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EL ZONTE, El Salvador, October 7 – A growing number of Salvadorans have experimented with bitcoin since the country became the first to adopt it as legal tender last month, with a few million dollars sent daily by migrants using crypto -cash.
But only a fraction of the businesses in the Central American country have accepted bitcoin payment, and technical issues have plagued the government’s cryptocurrency application, frustrating even engaged users of the technology.
Construction worker Adalberto Galvez, 32, said he lost $ 220 trying to withdraw money from the Chivo digital wallet.
Like Galvez, dozens of Salvadorans told Reuters they had at least one problem with Chivo, the local word’s name for “good,” and that few had used it on a daily basis.
“It took my money but didn’t give me anything,” said Galvez, who had already been using bitcoin successfully for months with another app in a small-scale bitcoin-saving experimental project dubbed Bitcoin Beach in the coastal town of El Zonte.
Galvez said the funds were taken from his Bitcoin Beach wallet but he was never able to withdraw the money through Chivo. He said he had not heard back after filing complaints.
Others also reported irregularities in transactions and attempted identity theft. President Nayib Bukele blamed high demand for the problems Galvez and others faced.
A spokesperson for the president’s office and for Chivo could not be reached for comment.
By some measures, adoption in the poor country, where a fifth of families depend on remittances, has been rapid.
Bukele said three million people have downloaded Chivo, some 500,000 more than initially expected and around half of the country’s population. In September, he said the wallet had 2.1 million active users.
A month after the launch, 12% of consumers used the cryptocurrency, the Salvadoran Foundation for Economic and Social Development reported.
“As of yesterday Salvadorians are inserting more money (to buy #bitcoin) than they are taking out of @chivowallet ATMs,” Bukele tweeted Wednesday. “It’s very surprising so early in the game.”
But the foundation, which surveyed 233 companies across different industries, found that overall usage was still low, with 93% of companies reporting no bitcoin payments.
“We still don’t know what benefits the government expected,” said Leonor Selva of the National Association of Private Businesses, one of the many business groups that remain skeptical of the deployment.
Migrant money
The Bukele government hopes that 2.5 million Salvadorans living in the United States will eventually send funds through Chivo.
So far, 30 bitcoin ATMs for sending funds have been set up in Atlanta, Chicago, Houston, and Los Angeles and Bukele says around $ 2 million is sent through Chivo daily.
Juan Moz, a construction worker who has lived in the United States since 2005, recently chose Chivo to send funds to his family – a move he says saves him up to $ 18 compared to the services of traditional money transfer.
“I will definitely continue to use it,” he said in a telephone interview from San Francisco.
However, most of El Salvador’s annual $ 6 billion remittances – about a quarter of the country’s gross domestic product – still come from money transfers, and many are wary of cryptocurrency volatility.
Last month El Salvador bought 700 bitcoins. Prices initially fell sharply after the adoption of September 7, but surged in late September to reach around $ 54,000 per coin this week.
Several people told Reuters that they downloaded the wallet and received a government-offered $ 30 bonus when the program started.
The document was important enough to benefit some small business owners like Alexander Diaz, whose chicken wing restaurant saw a spike in activity.
“Most of the people who received this bonus wanted to test how it could be spent, so several customers made payments to us in bitcoin,” Diaz said, adding that around 20% of his customers are now using cryptocurrency.
“Chivo has benefited small business owners because it makes the payment method easier for customers,” Diaz said.
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