When the paths in the mountains around Suchitoto are overgrown, Erick Castro clears the way with his machete. The young Salvadoran works in his family’s cornfields and as a tour guide. His mobile phone often has no reception up here in the mountains. Nevertheless, the 28-year-old farmer is a Bitcoin fan.

He is unable to pay for anything digitally in his village of El Sitio Zapopan, which is home to around 130 families. His neighbors swear by cash and prefer to hoard their money under their pillows rather than deposit it in banks. But in the next small town, Suchitoto, at least a handful of stores and restaurants accept Bitcoin as payment. Castro recently bought bread and paid for it with the state-operated Chivo app – 0.00010772 Bitcoin, the equivalent of $5.45.

"I believe Bitcoin is the future," Castro says. "But it will probably be another 10 years before everyone here is paying digitally." He is proud to see El Salvador making headlines as a tech lab rather than for its gangs and violence.

El Salvador was previously best known as a place people wanted to leave because they didn’t believe there was much of a future for them there. Central America’s smallest country is home to 6.5 million people. Up to 3 million Salvadorans live abroad, mainly in the United States. But since hip President Nayib Bukele, who is only 40, has been fast-tracking the country’s transformation into a Bitcoin state, there has been a new kind of optimism, at least among those who don’t think that Bukele’s bet on the volatile cryptocurrency is dangerous megalomania.

The president is marketing the plans as a way out of poverty. He wants to transform El Salvador into a center for innovation and tourism, with thousands of new jobs. Bukele also wants to use Bitcoin to promote financial inclusion in a country where, according to the World Bank, only 30 percent of the population has a bank account. However, critics see the vision primarily as a gigantic marketing machine for the president – and an attempt to fill empty state coffers.

Bukele is positioning himself as a tech evangelist, a maverick who is breaking with the traditional political rules. He makes appearances in a baseball cap and leather jacket and uses social networks as a political marketing machine. On Twitter, he refers to himself as the "CEO of El Salvador" and governs Silicon Valley style, pushing through rapid reforms, ignoring skeptical voices. He attacks critical media, and even had soldiers march into parliament to urge policymakers to push through a budget for security reform.

And yet, he has approval ratings of 85 percent in El Salvador and is feted as a pioneer by the international crypto community. Six months ago, Bukele announced via video at the Bitcoin 2021 Conference in Miami that he would introduce Bitcoin as a legal tender in his country. Only a few days later, he introduced the corresponding law in parliament, where his party holds a majority. As of September 2021, merchants are also required to accept cryptocurrency, if they are technically capable of doing so, in addition to U.S. dollars.

In 2022, Bitcoin City is also meant to emerge at the foot of the Conchagua volcano in the southeast of the country also expected to be the home of a massive technology center that Bukele plans to finance in part with government cryptobonds. According to the president, the government will provide the infrastructure, and investors will build offices, apartments and shopping centers The energy for the operation is to be generated from the volcano. El Salvador has 170 volcanoes and hopes to be able to mine its own Bitcoins on a large scale with geothermal energy.

In December 2021, the Bitcoin volcano still lies untouched in the blazing sun. Nelson Rosa has heard of Bitcoin City, but from his little house on Conchagua, he can only see dense forests, a few cornfields and the Gulf of Fonseca, from which the islands and the silhouettes of neighboring Honduras and Nicaragua rise up. So far, all that has happened is that the narrow road that winds up to the summit and passes Rosa’s house has recently been repaved.

He says Bitcoin City remains "a phantom" – and a project that is aimed at foreign investors, anyway, and not "normal people" like him. The 31-year-old and his wife have mobile phones and an internet connection, but are suspicious of cryptocurrency. "Bitcoin is for people who understand how it works," says Rosa, who works as a security guard. So far, he hasn’t even downloaded the Chivo app, which would allow him to get the starting credit of around $30 that the president wants to use as an incentive to get people enthusiastic about Bitcoin.

Helpers are assisting less tech-savvy citizens sign up for Chivo at information booths that have been set up in many cities. Some 200 blue Chivo ATMs have been installed around the country. There, Salvadorans can buy digital credit or exchange Bitcoin dollars. They are guarded by police officers or military personnel with assault rifles.

Another 60 ATMs have been set up in cities in the United States to facilitate no-fee money transfers between relatives who emigrated abroad and Salvadorans. Remittances account for more than 20 percent of El Salvador’s gross domestic product. Before the introduction of Chivo, service providers collected around 10 percent in fees.

Athenas, the U.S. company which developed Chivo with the government, claims the app has around 4 million users. But many have apparently only spent the initial Bitcoin credit the government has provided. "Most withdraw the $30 and that’s it," says a policewoman who guards Chivo ATMs. She says she has used it to purchase medicines herself. Many people told DER SPIEGEL that they spent the credit on food, restaurant visits or clothing and hadn’t used the app since.

Merchants also say that few Salvadorans are actually paying with cryptowallets in their daily lives, even though supermarkets like Súper Selectos, U.S. chains like Starbucks and Subway and some bars, stores and even small market stalls accept Bitcoin.

"It’s not like an entire nation has been Bitcoin-ized and in two years everyone will be using Bitcoin," says cryptocurrency expert Jeff Gallas, the founder of fulmo, a Berlin, Germany-based Bitcoin Lightning network startup. Still, he considers it to be a successful start, "considering how little time there was." He says the government now needs to show that it can deliver on all its promises and fix the bugs in Chivo.

Security flaws in the software allowed scam artists to collect the credit balances of hundreds of citizens. Sometimes, money transfers haven’t worked, either.

"El Salvador has a bit of a head start now," Gallas says. "But other countries can look at what’s not working so well yet, and then follow suit." Like many Bitcoin enthusiasts, he first had to look up where El Salvador was located. Then, he organized a trip for a delegation representing the Berlin Bitcoin scene at short notice.

In the town of Berlín in Salvador, the group visited the La Geo geothermal power plant, the site of a mining container where Bitcoins are already being mined using volcanic energy. But so far, the quantities have only been enough to score a marketing coup. Gallas doesn’t yet see a lucrative new business field there. "Three to 10 years would be the timeline for getting this to a level where anyone would even be interested," he believes. It also isn’t clear yet whether the Conchagua volcano is suitable for mining on a large scale. Currently, El Salvador covers about a quarter of its energy needs with geothermal energy.

It’s only in El Zonte that the Bitcoin vision is already part of everyday life on every street corner. The 3,000-inhabitant beach village is a kind of mini-Disneyland for crypto fans. Kiosks, restaurants, hotels, surf stores and cafés are emblazoned with Bitcoin signs, and even trash cans have a yellow "B" painted on them.

The Bitcoin Beach initiative has been working for some time to get residents on board with the technology. Three surfer friends from El Zonte have been running social projects here for around 13 years, teaching young people surfing, English or IT to provide them with more opportunities than the sons of local fishermen often have here. An American who had moved to El Zonte got them interested in Bitcoin, then an anonymous donor sponsored the crypto launch with a large sum, and a startup programmed the village’s virtual wallet.

During the pandemic, villagers received credit on their mobile phones instead of aid packages, motivating more and more stores to accept Bitcoin.

"It has made our whole life easier," says 21-year-old Mabel Alvarez, who works for the social project. She receives her entire salary in Bitcoin. She pays her electricity bill and her college tuition funds digitally, transfers money to her mother for purchases and she tries to save some. Alvarez argues that one of the biggest benefits of the Bitcoin revolution is that youth and adults who otherwise probably wouldn’t even have bank accounts can now set money aside.

El Zonte is now benefiting from Bukele’s campaign. The village used to be an insider tip for surfers, but now it is drawing many Bitcoin tourists.

Not everyone here is Bitcoin fan, though. At the Pupuseria Mama Blanca, a snack stand, small dough patties are sizzling on a grill. There’s still a sign with the QR code next to it, but Blanca waves it off indignantly. "Bitcoin is not for me," the 55-year-old says. She says she started accepting crypto payments at the beginning of the pandemic, when she was earning good money from her delivery service. But then the price of Bitcoin collapsed. "I lost $800," she says.

Many Salvadorans share this fear of losing what they have in the face of sharp price fluctuations. They can’t afford to set much or any money aside, anyway, and even small changes in value are a major loss for people who earn only a few dollars a day. In the capital city of San Salvador, there have been several protests since the launch of the Bitcoin campaign.

Critics also fear that the president is gambling away taxpayers’ money with his Bitcoin investments. They also argue that the sources of the money are opaque. "The government isn’t transparent about its sources of funding or how the money is spent," says Marjorie Chorro de Trigueros, the director of legal affairs at Fusades, a Salvadoran think tank.

The small country is already heavily in debt, but that hasn’t stopped it from spending state funds of around $70 million on the purchase of 1,370 Bitcoins so far, the newspaper El Diario de Hoy reported. "Countries shouldn’t gamble with public funds," says Christian Ambrosius, an economist at the Free University of Berlin who specializes in Latin America. As long as the Bitcoin trend is pointing upward, things are likely to be fine, he says. "But nobody knows how long that will be."

The planned Bitcoin government bonds are also a bet on rising prices for the cryptocurrency. Ambrosius sees it as an attempt to "find alternative sources of funding in an acute time of need." Half of the initially planned $1 billion in bonds are to be invested in the construction of Bitcoin City, with the other half going toward investments in Bitcoin. Investors are to receive 6.5 percent returns annually – and a dividend after five years if the value of Bitcoin increases.

Bukule’s plan to raise funds in the crypto scene may work – at least in the short term. "Many are predicting that the bond will sell out relatively quickly," says Frankfurt-based Bitcoin expert Veronika Kütt. "If that’s really the case, then I think there’s a good chance that a small town will be built."

But Bitcoin experts like Jeff Gallas or cryptohacker Pavol Lupták doubt that very many tech nomads will actually want to settle in Bitcoin City, other than perhaps establishing offshore companies there. And even if the city of the future does get built at the foot of the Conchagua volcano, it is unclear if the broader population would actually benefit.