El Salvador Bitcoin Beach Merchant Claims First BTC Payment This Month, Staff Says Previous Bitcoin Transactions Are Now Almost Nonexistent
Bitcoin core contributor Jon Atack stated that after he paid for lunch with Bitcoin in El Zonte, El Salvador, the staff informed him that this was the first BTC payment received by the store this month; the staff mentioned that Bitcoin payments, which were previously common, are now "almost nonexistent."
Atack has been living in El Salvador since 2022. When he asked the staff about the current main payment method, they said that the vast majority of people use bank cards; he then offered to tip in sats, but an employee who has worked there for about three years said he had forgotten how to use the Bitcoin app and refused to accept it, stating that the local scene is "dead."
This experience comes from a single merchant and a one-time observation and cannot directly prove the volume of Bitcoin payments in El Zonte or all merchants nationwide. Atack himself defined it as a data point; travelers still report completing BTC payments locally, and some merchants retain signs indicating they accept Bitcoin.
El Zonte is known as "Bitcoin Beach," where an anonymous donor initiated a local Bitcoin project in 2019, combining Bitcoin distribution with community spending; El Salvador subsequently adopted BTC as legal tender in September 2021, attempting to expand this community practice into a national payment experiment.
The policy environment has changed. To secure an IMF financing arrangement of about $1.4 billion, El Salvador has committed to reducing Bitcoin participation in the public sector by 2024, removing the requirement for merchants to accept Bitcoin, and stopping tax payments in BTC; related amendments to the Bitcoin law are expected to be passed in February 2025, making BTC acceptance by merchants voluntary.
The decline in daily payments does not necessarily equate to the disappearance of Bitcoin's demand as a reserve or investment asset. Merchants and consumers using card payments in a dollar-denominated environment typically means lower operational thresholds, familiarity with instant settlement, and more stable accounting standards; if users expect BTC to appreciate, the motivation to hold Bitcoin may also weaken its use as a medium of everyday exchange.
From a market mechanism perspective, consumers and merchants shifting from BTC to bank cards will redirect payment flows back to banks, card organizations, acquirers, and the dollar settlement network; non-custodial wallets, Lightning Network service providers, and local BTC payment integrators will lose the network effects brought by high-frequency trading. Holders of Bitcoin may still benefit from price increases, but merchants and payment infrastructures attempting to establish a circular economy based on everyday consumption bear the pressure of declining transaction frequency.
Source: Public Information
ABAB AI Insight
The experiment in El Zonte was initially built on external funding and community coordination: anonymous donations supported residents in acquiring, saving, and spending Bitcoin, while merchants' acceptance of payments relied on wallet training, usage incentives, and tourist traffic. The national legalization in 2021 escalated this bottom-up local experiment to national policy, but nationwide promotion does not automatically replicate the subsidies, organizers, and high-density user networks present in the community; once incentives weaken, payment habits will revert to the more familiar dollar and card systems.
The breakpoint in the capital pathway occurs at the settlement choice. When consumers hold BTC, if they expect it to appreciate, they will view it as a savings asset; when merchants receive BTC, they face risks related to pricing, currency exchange, accounting, taxation, and price volatility. Mandatory acceptance shifted part of the cost of use from merchant preference to legal obligation; after the IMF agreement changed it to voluntary acceptance, merchants will reassess payment tools based on actual customer flow, operational costs, and dollar cash flow, with low-frequency BTC payments losing their justification for maintaining wallet processes.
A historical analogy is the behavioral version of "Gresham's Law" in a dual-currency environment: when people believe one asset is more likely to appreciate, they tend to hold onto it and spend a more stable currency that has lower resistance to everyday circulation. El Salvador's dollarized economy amplifies this effect, as commodity prices, wages, card networks, and most business ledgers already revolve around the dollar. Bitcoin is thus closer to a high-volatility reserve asset rather than a naturally superior medium of exchange.
This represents a transfer of pricing power. The value of a payment network depends not only on the ability to transfer funds but also on who controls the pricing unit, merchant software, refund mechanisms, consumer habits, and regulatory compliance. The Bitcoin protocol can lower the threshold for permissionless transfers, but when goods are still priced in dollars and merchants must bear operational friction, pricing power remains with the dollar and card network system. The voluntary nature has removed the legal hedge against this network effect, and payment choices thus revert to competition based on efficiency and habit.
ABAB News · Cognitive Laws
Accumulated assets are difficult to become high-frequency currencies.
Payment revolutions rely not on the ability to transfer but on the willingness to accept payments.
Law can create entry points, but habits determine the flow of funds.