You're The Voice | by Efrat Fenigson - Ep. 52: Mike Peterson - Building a Bitcoin Country

Episode Date: November 21, 2024

My guest today is Mike Peterson, the Director of “Bitcoin Beach”, a project creating a sustainable Bitcoin Economic ecosystem on the coast of El Salvador by bringing financial inclusion and opportunities to the most marginalized in the population. In this conversation, Mike shares his journey of moving to El Salvador and his efforts to integrate Bitcoin into the local community. He discusses the challenges faced, particularly during the early days, and how these circumstances accelerated Bitcoin adoption. Mike highlights the shift in savings consciousness among the locals and the growing acceptance of Bitcoin beyond the small community of El Zonte. He also addresses the impact of tourism and the viral effect of Bitcoin initiatives in other regions. We touch on the IMF's stance on El Salvador's Bitcoin adoption and end with an invitation for others to visit and experience the transformation of El Salvador. ► If you got value, please like, comment, share, follow/subscribe and support my work. Thank you! -- SPONSORS -- ►► Get your TREZOR wallet & accessories, with a 5% discount, using my code at checkout (get my discount code from the episode - yep, you’ll have to watch it): https://affil.trezor.io/SHUn  ►► Get 10% off on all books, inc. “The Inverse of Clown World”, using the code EFRAT https://bitcoininfinitystore.com ►► Join me in any of these upcoming events:https://www.efrat.blog/p/upcoming-events  -- LINKS – Bitcoin Beach Twitter: https://x.com/Bitcoinbeach Bitcoin Beach Youtube: https://www.youtube.com/@LiveFromBitcoinBeach Efrat's Twitter: https://twitter.com/efenigson Efrat's Telegram: https://t.me/efenigson Watch/listen on all platforms: https://linktr.ee/yourethevoice Support Efrat's work: ⁠https://www.buymeacoffee.com/efenigson  ⁠ Support Efrat with Bitcoin: https://geyser.fund/project/efenigson

And they knew I was one of those crazy Bitcoin people. So they came to me and said, hey, how can we use this? And so there's probably now probably about 40 different circular Bitcoin economies out there. We were shocked. We had, you know, the young kids that were working with us that would save up enough to buy a phone or, you know, a new bike or a motorcycle. And these were kids that had never saved before. I'm sure it excited them a lot.

When people make that jump from just seeing it as digital gold to seeing it as freedom money, like to me that is the important jump for them to make i agree with you all right mike peterson yeah hello it's good to be here thanks for being with me thanks for agreeing i know you're very busy you're very uh unpopular and people want to talk to you i don't know i look forward to this type of thing cool so yeah i i'm excited to actually meet you in your uh base in el salvador very you haven't been there yet right no it's gonna be my first time and i'm so curious and i've been following your work and everyone's work everyone that i know that lives there and i've read your story um that you've published a couple of years ago

in bitcoin magazine and about the meeting you once had so i'd love to like introduce to my audience who you are what happened back in was it 2019 when you had that meeting 2019 and then 22 when you started uh rolling out this vision and where we are now we actually started rolling it out in 19 in 19 yeah it was just later that the the government made the official decision yeah so let's start like from the start where it started and so we had been living in el salvador for a number of years uh working in the the community there um for people that know some the history of el salvador it for the past in the between 2008 and 2016 it usually had the highest murder rate in the world and it was i mean it was yeah i think it was like it got up to like uh

120 murders per 100 000 people per year so it was yeah it was off the chart higher than most war zones and it was um yeah the gangs really controlled you know huge swaths of of the area including the the small town that we lived in and so we were working within the community to really try to keep the youth out of the gangs to encourage them to continue in school and how did you get there in the first place i was went there on a surf trip okay yeah so i went there in 2004 on a surf trip and just fell in love with the the people and the they have good waves there the water's warm um so we decided to buy a place there and then um you know over the years we got to know a number of people and we were attending a church in the capital city and got

to know people that were running like children's homes and um a couple that was working with women who've been victims of sex trafficking and so we decided to move down to El Salvador to kind of support all these organizations behind the scenes and then also in the community where we're at in alzonte get involved with with the youth there and so that was we had a business in the u.s that we'd go back and it's seasonal so we'd go back every year for like three or four months run our business and then come the rest year in el salvador and through like some connections we uh and but still wanted to use the the bitcoin they had to do something good in the world and so um they had hired somebody as an intermediary to kind of shield them and so we just presented what we were doing

And I understand their vision that the donor wanted to see circular Bitcoin economies started and people really to leave the fiat world. And so came back to them with this crazy proposal that, hey, we'll do it, you know, in this community that we're living in and a part of. And I thought for sure they would say, like, that's crazy. But they went along with it. And so, yeah, that's how it all started. And so we started just injecting Bitcoin into the community through, you know, incentives and incentivizing kids to stay in school, to get good grades, to clean the river and the beach. We'd pay them in Bitcoin. And, you know, through that, then they had Bitcoin to spend. But you didn't just hand it out.

No, no. We wanted, yeah. We found that it's very important that people have skin in the game and they earn. And now we did shift a little bit because then COVID hit, you know, probably three or four months after we had started. And at that time, people were going hungry. They couldn't work. You know, and El Salvador is a very poor country, so hardly anybody has any savings. Even, you know, most people only have one or two days worth of food in their home.

It's not like in the U.S. where, you know, at my house in the U.S., I could go for two weeks probably on the food I just have in my pantry and refrigerator. But they couldn't work. they didn't have any money to eat and so at that point we felt okay kind of shifting during that time since people weren't allowed to work we started doing distributions of bitcoin to it was probably 90 of the families in the community wow so we were sending them you know it wasn't in in dollar terms it was probably 40 50 a month that we were sending them it wasn't enough to cover all of their needs but it was enough to cover you know if they could buy their basics their their beans and their tortillas and so um through that it kind of

turbocharged um the the use of bitcoin because all the stores wanted to accept it because that was all everybody had and um you know the the people also had the time because they were bored so they had the time to you know dig into bitcoin and to research it because nobody could work during that time and so um it was kind of weird how you know that all came together and i feel like that had a big impact on the uptake of Bitcoin. And then obviously, once the COVID lockdowns ended, we pulled back from that and we pushed more into, you know, we did have like a work program because a lot of people were out of work after that time and the businesses were kind of slow to rehire. So for the few months after the lockdown ended, we paid people to

repair roads and do things like that. And, you know, but with the incentive to get them back in the regular workforce right you're the voice is brought to you by trezor the original bitcoin hardware wallet company pioneering the development of self-custody for crypto assets since 2013 empowering individuals with an open source device enabling beginners and experts to easily and securely hold their coins i find my trezor super easy to use and recommend it to my friends and family enjoy my five percent discount on trezor product by clicking the link in the show notes and using the code FLAT. Did El Salvador go all in on the lockdown thing?

Yeah. Oh, they went totally all in. In the beginning, I was very against how they handled it in the beginning. But to their credit, they reversed course before most people did. So they actually locked down in El Salvador before they even had one case of COVID. Just like overnight, they closed the airports. And it was a very strict lockdown. They had soldiers on the street. you weren't allowed to yeah it was it was i i totally disagreed with the way that they did it

and then they realized but then i think they realized like this is crazy like it's it's not one it's not helping two it's actually hurting people and have them locked in their homes and so as other countries were were actually just implementing their lockdowns el salvador reverse course encouraged people to get outside and get sunlight and exercise and lifted their lock lifted the lockdowns and then actually i think bitcoin played a big role in that because they had bitcoiners speaking in to the government and even the first year that they did the adopting bitcoin conference mid-conference they got rid of the um the requirement to have the social distancing no they the testing requirement all right yeah so they because

they were having speakers and stuff that their tests you know their flights got delayed and their tests weren't valid anymore and so they were being locked out so they got rid of the tester requirement i am impressed so like i said i i didn't agree with the way they handled the first but they definitely reversed course and had a they overall i would say they did a good job okay good wow okay so then you started and this is when covid started to like fade then you were helping stimulate the local economy in azonte yeah we did we did a number of things too also with businesses we said hey we'll pay half the employee salary in bitcoin if you'll rehire them because business were afraid to rehire they didn't know you know the economy going to come back and

so we did a lot of things to try to get people back to work did it work yeah oh yeah it was we had in el zante it recovered much quicker than the other areas and i think it's and it hasn't stopped it just keeps we had the plus two of now all these bit pointers were flowing in right and And so the tourism was off the charts. And so, yeah. How many people live in El Jonto, more or less? It's about 3,000. 3,000.

Yeah. It's a very small community. Okay. And the whole community today, you can say, is aware of Bitcoin or using Bitcoin? Like this is... Yeah. Everybody's aware of it, for sure. Yeah.

I would say probably 90% of the families have used it at some point. I would say, you know, probably the majority of the families use it, you know, at least once a month. Yeah. And almost all of the businesses, I'd say probably 80 to 90 percent of the business is there except Bitcoin. So did it do anything to their savings consciousness? Oh, yeah. El Salvador historically is not out of a culture of savings at all. So I think part of that is a lot of money comes from remittances. And so it seems, you know, people are receiving it. They're not really working for it.

So they're quicker to spend it on fast food or, you know, El Salvador is super poor, but you look at all the fast food restaurants and you're like, how do these like stay in business? Well, a lot of it's because you have this kind of welfare type money that comes in through the remittances. And so historically, people have just not, they've also, just with the history of the gangs there and extortion and, you know, people not knowing if they're even going to live another year. They kind of had this thing of loop for the day. And once they started using Bitcoin, you see this kind of shift in their mind because they're like, if I spend it now, it probably can buy me twice as much if I save it. And so you have them start thinking about saving for the first time. And we were shocked. We had, you know, the young kids that were working with us that would save up enough to buy a phone or, you know, a new bike or a motorcycle.

And these were kids that had never saved before. I'm sure it excited them a lot. And just, I think, too, to be able to see that for them to understand the first time what money is, that it's kind of their stored energy and effort and value. And so if they spend it now, they're not going to have it in the future. So the whole deferred gratification thing really started to click for them. And we saw that kind of bleed over into education even where they would start thinking, well, it's better for me to stay in school because even though I'm not earning a wage during that time, I'll be able to earn more in the future and have better opportunities. And so it really, Bitcoin does change people. Yeah, I guess also on the moral level, the self-fulfillment that you feel when you see

that you can actually create the fact that, you know, you now have a phone, you now have a means of communication. And I did that. I did that. And then you start rebuilding your confidence in yourself. And it's like a self-sovereignty, circular process kind of thing. 100%. And you don't have any gatekeepers telling you you can't do it.

For a lot of people, they couldn't get bank accounts or the banks would charge them so much fees it wasn't worthwhile. And so they never started this process of really engaging in the financial system. Now they're able to kind of leapfrog and bypass that and have this self-sovereign financial system. And how is it at large outside of El Zante, inside maybe San Salvador or even greater El Salvador? So definitely it's not like everybody's using Bitcoin. The majority of purchases in the country are still made in dollars, for sure. Well, it's a process. Yeah, and that's what, like, when it first, when the law first passed, I tweeted out.

I said, you know, a year from now, everybody will say how this failed. You know, three or four years from now, they'll start to be like, well, maybe it's kind of working. And a decade from now, everybody will say, like, oh, it was obvious. And so that's been, you know, really interesting to see is that's actually what's happening. You see now, you know, all the major supermarket chains now take Bitcoin, the major department stores. We're seeing gas stations now and then just thousands of local small businesses. And so it's initially there was a lot of people that were hesitant and even people that we went to talk to like, no, no, no. Now they're coming to us and saying, OK, how do I onboard the Bitcoin?

you know they they see that the businesses that are accepting it are thriving and are getting more customers and are saving and having investment money to grow their businesses and so we're seeing this FOMO but but in a good way like you know like hey this is yeah like we're missing out on this economic opportunity amazing does it help to get all the Bitcoiners coming as tourists to stimulate that even more yeah I mean definitely so one that's a huge injection of Bitcoin into the economy because you you know when you're bitcoinizing an economy it has to come from the outside there wasn't much bitcoin in el salvador prior to when we started and so uh now you have this injection of bitcoin into into the economy but it also i think helps show people like wow

nobody used to want to come to el salvador and now we have people from all over the world that are not just visiting but a lot of them are moving they're moving their families there and so I think for them, that makes them realize, wow, Bitcoin is like a real thing that's going to be really important. It's bringing conferences. It's bringing, I mean, the number of education and just like the amount of investment that's coming in for the country. I mean, there's been probably a couple dozen billionaires that have come to El Salvador where in the past nobody would have had any interest. of even you know they'd be scared to even like stop by now you have people that are there looking to invest in the country and so the local people see this and realize that there's a transformation or wanting to learn yeah like look at that case study and and learn okay and so I have a couple

of things I want to take you to first of all I saw your interview with Murph and the kind of stuff he does there and I'm like okay so Mike is completely viral because like people are looking at you what you have done how you have kind of infected your local community with your passion but with this also with this very practical solution for life and now you you get other people coming in and doing similar things like smaller communities projects and it's just starting to like virally take place and I mean I find that so inspiring and so amazing so on your podcast you interview all these people that have all these amazing entrepreneurship projects or or initiatives so can you tell me a bit about like how do you find these people do they find you how does it

is it really a viral effect that you're noticing yeah I mean most mostly they they'll reach out to me and you know and that's what I love about the podcast I get to you know know all these people that otherwise I wouldn't get to know and you know in that format you can dig deep really quickly and so you can get to know people like... Also, Murph, but also your episode, I'll recommend to the audience your episode with me, Premier Bitcoin, with John and with Lina. Yeah, yeah, yeah.

Both great projects. No, I feel so fortunate because I get to sit down with all these amazing people. And a big part of my time now is devoted to, we're working with all these Bitcoin circular economies around the world. And so we do a lot of coaching and a lot of supporting with them.

And we're very careful. You have your own community of community builders? Yeah. So there's probably now probably about 40 different circular Bitcoin economies out there. And initially, there was a lot of pressure on us like, hey, you guys need to be in charge of this. And we're like, no, no, it needs to be decentralized like Bitcoin. We'll help. We'll share what worked for us, what didn't.

But each community is going to need to figure out what works for them. And so right now, we try to just focus on being able to support all these other communities that are out there. Costa Rica, South Africa. Brazil. I mean, in Africa, there's probably at least a dozen that are there. There's even some that are springing up now in the U.S. Right. Latin America is really big.

In L.A., there's somebody starting one. There's a big Salvadoran population in L.A., and so they're focusing on that. but yeah so we're seeing all these things pop up over all over the world and and that's what's so exciting kind of ripple out and in el salvador too there's berlin now which is a kind of community in the in the coffee country that has really replicated what's happened in el zante and so this is berlin el salvador yeah people think berlin german yeah um which is it's funny the berlin el salvador was was actually founded by people from germany yeah from germany itself um but uh yeah so it's it's interesting to see germany our german friends in indonesia as well

in bali yeah there's a big project in bali and so in each i mean like in bali they have they have goosebumps like just hearing all the names of the place in bali they have some unique challenges because you know they're not allowed to use bitcoin as as to purchase things by law but they found kind of a workaround way to do it and so each community finds their own way of you know meeting the needs of what's happening in their local area okay i wanted to ask you about the imf but before that because i'm all like goosebumps why are you in bitcoin like what is this for you what does it mean because your ripple effect and Your impact is so big the way I see it.

And I guess you know that. I guess you feel that. I'm so excited to be a part of it. What does it mean for you? For me, it's always been, I've came to it through the monetary side. People who know me know I'm not a technologist. Like investment side? Not so much investment, but just seeing how monetary systems impact.

Like why are some countries poor and some countries wealthy? And obviously there's a lot of complex factors that come into it. But the monetary system plays a big role in that. And so for me, you know, I've always been wired as a libertarian and feel the government shouldn't control money. And so when Bitcoin came along, I was like, oh, wow, this is amazing. So that's kind of where I was drawn into it. I learned the technology side, you know, as I went. That was more of the challenge where a lot of, you know, some people in the space come in from the technology side.

But for me, it was definitely the money. Bitcoin is money. Amazing. and you feel like what you're doing today is like walking that path like actually implementing the vision i mean i feel super fortunate just to be able to kind of focus on on that um yeah it's to see bitcoin actually being used day-to-day transactionally it's interesting you come to the bitcoin conferences you know even like we're here in lugano and you know a lot of the people here maybe haven't even ever bought anything with bitcoin in their life they haven't understood

what it is to use bitcoin as freedom money and so we love being able to share with people and even seeing what's happening here in lugano where now all these businesses are accepting bitcoin and you know i think for when people make that jump from just seeing it as digital gold to seeing it as freedom money like to me that is the important jump for them to make i agree with you and so when you say what's your take on the the statement of the imf about el salvador recently You know, they came out and said El Salvador may be going too far or too fast with their implementation of Bitcoin. Maybe we need to like curb their enthusiasm a little bit. What's your take on that?

What do you make of that? And how do you think Bukele and the state sees it? Yeah, I mean, I don't think anybody in the Bitcoin community is shocked that the IMF doesn't like what's happening in El Salvador. But I think you see in their statements that they're backtracking. When it first happened, they were like, no, you know, they were basically demanding that El Salvador, like, totally walk away from Bitcoin and get rid of that. And we're threatening them. And El Salvador has just pushed forward. And so now you see them kind of like, well, we're encouraging them to, you know, put some curbs on it or to go a little slower.

But I think they're being forced to walk back by the fact that the government in El Salvador has stood firm. Like, we're not going to be controlled by the IMF or any outside forces that, you know, they have their own independence and their own sovereignty. And so they've made this decision. And so I think I think the IMF is going to buckle. And I think that but I think that they're just they see this coming that as countries start to adopt Bitcoin, it's going to make the IMF obsolete. So I think that that is their fear. And, you know, obviously they want to be able to control things. When they have countries under their thumb, they can dictate terms to them.

Do you think they're not going to try and use any, I don't know, severe measures to stop El Salvador? I don't know if they can. I'm just asking. Yeah, I mean, I... Because they have done similar things to other countries in the past. No, and I think that they will make some attempts. But I think that, I mean, Bukele is just a very sharp leader and I don't think he's going to get boxed into a corner. And so I think they're going to try to find a way out that saves space for them. But I don't see the government in El Salvador buckling to their demands.

I mean, you know, they've received a ton of criticism since the beginning. And when they started, it was when Bitcoin price was going down. So it would have been very easy for them to walk back from it. And most politicians would have. But they stood firm and said, no, we have a long term vision with this and we know where Bitcoin is going. And so, yeah, I don't think the IMF is going to have any real sway on them. I mean, I'm not saying that they won't negotiate with them. You know, they have to be pragmatic, too. But they're making big decisions to make sure that entities like the IMF can't control them. Their recent budget that they announced, I believe they cut the budget by 10 percent.

And it's not, a lot of times when governments talk about cutting, they cut from what they planned on increasing. So instead of increasing 10%, we're only increasing 5%. So we cut it by half. You know, they'll play games like that where El Salvador is literally spending, you know, their proposal for the budget is spending 10% less this year than they spent last year. And to not have a budget deficit. So you see them kind of shifting away from, you know, the past governments would do anything they could to get money from the IMF. The reality is most of the time they weren't going to be in power when it had to be paid back.

So for them, it was free money and they would skim some off the top and, you know, not worry about the consequences. So I see El Salvador's kind of pushing back on that shows just the strength of the leadership there. That's spectacular. Okay, so when I come to El Salvador, I would love to sit with you for a longer talk, to go deeper on some of these topics, but also more about you and the kind of work you do there. And so I want, like I encourage my audience to start following you on Twitter. Where they can follow you? So they can follow us at Bitcoin Beach, our Twitter handle.

And then we have a podcast and YouTube live from Bitcoin Beach. And Bitcoin Beach is not just the name of the place, right? It's the name of an app? No, so Bitcoin Beach was just the name of this, the idea to basically Bitcoinize the whole coastal area of El Salvador. And so for a lot of people, they now think of El Zante as Bitcoin Beach because that's where it started. But more it was just kind of a grassroots dream of let's see the way Bitcoin can impact the whole coast. And so that's kind of the bigger goal. And originally there was a wallet that we, Galloway, the company developed.

Specifically, they came and saw what we were doing, wanted to participate, wanted to build a wallet that was not built for tech people, but for people on the ground. And so they built a wallet, which we called the Bitcoin Beach Wallet originally. We've since changed the name and the wallet has been changed to Blink. More because it wanted to grow outside of El Salvador, But also we just wanted to, you know, represent the difference between the grassroots project and, you know, the wallet as a commercial endeavor. And so we felt at that time it was good to have a little bit of separation just so. But we're still, you know, we love the wallet and everything they've done.

And, yeah, it's been an amazing project. And it's really, I think, without the wallet that they developed, I'm not sure if the project would have been nearly as successful because it really made it easy for the businesses and people to use. I use Blink as well. It's the same one, right? Yeah. Yeah. So I use Blink, too. People can just download it and use it.

It's very easy, yeah. Very easy. Unless you're a U.S. citizen, they block you right now. Oh, really? Yeah, yeah. Oh, I didn't know that. It's like, you know, now it's like if you're from the U.S. or Iran or North Korea, you know, we're on that list now. U.S., Iran, and North Korea are on the same page right now.

Isn't it insane? Yeah, it's like you're at a disadvantage if you're an American, so it's crazy. damn what's happening to this world wow okay right so mike any any like last thoughts things you want to share with the audience uh they're gonna see us soon in a in a cool long episode but until then any thoughts you want to share i just encourage people coming to el salvador there's been a ton of like hit pieces and negative things written about the country and so i encourage people to get their feet on the ground there and see it for themselves yeah it's really being transformed believe that that's happening so quickly as well it's i mean i live there and i'm like you know

one week to the next i drive down i'm like wow they're building more here and that they're improving this so it's yeah wow i come back from this trip here to switzerland and i'll go back and you'll be surprised you know it reminds me of my son who's uh now he's 15 but when he started like growing physically 13 13 and a half every morning i would wake up he would look taller and I'm like what happened during the night yeah I'm a 17 year old it's the same way so it's like that in El Salvador

okay I'm coming to see it with my own eyes thank you so much Mike I appreciate your time we look forward to having you in El Salvador thank you