In El Salvador, two people are actively working to help increase the speed of Bitcoin adoption and to help foreign investors start Bitcoin-related businesses. With the current market price of Bitcoin at approximately $29,500, it is out of reach for most people. However, each bitcoin is divisible into one hundred million sub-units called “satoshis,” allowing anyone to exchange fiat-to-bitcoin in smaller amounts. This, paired with Layer Two (L2) integrations like the Lightning Network, are seen by many as the pathway to increasing Bitcoin use cases and elevating its role as a medium of exchange in commerce.
Edgar Borja, founder of a company called K1, has invented a Lightning-enabled ATM that massively reduces the frictional costs associated with the fiat-to-bitcoin conversions compared to other Bitcoin on-ramps that utilize the Layer One (L1) blockchain. Borja demonstrated the device, which accepts coins and dollar bills, by depositing 5 cents into the coin slot and tapping once or twice on the LCD screen. He then directed me to hold up the QR code for my Lightning-enabled wallet (called Wallet of Satoshi) on my iPhone to the embedded camera. Within seconds, the equivalent of 5 cents in Satoshis arrived in my wallet with no fee associated with the transaction.
K1 sells its Lightning ATMs for $1,200 and does not charge any recurring fees thereafter. Business owners are free to include a usage fee of their choosing once they own the device. K1 ATMs lower the barrier to entry for the fiat-to-bitcoin conversion and could potentially address a much larger market than the Athena ATMs that utilize the L1 blockchain and have much higher fees.
Carlos Miguel Rivas Carrillo, Board Secretary of the El Salvador Bitcoin Association (ASOBITCOIN), is knowledgeable about the local Salvadoran laws and regulations and even offered to help me incorporate a business. The process takes three to four days with the help of attorneys that cost $1,500-$2,000. There is also a government fee of $300, and the minimum investment capital requirement is $2,000.
For bitcoin to be used more readily as a medium of exchange, devices would likely need to add a third integration — Lightning — to make using bitcoin more intuitive and straightforward for vendors. The barriers to mass adoption exist on both sides of commercial transactions.
President Bukele’s Bitcoin vision is becoming a reality in El Salvador. The price volatility inherent to bitcoin scares some people away, but this ignores the volatility that inflation introduces to the use of fiat. It will be several years before everyday people trust the Bitcoin network the same as they trust dollars, but people like Borja and Rivas will be critical in achieving Bukele’s goal.