Salvadorans not yet sold on bitcoin

EL ZONTE, EL SALVADOR: A growing number of Salvadorans have experimented with bitcoin since the country became the first to adopt it as legal tender last month, with about $2 million sent daily by migrants using the cryptocurrency.

But only 2% of the country’s businesses have taken a bitcoin payment and technical problems have plagued the government’s cryptocurrency app, frustrating even committed users.

Construction worker Adalberto Galvez, 32, said he had lost $220 when trying to withdraw cash from the Chivo digital wallet.

Like Galvez, dozens of Salvadorans told Reuters they had at least one problem with Chivo, named after the local word for “good”, and few had used it on a daily basis.

“It took my money but gave me nothing,” said Galvez, who had already been using bitcoin successfully for months with another app at a small-scale bitcoin economy project dubbed Bitcoin Beach in the coastal town of El Zonte.

Galvez said the funds had been taken from his Bitcoin Beach wallet but he was never able to withdraw the cash via Chivo. He said he had not heard back after he filed complaints.

Others have also reported irregularities with transactions and attempts at identity theft. President Nayib Bukele has blamed high demand for the problems.

By some measures adoption in the poor country, where one fifth of families depend on remittances, has been rapid.

Bukele has said 3 million people, roughly half the population, have downloaded Chivo, with 2.1 million active users in September. One month since launch, 12% of consumers have used the cryptocurrency, the Salvadoran Foundation for Economic and Social Development reported.

“Since yesterday, Salvadorans are inserting more cash (to buy #bitcoin) than they are withdrawing from the @chivowallet ATMs,” Bukele tweeted last Wednesday. “This is very surprising so early in the game.”

The government hopes that 2.5 million Salvadorans living in the US will eventually send remittances through Chivo. So far, 30 bitcoin ATMs have been installed to handle remittances in Atlanta, Chicago, Houston and Los Angeles and Bukele says around $2 million is being sent via Chivo daily.

However, most of El Salvador’s $6 billion in annual remittances still come via money transfers, with many wary of the volatility of cryptocurrency.