Note that this is not the first time Bitcoin has had problems in El Salvador. In particular, users of the national cryptocurrency wallet Chivo have already fallen victim to fraudsters. The latter took $30, which could be received by adult citizens of the country. That is, they essentially used other people's documents and identities for the funds. As a result, these funds ended up in the wallets of completely different people. Read more about the story in a separate article.


Bitcoin problems in El Salvador

Chivo was launched nationwide in early September, when Bitcoin became legal tender in El Salvador. Initially, many Salvadorans complained that it was almost impossible to download the program from the app shop. But even after installing it and users have problems.

Firstly, many Salvadorans still have little understanding of the concept of Bitcoin and the basic principles of using the cryptocurrency. Some of them either couldn’t withdraw BTC from their account or spent the coins and didn’t use Chivo at all after that. There are also those who left bitcoins in their wallet, expecting the price of the cryptocurrency to rise.

A 30-year-old local man, Luis Maurizio, shared his feedback about Chivo in an interview with the news outlet Decrypt. Here’s a quote from the Salvadoran citizen in which he talks about what’s going on.

Chivo is still not working the way it should. I hope that in the future the wallet will be refined and become more user-friendly.

Maurizio also complained about the shortcomings of Chivo ATM, a special crypto machine that can be synchronized with the wallet for direct withdrawal of coins into dollars or sending them to other addresses. He himself believes that Salvadorans for the most part don’t understand Bitcoin, but that’s not their fault. Still, the government should pay more attention to educational programs about the cryptocurrency and promote it as an investment instrument rather than a means of payment, the resident believes.

El Salvador’s President Nayib Bukele at the launch of a Bitcoin city planned to be created with money from Bitcoin bonds

There have also been local media reports of identity theft on the app, with citizens who did not register to use Chivo later finding out that their ID number had been used to create an account and receive government handouts.

The problems don’t end there. Sometimes Chivo is very slow or does not process BTC transactions at all. Because of this, many businesses and merchants refuse to accept the crypto and wallet for payment. Steve Hanke, professor of applied economics at Johns Hopkins University and director of the Cato Institute’s Problem Currencies Project, noted that “Bitcoin acceptance in El Salvador is curated by amateurs.

Chivo’s problems don’t surprise me. The wallet’s shortcomings relate to slow transaction processing and unconfirmed transfers on the Bitcoin network. These problems often “pop up” when trying to transfer bitcoins from Chivo to another wallet.

Steve Hanke, professor of applied economics at Johns Hopkins University

Read also: Bank of England governor criticises El Salvador's adoption of Bitcoin. What are his arguments?

The Chivo wallet is centralised, meaning one entity – in this case the government of El Salvador – is responsible for the safety of its users’ funds. However, this does not make things any easier for those who have suffered losses due to problems in the application’s code.

Rodolfo Rosales, a 48-year-old teacher, added in an interview that there are many myths about cryptocurrency in El Salvador. Here’s his rejoinder.

Truth be told, people need to be educated more about it. The only information ordinary citizens know about Bitcoin is from rumours – and the latter are far from always true.

Chivo wallet


Bottom line: adopting cryptocurrency at the state level is a very bold and radical move that requires careful preparation. First and foremost, the government should have conducted an education campaign about Bitcoin among the public, which would have avoided many of the problems with integrating cryptocurrency into the economy.

Officials, however, have taken a different approach. So now we can only hope that citizens are proactive and take the time to learn the right information about Bitcoin and digital assets in general. They will then have a better understanding of the cryptocurrency and deal with it properly. Accordingly, there will be a better chance of BTC being recognised as official tender in other countries.


What do you think about it? Share your opinion in our Millionaire Crypto Chat. We’ll talk about other topics related to blockchain and decentralisation there as well.