As a former Venezuelan resident, Josef Dvoracek knows a thing or two about inflation, economic mismanagement, and the risks of fiat currencies.
Because of this, he is among the most enthusiastic pioneers of a new Bitcoin payments ecosystem emerging in this lush southern region of Costa Rica known as Costa Ballena (Whale Coast).
Dvoracek, a 71-year-old Czech who sells artisanal bread at local food markets with his Venezuelan wife, said he now makes around 25% of his sales from the new Bitcoin Jungle wallet. Aside from being able to make bitcoin, he says the biggest benefit of using it was saving up to 8% on fees he loses on credit card sales.
“It was incredible,” said Dvoracek, who lived in Venezuela for 20 years. “Most of us who use Bitcoin are now leaving the credit card machines at home,” he added, referring to his fellow sellers.
The development of the Bitcoin jungle in this region means that El Salvador is no longer the only place in Central America where you can buy a coffee with Bitcoin before hitting the beach. In fact, there’s a lot more that can be done with it in this corner of Costa Rica these days.
On a recent Friday in the surf town of Dominical, over a dozen vendors, including Dvoracek, accepted bitcoin. A few minutes’ walk down Main Street, the orange plastic Bitcoin plaque was also on display at Mono Congo (Howling Monkey), a popular breakfast and lunchtime cafe. A pharmacy next door recently accepted bitcoin, as did a number of restaurants and other tourist-focused businesses in the town of Uvita, a 15-minute drive south of Dominical.
In total, around 50 providers in the roving market and 20 brick-and-mortar companies have signed up for the Bitcoin Jungle project since it was launched around six months ago. The wallet app had around 1,500 downloads and 1,000 monthly active users.
The project is a prime example of how the original bitcoin beach in El Zonte, El Salvador — which foreshadowed that country’s decision to make bitcoin legal tender last year — foreshadowed the organic growth of local bitcoin ecosystems elsewhere in the world world moves forward. It also provides further evidence that Bitcoin can be an effective and useful payment system – something that skeptics have long dismissed because of its slow transaction speeds and relatively high cost.
Like the El Zonte project, the Bitcoin Jungle wallet runs on the second layer Lightning Network, making transactions significantly faster and cheaper than they would be on the underlying Bitcoin blockchain. It is a fork of the original Bitcoin Beach wallet, built using the open-source bitcoin development platform Galoy, but has additional features such as a GPS map with locations that accept bitcoin and NFC contactless payment functionality (Near Field Communication).
Richard Scotford, a 50-year-old former Hong Kong resident who was active in that region’s pro-democracy movement, came up with the idea for Bitcoin Jungle when he and his wife were making plans to start a local middle school based on the Bitcoin standard.
“The deeper I delved into Bitcoin, the more I realized that this space was primed,” he said. “All we had to do was start getting people into the bitcoin standard by giving them ways to spend their bitcoins.”
Scotford says Costa Rica’s economy and financial system required a different approach to Bitcoin Jungle. Unlike impoverished El Salvador, Costa Rica has long had one of the most stable economies in Latin America, with little corruption and a relatively good standard of living.
“El Salvador is about banking the unbanked. Costa Ricans have bank accounts and mostly don’t question the financial system,” Scotford said.
So, rather than relying on local adoption, Bitcoin Jungle primarily aims to break into the ranks of foreign tourists who flock here for Costa Rica’s pristine beaches, verdant rainforests, and pristine waterfalls.
Given the ability to seamlessly pay with bitcoin, tourists could leave their credit and debit cards at home, or at least back at the hotel. For their part, hotels, restaurants and retreat centers are getting a way out of painfully high credit card fees and a chance to hold bitcoin for the long term. The idea is that this will eventually lead to a Bitcoin circular economy that will also attract Costa Ricans.
Lee Salminen, a software developer who sold his payments business before moving to Uvita and worked with Scotford on Bitcoin Jungle, said he’s optimistic more locals will come on board, especially given that the native currency Costa Rica’s dollar has fallen by about 10% over the past year.
The locals’ onboarding process was aided by one-on-one sessions, during which Salminen and Scotford listened to people’s financial woes and explained how Bitcoin can solve them, most importantly giving them the ability to quickly convert them into dollars.
After the first week that Bitcoin Jungle went live on local markets, every provider used the option to withdraw. Today, very few do, says Salminen.
“It’s been an incredible development in the markets,” he said. “Every week they come in and have another level of complex questions about bitcoin or the economy or inflation. Everyone has their reasons – some have a healthy distrust of government, some have family in distant places and some like to speculate.”
The next step in improving the ability to switch between bitcoin and fiat was the recent arrival of two shiny new bitcoin ATMs.
The Costa Rican government has been reluctant to accept cryptocurrencies as legal, but has warned citizens that buying them can be risky. But a recent COVID-19-related slump in tourist arrivals — compared to a 30 percent surge in El Salvador since Bitcoin launched last September — could be a catalyst for a change in official stance, Salminen said.
“The Ministry of Tourism wants to speak to us to see how Bitcoin could be positive for tourism here and use that to drive legislation,” he said.
Czech operator Dvoracek said he believes more Costa Ricans will use Bitcoin payments once they realize it gives them the ability to unbank themselves, eliminating the need to wait in long lines for services at banks and ATMs to stand.
Fuad Yantani, a 43-year-old Chilean who sells cold-pressed juices, said Bitcoin Jungle payments made up a small but growing portion of his sales. He said bitcoin has also been useful for making and receiving payments from other providers, but his longer-term goal is to treat it as an investment.
“My idea is to save more of it than spend,” he said.
This is a guest post by Stuart Grudgings. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.