El Salvador’s bitcoin usage rises but headaches remain

EL ZONTE, El Salvador, October 7 – A growing number of El Salvadorans have experimented with bitcoin as the country became the first to adopt it as legal tender last month, with a few million daily deaths by expatriates using the cryptocurrency. Dollars are sent.

But only a fraction of the Central American nation’s businesses have taken bitcoin payments and technical problems have plagued the government’s cryptocurrency app, frustrating even committed users of the technology.

Adalberto Galvez, a 32-year-old construction worker, said he lost $220 while trying to withdraw cash from the Chivo digital wallet.

Like Galávez, dozens of Salvadorans told Reuters they had at least one problem with chivo, named after the local word for “good” and used by some on a daily basis.

“It took my money, but gave me nothing,” said Galvez, who was already using bitcoin successfully, with another application in an experimental small-scale bitcoin economy project in the coastal city of El Zonte. termed as middle.

A Chivo worker assists two people with the use of bitcoin outside the ATM location of Chivo, a bitcoin digital wallet that has been approved by the Salvadoran government to use bitcoin as legal tender on October 4, 2021 in San Salvador, El Salvador. was launched.
A Chivo worker assists two men using bitcoin outside an ATM location on October 4, 2021 in San Salvador, El Salvador.
Reuters

Galvez said the funds were taken from his Bitcoin Beach wallet, but he was never able to withdraw cash through Chivo. He said that after lodging the complaint, he did not take any action.

Others have also reported irregularities in transactions and attempts to identify thefts. President Nayib Bukele has attributed the high demand to issues that Galvez and others have faced.

Spokespersons for the presidential office and Chivo could not be reached for comment.

Some measures have accelerated adoption in the poor country, where one-fifth of households depend on remittances.

Bukele said that 3 million people have downloaded Chivo, which is about 500,000 more than initially targeted and nearly half of the country’s population. In September he said the wallet had 2.1 million active users.

The Salvadoran Foundation for Economic and Social Development reported that a month after its launch, 12% of consumers have used cryptocurrencies.

Bukele tweeted on Wednesday: “Since yesterday, Salvadorans are withdrawing more cash than @chivowallet ATMs…[#bitcoin खरीदने के लिए]”It’s pretty amazing so early in the game.”

But the foundation, which surveyed 233 companies across different sectors, found that overall usage was still low, with 93% of companies reporting no bitcoin payments.

A man passes by a mural that reads "Bitcoin equals corruption", which is part of a campaign against the use of bitcoin as legal tender on October 5, 2021 in San Salvador, El Salvador.
A man walks through graffiti reading “Bitcoin equals corruption”, which is part of a campaign against using bitcoin as legal tender, in San Salvador, El Salvador.
Reuters

“We’re still not sure what benefits the government expects,” said Leonor Selva of the National Association of Private Enterprises.

overseas money

The Bukele government expects the 2.5 million Salvadorans living in the United States to eventually send remittances through Chivo.

So far, 30 bitcoin ATMs have been installed in Atlanta, Chicago, Houston and Los Angeles to send remittances, and Bukele says about $2 million are being sent daily through Chivo.

Juan Moz, a construction worker who has lived in the United States since 2005, recently chose Chivo to send his family a remittance home – a decision he said saves him up to $18 compared to traditional money transfer services. .

“I will definitely continue to use it,” he said in a phone interview from San Francisco.

However, most of El Salvador’s $6 billion dollars in annual remittances – about a quarter of the country’s GDP – still comes through money transfers, with many wary of the volatility of cryptocurrencies.

El Salvador bought 700 bitcoins last month. The price initially declined sharply after the September 7 adoption, but reached around $54,000 per coin this week in late September.

A man walks by reading past signs "bitcoin accepted here" Outside a street stall where cryptocurrency is accepted as a payment method on October 4, 2021 in San Salvador, El Salvador.
A man reads “Bitcoin accepted here” outside a street stall where the cryptocurrency is accepted as a payment method in San Salvador, El Salvador.
Reuters

Several people told Reuters that they had downloaded the wallet and that the government had received a $30 bonus at the start of the program.

The handout was so big that it benefited some small business owners like Alexander Diaz, whose restaurant serving chicken wings saw a boom in business.

“Most of the people who had that bonus wanted to test how it could be spent, so many customers paid us with bitcoin,” Diaz said, adding that some 20% of his customers now use cryptocurrency. Huh.

“Chivo benefits small entrepreneurs because it makes the payment method easier for customers,” Diaz said.

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