A group of Bitcoin true believers and cryptocurrency newbies have come together to test Bitcoin in Brazil. It’s called Praia BitcoinBitcoin, which simply means Bitcoin Beach in Portuguese. Here, in the beautiful tropical beach town of Jericoacoara in northeastern Brazil, small donors and business owners try to turn the local economy from one dependent on the local currency or dollar to bitcoin. This is Brazil’s version of the El Salvadoran Bitcoin Beach project that started around 2019 on the shores of El Zonta.
The two-year-old Priya Bitcoin project set a world record for peer-to-peer transactions on the Lightning network, Bitcoin Magazine reported in February. Participants were able to execute 71 transactions in just three minutes and 33 seconds, making it the largest number of peer-to-peer Bitcoin transactions ever made via Lightning.
“This is only possible because the Lightning Network is ready for the public,” Fernando Motolis, creator of Praia Bitcoin, told me in an interview. “Right now, there is no other option that is ready for this type of market with a solution as functional as Lightning. It is better than Visa.
The main essence of Priya Bitcoin is to create a so-called circular economy of small businesses that accept Bitcoin as payment. Participants use (and accept) a Bitcoin debit card called a Bolt Card to make purchases at local stores. Throughout 2022, Priya received Bitcoin 1.23 BTC in donations from Brazilian YouTube channel Bitcoin Beach, Galoy Money (creator of Bitcoin Beach Wallet). Satoshi’s words and more than 400 anonymous donors. This Brazilian community project has come a long way since it started a year and a half ago.
Bitcoin: A Life Saver
Motolese said the idea to create Praia Bitcoin came to him in 2020. During the pandemic, Motolese’s bread and butter as a businessman and musician evaporated and he quickly lost income. Then, he remembered something…a bitcoin wallet.
He found the 12 word passkey. He didn’t have much there, “probably a few fractions of the BTC value from a 2013 purchase,” he tells me. “But it saved me financially.”
And voilaBorn a Bitcoin true believer.
So on October 4, 2021, newly converted bitcoiner, Motolese, announced its campaign to become the biggest test of bitcoin utility in Latin America.
“I asked for help from Bitcoin Beach, but it only came after a year,” he says. “They were the inspiration at first, but after publishing their Bitcoin Beach whitepaper, They become a role model and important partner.
Afterwards, the Brazilian community used their donated funds to create Brazil’s first public Lightning service provider, as well as a number of open-source tools shared in their GitHub repositories to build a small, local Bitcoin economy. You can be a fruit vendor on the street, or a local package store and accept Bitcoin as payment in Jericoacoara if you want. Ongoing grants go towards purchasing equipment including handheld payment card readers (aka point of sale machines) and servers.
Brazil’s Bitcoin Beach community has even bigger aspirations, reaching only 22% of their fundraising goal as of March 31, according to their donor website.
“Getting grants is very difficult,” Motolese said. “At each stage of our development we update our crowdfunding campaigns with new goals and evidence of the work we’ve done with those grants. I started it by donating 0.02 BTC, which was about $1,000 at the time. Now we have about 2.43 BTC.” That’s about $67,000, or R$338,825.
Bitcoin proceeds include sales of Bolt Card Genesis Block Editions from Praia Beach, point of sale machines, and sponsorships for the Bitcoin Conference held at this year’s carnival.
Palavra de Satoshi’s creator, Vinicius Kinzel, from Rio Grande do Sul, which is across the north from the state of Sierra, joined the team to help develop a product line so the project would be less dependent on donations. To date, tourists in Jericoacoara use bitcoins at more than 25 merchants. All transactions are done on the Lightning Network.
As for the philanthropic side of Priya Bitcoin, about 370 students and 30 teachers at a local public school now have Bolt cards linked to wallets with school servers. About 100 residents do, too, and that number is growing. The city has about 20,000 inhabitants.
“We’re an outlier, but other cities will follow in our footsteps,” Motolese said, referring to the South African project Bitcoin Acc, another Bitcoin Beach model using the Lightning Network and Bolt cards.
Brazil’s Bitcoin Regulatory Landscape
The newly appointed Brazilian government is working to create more regulations for the crypto industry, all designed to protect investors.
“A better understanding of regulations will fuel some of the fire in Brazilian investor demand for bitcoin because there are so many cold feet about cryptocurrency today,” Foxbite CEO Ricardo Dantas told me in an interview.
According to CoinTraderMonitor, Foxbit is Brazil’s second largest cryptocurrency exchange by volume. Brazil has seven well-known exchanges: Foxbit, Mercado Bitcoin, NovaDax, Coinext, BitcoinTrade and BitPreco.
“There’s a perception that Bitcoin technology is relatively complicated and has no rules, which gives people the impression that it’s completely lawless. We work hard to change that perception even though it’s not something that people see and it’s not something that’s in crypto. Everyone will follow. But with better regulation will come more adoption, more investor confidence,” Dantas said.
He expects the bitcoin halving next year to turn investors back into bitcoin. In short, halving reduces the rate at which new bitcoins are created. He thinks a new “boom” is likely, not unlike the 2020-2021 bull market.
Dantas’ main competitor, MercadoBitcoin, is the No. 1 exchange in all of Latin America with 3.7 million clients. Bitcoin is the top crypto trade on their platform, followed by Ethereum, Ripple, Chiles and Circle’s US dollar stablecoin, USDC.
Praia Beach wants to create an economy out of Bitcoin, but Foxbit and MercadoBitcoin will tell you that most of the people who are into it are speculators.
“The main utility of cryptocurrency in Brazil is for investment,” said Fabricio Tota, Director of New Business at MercadoBitcoin. “Brazilian investors like the idea of investing in securities related to new, innovative technologies, but there are few opportunities to buy them here. Because of this, cryptocurrencies have become an important alternative in that market,” said Tota.
Bitcoin Brazil Future: Lightning Fast?
For Motolese, finding his old Bitcoin wallet made him think about the potential of this new currency to help people. It is unstable. It’s risky business. But most business owners in emerging markets are accustomed to dealing with risk. Bitcoin will not replace the Brazilian real anytime soon.
However, merchants large and small must pay a fee to Visa and MasterCard to use their payment systems. It is like an additional tax on business. This alternative Lightning Network system has gained traction in some Brazilian neighborhoods where small businesses already feel burdened by taxes.
“Lightning allows you to send and receive bitcoins without waiting for block confirmation. You’re doing transactions in milliseconds,” says Motolis. “There’s no other payment network that compares to Lightning. It decentralizes the delivery of financial services and gives power back to individuals,” he says. “We’re building the next decade of financial services and using bitcoin as a medium of exchange.”
There are enough people who like the idea of ”going off the grid,” when it comes to dealing with corporate banks and the Brazilian government, that the Lightning Network could offer an alternative payment option.
“The thesis of an alternative financial system has gained popularity in Brazil in the last few years, especially after the failure of the big banks and their subsequent rescue plan by the United States,” Tota said. “That’s when Bitcoin was born. This idea of a financial system controlled by a few institutions, where critical decisions are concentrated in the hands of a small group seems to matter little in our daily lives, but look again at the bank failures in the United States (Silicon Valley Bank) and Switzerland (Credit Suisse). It shines a light on those who want to create alternative solutions, such as Bitcoin, which is a viable option in this context.”
A few circular economies based on bitcoin are popping up around the world outside of Brazil and El Salvador. Most of the demand is coming from emerging markets. However, people can use Bolt cards in Finland and Taiwan just as easily as they can in Jericho.
“Bitcoin and Lightning allow you to participate in a faster, cheaper and more efficient financial system,” says Motolese. “Maybe Americans don’t see bitcoin as money yet. But if the petrodollar collapses and you have hyperinflation, that perception changes quickly.”
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