Brazil’s Bitcoin Beach Says Lightning Network Works Better Than Visa

A group of bitcoin true believers and cryptocurrency newcomers have come together in Brazil for a bitcoin experiment. It’s called Praia Bitcoinbitcoin, which simply means Bitcoin Beach in Portuguese. Here, in the idyllic tropical beach town in northeastern Brazil called Jericoacoara, small donors and business owners are trying to turn the local economy from one dependent on the local currency, or dollar, to bitcoin. This is Brazil’s version of El Salvador’s bitcoin beach project that started on the shores of El Zonte around 2019.

The two-year-old Praia Bitcoin project set a world record for peer-to-peer transactions on the Lightning Network, Bitcoin Magazine reported in February. Participants were able to run 71 transactions in just three minutes and 33 seconds, making it the largest number of peer-to-peer bitcoin transactions via Lightning to occur in the shortest amount of time.

“This was only possible because the Lightning Network is ready for the masses,” Praia told Bitcoin’s creator, Fernando Motolese, in an interview. “Right now, there is no other alternative that is as prepared for this type of market with a functional solution as Lightning. It is superior to Visa.”

The main point of Praia 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 the Bolt Card, to make purchases at local stores. Throughout 2022, Praia Bitcoin received 1.23 BTC in donations from Bitcoin Beach, Galoy Money (the creators of Bitcoin Beach Wallet), the Brazilian YouTube channel Palavra de Satoshi and more than 400 anonymous donors. This Brazilian social project has come a long way since it started a year and a half ago.

Bitcoin: A lifesaver

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 disappeared and he quickly lost income. Then he remembered something… a bitcoin wallet.

He found the 12 word password. He didn’t have much in there, “maybe a few fractions of BTC from a 2013 purchase,” he tells me. “But it saved me financially.”

And voilaa true bitcoin believer was born.

Then on October 4, 2021, newly converted bitcoiner Motolese announced his foray into what has become the biggest experiment in bitcoin tools in Latin America.

“I asked for help from Bitcoin Beach, but it didn’t come until a year later,” he says. “They were just the inspiration initially, but after the release of their Bitcoin Beach Whitepaper, they became a role model and an important partner.”

The Brazilian community then used their donated funds to create the first public Lightning service provider in Brazil, as well as develop many open source tools shared in their GitHub repository to build small, local bitcoin economies. You can be a fruit seller on the street, or a local package store and accept bitcoin as payment in Jericoacoara if you want. Ongoing donations go towards purchasing the equipment, including handheld payment card readers (aka vending machines) and servers.

The Bitcoin Beach community in Brazil has even bigger ambitions, having reached just 22% of its fundraising goal, according to its donor website as of March 31.

“Getting donations is very difficult,” says Motolese. “At each stage of our development, we update our crowdfunding campaign with new goals and proof of the work we’ve done with these donations. I started this by donating 0.02 BTC, which was around $1000 at the time. Now we have around 2.43 BTC.” That’s around $67,000, or R$338,825.

The amount received in bitcoin includes revenue from Praia Beach selling the Bolt Card Genesis Block Edition, vending machines and sponsorship for its first ever bitcoin conference held during Carnival this year.

The creator of Palavra de Satoshi, Vinicius Kinczel, from Rio Grande do Sul, located in the opposite direction from the state of Ceara to the north, joined the team to help create a product line so that the project is less dependent on donations. To date, tourists in Jericoacoara use bitcoin at more than 25 merchants. All transactions are done on the Lightning Network.

For the philanthropic side of Praia Bitcoin, around 370 students and 30 teachers from the local public school now have Bolt Cards with wallets connected to a server at the school. Around 100 residents do as well, and that number is growing. The city has around 20,000 inhabitants.

“We are an outsider, but other cities will follow in our footsteps,” says Motolese, mentioning the South African project Bitcoin Ekasi, which is another Bitcoin Beach model that uses 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 the regulations will kindle a little bit of Brazilian investors’ demand for bitcoin because today there are a lot of cold feet regarding cryptocurrency,” Foxbit CEO Ricardo Dantas told me in an interview.

Foxbit is the second largest cryptocurrency exchange in Brazil by volume, according to CoinTraderMonitor. Brazil has seven well-known exchanges: Foxbit, Mercado Bitcoin, NovaDax, Coinext, BitcoinTrade and BitPreco.

“There’s a sense that bitcoin technology is relatively complex and has no rules, which gives people the feeling that it’s completely lawless. We’re working hard to change that perception even though it’s not something people see, and it’s not something everyone in crypto will follow. But with better rules, there will be more adoption, more investor confidence, says Dantas.

He expects the next bitcoin halving next year to turn investors back to bitcoin. In short, halving reduces the rate of new bitcoin creation. He believes 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 customers. Bitcoin is the top crypto trade on their platform, followed by Ethereum, Ripple, Chiliz 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 people doing this are speculators.

“The main tool for cryptocurrencies in Brazil is for investments,” says 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 very few opportunities to buy it here. For this reason, cryptocurrencies have become an important alternative to that market, says Tota.

Bitcoin Brazil’s Future: Lightning Fast?

For Motolese, finding his old bitcoin wallet got him thinking about the potential for this new currency to help people. It is fleeting. It is risky business. But most business owners in the emerging markets are used to dealing with risk. Bitcoin will not replace the Brazilian real anytime soon.

However, large and small vendors must pay Visa and Mastercard a fee to use their payment systems. This is like an additional tax on business. This alternative Lightning Network system has gained traction in some Brazilian neighborhoods where smaller businesses already feel burdened by taxes.

“Lyn allows you to send and receive bitcoins without waiting for block confirmation. You trade in milliseconds,” says Motolese. “There is no other payment network that can compare to Lightning. It decentralises the delivery of financial services and gives power back to individuals, he says. “We are building the next decade of financial services using bitcoin as a medium of exchange.”

There are enough people out there who like the concept of going “off 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 in popularity over the last few years in Brazil, especially after the failure of major banks and their subsequent bailout by the United States,” says Tota. “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 of people, seems of little importance in our daily lives, but look at the bank failures again in the United States ( Silicon Valley) Bank) and Switzerland (Credit Suisse). It sheds light on those who want to build alternative solutions, such as bitcoin, which is a viable option in this context.

A small handful of circular economies based on bitcoin are emerging around the world, outside of Brazil and El Salvador. The demand mostly comes from the emerging markets. However, people can use Bolt cards in Finland and Taiwan just as easily as they can in Jericoacoara.

“Bitcoin and Lightning allow you to participate in a faster, cheaper and more efficient monetary system,” says Motolese. “Maybe Americans don’t see bitcoin as money yet. But if there’s a collapse of the petrodollar and you have hyperinflation, that perception will change quickly.”

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