Bitcoin Becomes Legal Tender, the Central American Country in Chaos

A few days ago, President Nayib Bukele of El Salvador announced the latest achievements of the "Bitcoin Experiment" on Twitter: 1.1 million Salvadorans are using Chivo e-wallets!

If you remember, Bitcoin is now legal tender in this small, poor and turbulent Central American country with a population of only 6.5 million.

From the high-risk hype "virtual gold" to the spread of payments across the country, things have not been smooth sailing. In the past two weeks, El Salvador has been in a frenzy due to the collapse of the official app, with a frantic influx of one-star negative reviews; the people are confused and distrustful, and opposition crowds took to the streets to protest, and even violently smashed and burnt Bitcoin ATMs.

Bitcoin made headlines in local newspapers in El Salvador on Sept. 7.

There are reports describing the Bitcoin experiment in El Salvador as "a farce"!
Compared with the rise and fall of Bitcoin, what is even more maddening is:
On September 7, Bitcoin officially became the legal tender of El Salvador along with the U.S. dollar. In order to encourage use, the Salvadoran government launched an e-wallet App "Chivo", and distributed $30 worth of bitcoin to each user (can only be used but not withdrawn).

According to the official propaganda, you can freely choose to use US dollars or Bitcoin when paying, easily scan the QR code to pay, transfer money to the account quickly, no handling fees, and you can switch between the two legal currencies at any time. In addition, the government has deployed 200 Bitcoin ATMs and 51 service centers with staff throughout the country.

On the same day, Starbucks, Pizza Hut and other companies in El Salvador announced that they would accept Bitcoin as payment. President Bukele's Twitter has been rotating related news, and it seems that he is more excited than he himself. The government of El Salvador has bought 550 bitcoins at a cost of about 28 million U.S. dollars.

And the Bitcoin market on this day also "lived up to expectations", and indeed there was a wave of diving, and it even plummeted by 10,000 US dollars within 3 minutes. People saw that the 30 US dollars in the Chivo e-wallet had not been warmed up, and instantly shrank to less than 25 US dollars, which was a good lesson by the society.

If you guessed it right, El Salvador's 550 bitcoins have not paid back

Unexpectedly, it was the Chivo e-wallet itself that collapsed earlier than the residents of El Salvador.

According to reports, in the early morning of September 7th, Chivo started to fail just three hours after its release. After the emergency expansion of the server, transactions were still not possible. The customer service hotline was waiting forever, and Chivo's ATM machines were also short of cash.

The App Store and other app stores have crazily flooded with one-star bad reviews. In addition to dissatisfaction, users only have anger, and more technical problems that cannot use Chivo normally have surfaced:
· After 5 hours, the interface is still blank and there is nothing.
· It can be opened normally for the first time, and then can not be entered again.
· Unable to enter the account, the transaction information cannot be loaded
· I just entered my ID card and said it has been registered. What is going on? !

To register for a Chivo account and get $30 in Bitcoin, you must be a Salvadoran citizen, and you must also provide a photo on your ID card, a photo of yourself, your ID number and date of birth.

But soon someone discovered that their identity information had been stolen and registered because Chivo did not seem to verify the identity of the photo and the real person, only the ID number and date of birth were checked. In addition, some residents who did not install Chivo received SMS verification codes. The problem of identity theft immediately caused concerns about criminal money laundering.

In the next few days, President Bukele lived like Chivo's national customer service representative on Twitter. He will tell everyone that the technicians are rushing to fix it, he will call for bugs, and he will slap his chest saying that Chivo’s technical problems have almost been solved. To solve the problem, the ATM machine is also operating normally, and I urge everyone to experience and use it quickly.

We set ourselves a goal to launch a product in 3 months. This challenge is too difficult. We made mistakes, but we are correcting them. Soon, thousands of Salvadorans can use their Chivo wallets and enjoy convenience.

Despite this, there are currently 65% of mobile phone models that cannot download and use Chivo e-wallets.

Bukele's Twitter and app store comment areas are still full of issues such as "load failure", "remind error after entering the verification code," "cannot add ID photo", "delayed transfer" and other issues. Even if you are looking forward to opening the App and want to try Pioneer's avant-garde payment method, you have to be dissuaded by reality.

Starbucks in Salvador Accepts Bitcoin

These technological breakdowns and extremely poor user experience are hurting people's trust in Chivo e-wallets, the Bitcoin payment revolution, and even the government of El Salvador, forming the impression of "unreliable and unfeasible".

David Gerard, author of the book Attack of the 50 Foot Blockchain points out:

It takes time to build a payment system that users trust. You need to pilot the operation in advance and solve the foreseeable problems. In just three months, the need to deploy an electronic payment system from scratch across the country without any testing is the root cause of the disaster.

Street protests, merchant rejections, insufficient network coverage...

There are more problems to be solved

Long before Bitcoin officially became legal tender, surveys have shown that about 70% of respondents disagree or strongly oppose Bitcoin becoming legal tender, and believe that this law should be abolished. In addition, more than 90% of Salvadorans have no idea what Bitcoin is.

People's anxiety and confusion about Bitcoin did not disappear instantly with the arrival of September 7th. Some vendors said they were unwilling to collect bitcoins, "I would rather lose this business"; some street vendors said that they were illiterate or had no smartphones and couldn't use them; and some people tried to download with the mentality of a try, but said they did not dare Owning too many bitcoins, "for fear of a sudden collapse one day, nothing is left."

September 15th is El Salvador’s Independence Day. While the nation was celebrating the 200th anniversary of independence, about 15,000 people took to the streets to demonstrate, chanting "We don't want your Bitcoin", "We were deceived by Bitcoin", "Against dictatorship," and even burned a Chivo. Bitcoin ATM machine.

Allegedly, this is the most agitated opposition since President Bukele took office in 2019.

Dora Rivera, who participated in the demonstration, said that what the government did was arrogant and that it was authoritarian. Some netizens believe that the money the government spends on the bitcoin payment system can be used directly on people's livelihood and welfare. The opposition MP Claudia Ortiz pointed out:

Bitcoin is a very important economic decision, and its formulation, submission, and rapid passage are completely illogical. We are experiencing a severe fiscal crisis, with high cost of living and high unemployment, but the government's response is not a serious economic policy, but the use of Bitcoin as legal tender.

The violent protests on the street don’t just come from Bitcoin.

The Salvadoran government recently passed a series of changes to the constitution, including the dismissal of all judges over 60 years old (1/3), and the lifting of a ban on the president’s re-election.

Politicians reminded that the international attention that Bitcoin has attracted as a legal currency has diverted attention from President Bukele's consolidation of political power and continuous erosion of the democratic system.

Back to the Bitcoin incident itself, leave alone the beautiful vision promised by President Bukele (to convert at least US$400 million in cross-border remittance fees into national income each year), even the scan code payment and fast transfer to the account mentioned in the promotional video are still experienced by very few people in El Salvador.

To successfully buy a McDonald’s breakfast with Bitcoin, you probably need some lucky!

Even if Chivo's technical problems are resolved, El Salvador hopes to achieve financial inclusion through Bitcoin, there are still many mountains to climb. For example, survey data shows that on average only 45% of El Salvador’s population has a stable Internet. In rural areas, this number is pitifully small, only 10%.

And other issues we have discussed before, such as Bitcoin price fluctuations, national economic instability, criminal risks brought about by decentralization, lack of public education of Bitcoin, environmental damage caused by mining, and even the entire international The impact of the pattern... everything remains to be seen and verified.