Since El Salvador became the first country to accept bitcoin as legal tender last month, a growing number of its citizens have experimented with cryptocurrency. Migrants use bitcoin to send a few million dollars each day.
However, just a small percentage of the country’s companies have accepted bitcoin payments, and the government’s cryptocurrency software has been plagued by technical issues, disappointing even the most ardent users.
Adalberto Galvez, 32, a construction worker, claimed he lost $220 trying to get cash out of his Chivo smart wallet.
El Salvadorans have told Reuters that Chivo — named after the local word for “good” — has at least one drawback, and few have used it regularly as Galvez does.
Bitcoin Beach, a small-scale experiment in the bitcoin economy in the beach hamlet of El Zonte, was a failure for Galvez, who complained, “It took my money but offered me nothing.”
However, according to Galvez, the money was removed from his Bitcoin Beach wallet, and the cash could never be reclaimed with the help of Chivo. His complaints had gone unanswered, he claimed.
Unusual transactions and identity theft attempts have been reported by other people as well. According to President Nayib Bukele, high demand is to blame for the difficulties faced by Galvez and others.
Chivo and the president’s office declined to respond because they did not have a spokesperson available for an interview.
By some counts, adoption in the developing country has been quick, with remittances supporting one-fifth of families.
Three million people, according to Bukele, have downloaded Chivo, which is around 500,000 more than the original aim and about half the population of the country as a whole. At the end of September, he said the wallet had 2.1 million active users.
Salvadoran Foundation for Economic and Social Development reports that 13% of customers have utilized cryptocurrency after one month of operation.
“Since yesterday, Salvadorans are inserting more cash (to buy #bitcoin) than what they are withdrawing from the @chivowallet ATMs,”Bukele tweeted on Wednesday. “This is very surprising so early in the game.”
However, the foundation found that overall utilization was still minimal, with 93% of enterprises reporting no bitcoin payments after polling 233 organizations across several sectors.
Some business owners, including the National Association of Private Enterprises, are wary of the program’s rollout. “We’re still not sure what benefits the government expected,” said Leonor Selva of the NAPE.
2.5 million Salvadorans reside in the United States, and the Bukele administration expects that they would use Chivo to transfer money back to their families back home.
In Atlanta, Chicago, Houston, and Los Angeles, 30 bitcoin ATMs have been placed to transfer remittances, and Bukele estimates roughly $2 million is paid every day via Chivo.
As a construction worker living in the United States since 2005, Juan Moz recently used Chivo to send money back home to his family, saving him up to $18 throughout the transaction.
In a phone interview from San Francisco, he declared, “I’m going to keep using it.”
Many people are apprehensive of cryptocurrencies because of their volatility, yet El Salvador receives almost $6 billion in annual remittance through money transfers or nearly a quarter of the country’s GDP.
El Salvador purchased 700 bitcoins last month. After the adoption on September 7th, prices fell sharply. However, by the end of September, prices had risen to around $54,000 per coin.
At the program’s start, the government gave a $30 bonus to those who downloaded the wallet.
Small business owners like Alexander Diaz, whose eatery serves chicken wings, reaped the benefits of the generous giveaway.
“Most of the people who had that bonus wanted to test how it could be spent, so several clients made payments to us with bitcoin,”
Diaz said, adding that some 20% of his customers now use the cryptocurrency.
“Chivo has benefited small entrepreneurs because it makes the payment method easier for customers,” Diaz said.