether you are using Chivo or a different wallet. When you tell them "not Chivo", and they will likely use their IBEX Bitcoin wallet to charge you for the coffee.

Now I'm not saying that your experience will be flawless, as sometimes it depends on the day.

For example, the first day at Starbucks the staff said yes when I asked them if I could pay with Bitcoin. They launched the Chivo app and showed me a QR code, which was incompatible with my lightning wallet. Upon closer inspection the clerk had selected the USD option of the Chivo wallet, instead of BTC, and said that's the only form of "Bitcoin" payment that they are allowed to accept.

Another day, at a different location, the staff opened their IBEX wallet, but kept getting an error, and said they can't accept Bitcoin for now as the application isn't up to date. When I asked them if a lot of people pay with Bitcoin they said I was probably the first one, at least in their experience.

You can also pay for groceries with Bitcoin in El Salvador. Super Selectos, a nationwide grocery store chain, have some tills in each location that accept Bitcoin payments. The first time I tried to pay with lightning Bitcoin it worked like a charm, with the cashier knowing exactly how to load the Chivo wallet and ask whether I would pay using on-chain or lightning Bitcoin.

But at the second store the cashier wasn't as familiar with Bitcoin payments and had to call over his supervisor to load the wallet. And for one reason or another, the lightning QR code wouldn't scan. With other customers waiting in line, we decided it would be best to just pay with cash this time.

How about clothes and electronics? Well you're in luck, because Siman, one of the largest department stores in El Salvador, is also accepting Bitcoin. Simply tell the staff that you would like to pay with Bitcoin and they will direct you to the proper till.

The process is still hit and miss, however. The last time I paid there, the cashier presented me with a Chivo QR code. I asked her if the store accepts lightning payments and she said no, this is the only form of Bitcoin they accept. So I sent the Bitcoin as an on-chain transaction, expecting the process to take some time.

After waiting more than 20 minutes for a confirmation, there was still no payment received notification on her app, and they had to call management and tech support to sort it out. In the end, they were able to verify the payment was received and apologized for the delay. Perhaps they do have another Bitcoin wallet that this particular staff member wasn't aware of?

And how about your cell phone bill? Yes, you can refill your data and minutes with Bitcoin as well. You can get a pay-as-you go Claro SIM card, and then simply access their site with your phone number and buy packages with Bitcoin. After clicking the "pay with Bitcoin" link you are presented with a lightning QR code and the payment is almost instantaneous.

In addition to food, coffee, groceries, electronics, and cell phone service, you can use Bitcoin to pay for other products and services as well. Some taxi drivers are willing to accept Bitcoin if they have the Chivo wallet installed on their phone. Some ocean resorts will accept Bitcoin for their day passes, and some hotels (especially in El Zonte) will accept it directly for rooms. There are also Bitcoin ATMs available if you need to cash.

Conclusion

The truth is that Bitcoin payments can be complicated for non-technical people. Understanding the difference between Bitcoin, Chivo, digital US dollars, on-chain Bitcoin, and lightning Bitcoin is a challenge for people who aren't well-versed in the space.

It will take some time for the staff members of restaurants, cafes and department stores to get used to this new form of payment. More training and education is definitely required. In the meantime, we tourists need to be patient as the kinks are worked out and workers adjust to the new payment system.

I admire El Salvador for taking the bold move to adopt a cryptocurrency as legal tender in their country. Although the process will be somewhat painful in the beginning, they will be better prepared to weather the financial crisis or hyperinflation that's heading our way.

Bitcoin was designed to empower sovereign individuals, and I believe that cryptocurrencies could potentially erase national borders in the coming decades. Whether or not nation states will benefit in the long-run is still an open question. But if El Salvador's bet pays off, they could end up being the future Singapore of Central America.

Until Next Time...

What other information would you like to know about paying with Bitcoin in El Salvador? Let me know in the comments below.

Stay tuned for future blog posts where I will cover more the security, climate and cultural aspects of El Salvador.

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