El Salvador’s bold move to adopt Bitcoin as legal tender continues to make headlines. President Nayib Bukele recently announced that the state-run Chivo wallet has already onboarded a staggering 1.1 million users. This is despite the app’s current unavailability on a significant portion – around 65% – of phone models used in the country. Adding fuel to the fire, Bukele also revealed that his government seized the opportunity to “buy the dip” during a recent Bitcoin price drop.
Chivo’s Allure: Free Bitcoin for Everyone?
To incentivize adoption, the Salvadoran government is offering a welcome gift of $30 worth of Bitcoin to anyone who downloads and registers on the Chivo app. While the government maintains that using Chivo is entirely voluntary, this incentive has undoubtedly played a role in its rapid uptake.
President Bukele took to Twitter to express his enthusiasm, declaring the Chivo app and his broader Bitcoin adoption goals a resounding success. He stated:
“It looks that we will be able to bank more people in the space of month than [previous governments] did in 40 years with the nationalization and privatization of traditional banks.”
More Bitcoin on the Books: El Salvador’s Growing Holdings
Not one to simply talk the talk, Bukele also announced the purchase of an additional 150 Bitcoins. This latest acquisition brings El Salvador’s total Bitcoin holdings to an impressive 700 BTC. This move has been lauded by some, like author Mark Jeffrey, as further evidence of the country “punching above its weight” on the global stage.
Despite facing considerable criticism, the rollout of Chivo continues. According to CoinATMRadar’s latest data, there are currently 231 Chivo ATMs in operation, with a notable 31 located in the United States. President Bukele even suggests the number in the US is higher, closer to 50.
Navigating the Growing Pains: Hiccups and Headlines
The path to widespread Bitcoin adoption hasn’t been without its bumps. Bukele acknowledged a temporary setback caused by a “crash of an SMS carrier,” which led to errors in 28,000 Chivo registration requests. This incident temporarily prevented these new users from receiving their $30 Bitcoin bonus. However, Bukele assured the public that his technical team is working diligently to ensure everyone receives their due.
Just a ‘Snafu’ or Something More?
President Bukele downplayed the registration issue, labeling it a mere “snafu” and attributing it to a “telephone company error.” He reiterated that the Chivo application is “working at 100%” while acknowledging the challenges of onboarding such a large number of new users daily:
“It is almost impossible to have 300,000 new registrations per day and not have some temporary incidents.”
However, not everyone is convinced. The Salvadoran press, often critical of Bukele’s Bitcoin policies, has reported ongoing issues with the Chivo software. Ricardo Castaneda, an economist at the Central American Institute for Fiscal Studies (ICEFI), told La Prensa Gráfica that claims of commission-free transactions on Chivo are misleading.
Castaneda argues that while users don’t directly pay transaction fees, the cost is being covered by public funds. This implies that the entire Salvadoran population is essentially footing the bill for these “commission-free” Chivo transactions.
Bukele: From President to ‘Dictator’?
Beyond the technical and economic aspects of Bitcoin adoption, President Bukele has faced increasing scrutiny regarding his governance style. Opposition parties and media outlets have accused him of adopting dictatorial tactics, pointing to the replacement of judicial officials and moves to amend the constitution to allow him to seek re-election in 2024.
In a seemingly defiant or perhaps satirical move, Bukele even changed his Twitter bio to read “Dictator of El Salvador,” leaving many to wonder about his intentions and the future of democracy in the country.
Key Takeaways from El Salvador’s Bitcoin Experiment:
- Rapid Adoption: The Chivo wallet has seen impressive user growth, reaching over 1 million users quickly, driven partly by the $30 Bitcoin incentive.
- Government Investment: El Salvador continues to invest in Bitcoin, increasing its holdings to 700 BTC.
- Technical Challenges: The rollout hasn’t been seamless, with registration issues and questions surrounding transaction costs.
- Global Reach: Chivo ATMs are even present in the United States, catering to the Salvadoran diaspora.
- Political Controversy: Bukele’s approach to Bitcoin adoption is intertwined with broader political debates about his leadership style.
El Salvador’s experiment with Bitcoin continues to be a fascinating case study for the global crypto community. While the initial adoption numbers are encouraging, the long-term success and impact of this bold move remain to be seen. The interplay between technological innovation, economic policy, and political dynamics in El Salvador offers valuable insights for anyone interested in the future of cryptocurrency and its potential for societal change.
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