Bitcoin wallet launched by President of El Salvador Nayib Bukele fell after three hours

The virtual wallet launched by Salvadoran President Nayib Bukele (40) to convert Bitcoin into legal tender failed a few hours after it went online and the digital revolution proposed by the controversial Central American leader will have to wait, so less until the technical problems of the platform.

Chivowallet, the application of the official Bitcoin and Dollar wallet of the Government of El Salvador, has been promoted ad nauseam by Bukele, which has been counting down to its launch as one more fan, demanding that Apple, Google and Huawei upload it to their app stores as soon as possible.

All that previous euphoria, in which Bukele himself tweeted demanding Big Tech release virtual wallet downloads it suddenly turned off, when in the first hours the application started to crash.

“For a few moments @chivowallet won’t work, we took it offline while increasing the capacity of the image capture servers. The installation issues some people had was for this reason. We prefer to fix it before reconnecting it“informed the President of El Salvador.

The application was launched at 5 a.m. and at 8 a.m. it had already been disconnected by the authorities of the Central American country. “Any data they are trying to enter at this time will give them an error. System is offline while increasing server capacity. It’s a relatively simple problem, but it cannot be solved with the connected system, ”explained Bukele.

“Better slowly and with good writing. A little patience,” asked the head of state. An official statement from the Presidency of El Salvador even mentioned the technical flaws of the launch.

“Similar to a repair of streets or a highway, it is necessary to temporarily stop traffic, to be able to make the necessary interventions. After that, people can now move and use the roads with confidence, ”it was officially noted.

During the only hours when Chivowallet was operating, the government bought its first 400 pieces, at a market value of $ 21 million. To promote the use, he gave Salvadorians an amount equivalent to $ 30 in bitcoins to start trading.

The government has also installed 200 Chivo ATMs across the country to operate with bitcoin and dollars.

Criticisms of Bitcoin as Legal Tender

In the colloquial Salvadoran language, “goat” means something very good. But its detractors assure in the networks that bitcoin #NoesChivo because exposes public funds to a highly volatile asset.

When bitcoin was born in 2009, it was worth pennies on the dollar. Today his the price exceeds $ 52,000. But in the past 12 months, it has hit 62,000 or dropped to 35,000, according to comments from investors like Elon Musk or Chinese regulatory announcements.

For this reason, economists and organizations such as the World Bank, the IMF and the Inter-American Development Bank (IDB) are skeptical of this measure.

“One of the first risks that we noticed is that the costs of this experiment will be paid by the population,” warned economist Ricardo Castañeda, of the Central American Institute for Fiscal Studies.

The government assures that bitcoin will stimulate the economy which, since its dollarization in 2001, has stagnated with an average growth of between 2 and 4%. In 2020, it contracted by 7.9% in the midst of the covid-19 pandemic. This year, it is expected to increase by more than 9%.

The risky measure, according to the government, will contribute to the banking of the population and prevent the loss of some $ 400 million in commissions for remittances that Salvadorans send from abroad through financial entities.

The diaspora expeditions of about two million Salvadorans represent 22% of the GDP.

The Bukele government, which has a large majority in parliament, has set aside $ 203 million from the budget for its plan, which supports the automatic convertibility of bitcoin to dollars.

The law obliges “any economic agent” to “accept bitcoin as a means of payment when it is offered to him by anyone who acquires a good or a service”.

The government clarified that if the commercial establishment does not wish to receive bitcoins in its account, the application “Chivo” has the possibility of immediately converting the amount into its. dollar equivalent at time of transaction.

“No one is obligated to use it, so remember that the dollar is the currency of reference for prices, wages and accounting records in the country,” according to the government.

What this Central American country of 6.6 million inhabitants seeks, according to Bukele, is “to break with the paradigms of the past” because “El Salvador has the right to advance towards the first world”.

Protest against Bitcoin and arrests

The establishment of Bitcoin as legal tender sparked protests in early September which resulted in the arrest of one of the biggest critics of cryptocurrencies, Mario Gómez, a specialist in IT and virtual currencies.

“Neither Mario, nor any person arbitrarily detained is alone, we declare ourselves on alert and ready to join our colleagues. For Mario, no bitcoin!”, Complained the young people who mobilized against Bukele’s decision. ” use Bitcoin

The young people, who described Bukele as “fascist” and reiterated their rejection of bitcoin, assured that the Salvadorian executive seeks to “silence” critical voices, in particular “that of young people who did not believe his lies and who denounce the arbitrary acts committed by your government ”.

“We repudiate all acts which aim to intimidate dissident social struggles against the Bukele regime, including the course of hatred,” they added. Gomez was released hours after his arrest.

El Salvador was back on the region’s agenda after a decision by a chamber of the Supreme Court approved the possibility of Bukele standing for re-election. It sparked protests and even rejection from Human Rights Watch (HRW) director for the Americas, José Miguel Vivanco.

“Democracy in El Salvador is on the brink”, he maintained after the decision which allowed the millennial president after the Constitutional Chamber of the Supreme Court of Justice (CSJ) had ratified the possibility of the presidential re-election of Nayib Bukele.

He added: “The Constitutional Chamber of El Salvador – which Bukele took over in May this year – has just authorized Bukele to stand for re-election. The same script used by Daniel Ortega and Juan Orlando Hernández“.

With information from AFP