El Salvador has made an unprecedented bet: to make bitcoin a “legal tender” in the country. This rather risky project came into effect on Tuesday, September 7. But how does it translate concretely for the population?
Since September 7, 2021, bitcoin has become an official currency in El Salvador. The project is completely new: while cryptocurrencies are bought and used in many countries, none had yet given them “legal tender”, which means that traders and other creditors are required to accept it in payment. But what do Salvadorians need to do concretely if they want to use bitcoin on a daily basis?
Salvadoran President Nayib Bukele has bet on the deployment of an application called Chivo (“cool” in slang). To use bitcoin, people just have to download it from the Playstore, the Appstore or the Huawei Store. Once the app is installed on their phone and their profile is created, individuals and businesses can conduct bitcoin transactions. The service does not take commissions on these transactions. The app will immediately convert the bitcoins of a transaction into dollars for those who wish, reveals the media The Block.
Distributors to change their bitcoins into dollars
People can also use the Chivo app to use crypto vending machines that El Salvador is installing. These special ATMs allow bitcoins to be sold in order to receive cash dollars. More than 1,500 such distributors are in the process of being deployed.
The launch of the Chivo digital wallet experienced some minor technical hiccups on the day of its launch. The application arrived on the stores a little later than expected and the servers were sometimes saturated by Internet users’ registration attempts. Some people also indicated that they did not perceive, on the app, the small “welcome gift” promised by President Nayib Bukele. The latter has indeed announced that each citizen will be offered 30 dollars in bitcoin on their Chivo account. The Salvadoran president, however, reassured his population on Twitter, telling them that these errors would be gradually corrected and inviting him to report each technical problem encountered.
Other users have, in parallel, shared on Twitter their first bitcoin payment experiences. The journalist from Bitcoin Magazine reports that he was able to pay without problem his cryptocurrency breakfast at McDonald’s. The Salvadoran president also highlighted the fact that it was already possible to pay in bitcoin in many businesses in the country (Starbucks brands, some supermarkets, restaurants, from airport shops, etc.).
Timid launch for the Chivo crypto wallet
If Chivo has risen at the top of the Finance category of the Appstore in El Salvador on September 7, however, the number of downloads of the application still seems quite low. For the time being, the application is only in the “over 10,000 downloads” range of the PlayStore.
It must be said that the population of El Salvador is quite worried about the impact that the bitcoin law could have. And the point is, she has good reason to wonder. As we explained to you here, it is possible that the officialization of bitcoin in El Salvador will boost the country’s economy by attracting foreign investment and reducing certain costs (especially on money transfers from abroad which represent a significant share of the country’s GDP). But bitcoin poses many challenges because its price is highly volatile.
If the president did not hesitate to provide the “hotline” in responding to Internet users who encountered problems with the Chivo wallet, he and his government did not take enough time to explain to the public what bitcoin was and how it worked. The officialization of bitcoin into legal tender thus came barely three months after the approval of the law. As a result, in a July poll, 45% of Salvadorans indicated that “ know nothing To bitcoin.