It wouldn’t be an exaggeration to say that the Bitcoin Beach project in El Salvador changed the whole world. An anonymous donor, an ex-surfer, two local community leaders, and a team of volunteers built something majestic that mankind will remember forever. Galoy, the company that created the Bitcoin Beach Wallet, was an early collaborator. They recently published “Bitcoin Banking for Communities: Lessons Learned from Bitcoin Beach” and we’re here to distill and summarize it.
As an introduction to the Bitcoin Beach project, read this:
“Jorge Valenzuela, Roman “Chimbera” Martinez and Mike Peterson began running youth programs around 2009 to give El Zonte’s kids the opportunity to play, learn and dream. From surf “para todos” (surf for everyone) to computer classes to paid community service projects, the programs have breathed new possibilities into a place that once felt like a dead end.”
The donation that fuelled the revolution came with strings attached. The project had to “challenge preconceived notions about Bitcoin.” The first one was, “Bitcoin is a speculative asset for the wealthy.” The second and most prevalent one, “Bitcoin is a store of value, not a medium of exchange.” It’s fair to say that the Bitcoin Beach project shattered both and helped a lot of financially excluded people along the way. In the article’s intro, Mike Peterson wrote:
“In El Salvador, Bitcoin is the money of the poor and financially excluded. For Salvadorans that are living in poverty, the debates between the digital gold and digital cash camps seem out of touch, and without practical relevance. For those who need Bitcoin most, it is both how they buy their daily bread and how they save for the future. They see no need to choose one or the other.”
Galoy And The Bitcoin Beach Wallet
Here at Bitcoinist, we’ve covered the Bitcoin Beach project from the get-go. However, we’ve never discussed, or even looked into, the wallet they’re using over there. The topic is more interesting than we thought. The Bitcoin Beach wallet has unique characteristics that respond to El Zonte’s specific needs. The people at Galoy describe it as:
“The Bitcoin Beach Wallet is an open source Bitcoin community banking solution. One that was designed to meet the needs of the merchants and community members in El Zonte. It utilizes a multisig shared custody model that offers an alternative to the standard non-custodial and custodial solutions that are most widely available today.”
What’s this “multisig shared custody model” about? Well, the “capital is pooled and managed by the community.”This reduces fees “by batching on-chain transactions” and provides “free and instant “intra ledger” transactions.” Not only that, there’s no fee for opening and closing Lightning channels within the community. It also provides benefits to merchants, who don’t have to run servers. “Efficient use of online servers means lower costs per user.”
How does multisig shared custody work?
“The custody model that we landed on for Bitcoin Beach is what Galoy refers to as “community custody.” It is a multi signature solution where the keys for the funds in cold storage are held by established members of the local community. This model reduces reliance on centralized companies outside of the community while also reducing friction of onboarding members to the network.”
According to Galoy, this is a bridge to self-custody. Experienced users tend to eventually move away from the Bitcoin Beach Wallet as they get comfortable and find other solutions.
BTC price chart for 12/14/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Six Lessons For Future Projects
All of these are thoroughly explained in the original article, which everyone should read. However, the titles are self-explanatory and transmit the overall message.
- Education is Paramount
- Lightning is an Accelerant for Bitcoin as Money
- Merchant Onboarding is Necessary to Foster a Local Circular Economy
- User Experience Must be Developed Within the Context of the Community
- Community Custody is a Bridge to Self-custody
- Start Small and Build Momentum Before Expanding
Let’s close this with a Mike Peterson quote. “We invite you to come visit El Zonte, and help us spread this vision of community Bitcoin Banking that is enabling financial inclusion around the world.”
Featured Image: The Bitcoin Beach community in action. Taken from the article. | Charts by TradingView