In earlier blogs I introduced the idea that those trapped in poverty can be empowered by integrating them into a micro-economy that uses bitcoin as currency. Mike Peterson, an American living in El Zonte, El Salvador, was the first person to prove this.
Peterson was a surfer from California who fell in love with El Zonte and moved his family there. He started a ministry there to help the citizens. An anonymous donor partnered with Mike to build Bitcoin Beach a crypto-based, micro-economy in 2019 by donating some bitcoin to seed the effort.
The job Mike and his team had was to change people’s mindsets to consider crypto-currency a viable alternative to the local currency. This involved educating them and giving them the tools to set up wallets using bitcoin (facilitated by the Lightning Network) for everything from buying a $1 bag of tortillas to paying for a $3 haircut.
Here are the steps to bitcoin adoption:
Phase 1
Begin with a community where a key person has trust relationships based on years of experience. This person will need to parlay this trust to embrace a novel concept – that goods and services can be bought and sold using nothing more than a cell phone. The next step is to inject bitcoin into the local community through a variety of means:
1. Work programs paying young people to clean the local beaches and river.
2. Educational stipends to students staying in school
3. Transfers to the elderly and poorest families in the community and community construction projects.
4. Teach local businesses how to accept Bitcoin. Educate them on the advantages (and drawbacks) of accepting Bitcoin.
Phase 2
1. Track and increase the user base.
2. Expand users to remittances and bill paying.
Phase 3
1. Work with local employers to expand bitcoin usage to well-paying jobs.
2. Expand to other villages.
3. Promote bitcoin-driven tourism.
4. Attract new companies.
Once the residents of a village own bitcoin and can exchange it for what they want to buy on a regular basis, they begin to build trust in bitcoin as a unit of currency. Other business owners realize that they need to accept bitcoin if they are to compete.
Bitcoin Beach has served as a demonstration project. If it can work there, the bet is that in can work in other poverty-stricken villages like El Zonte as well.
Seth, Do you think it would take a sponsor for each location to bring in Bitcoin at a phase 1 level every time? Or would it depend on the people being willing to trade for Bitcoin with their own fiat at first?
I’m learning in real time like everyone else. When you think about currency, you think about trust. People have to have reasons to trust in something new. Imputed trust is essential to start a new currency.
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