A month later, Bitcoin consumption is growing in El Salvador, but the headache remains

EL ZONTE, El Salvador, Oct. 7 (Reuters) – A growing number of El Salvadorans have experimented with Bitcoin since the country became the first country to adopt it as legal tender last month. Migrants send a few million dollars a day with the cryptocurrency.

But only a fraction of the Central American nation’s businesses have accepted bitcoin payment, and technical issues have plagued the government’s cryptocurrency app and frustrated even dedicated users of the technology.

Construction worker Adalberto Galvez, 32, said he lost $ 220 while trying to withdraw cash from Chivo’s 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 cost my money, but it didn’t bring me anything,” said Galvez, who has been successfully using Bitcoin for months with another application in an experimental small Bitcoin economic project called Bitcoin Beach in the coastal town of El Zonte.

Galvez said the money was withdrawn from his Bitcoin Beach wallet, but he was never able to withdraw the money through Chivo. He said he didn’t hear anything after filing complaints.

Others also reported irregularities in transactions and attempted identity theft. President Nayib Bukele blamed the high demand for the problems Galvez and others faced.

A spokesman for the presidential office and Chivo could not be reached for comment.

Some measures were adopted quickly in the poor country, where one fifth of families depend on remittances.

According to Bukele, three million people have downloaded Chivo, around 500,000 more than originally planned and around half the country’s population. In September, he said the wallet had 2.1 million active users.

A month after it launched, 12% of consumers were using the cryptocurrency, the Salvadoran Foundation for Economic and Social Development reported.

“As of yesterday, Salvadorans have been inserting more cash (to buy #Bitcoin) than they are withdrawing from @chivowallet ATMs,” Bukele tweeted on Wednesday. “It’s very surprising so early in the game.”

A woman sells at a sign that reads “Bitcoin accept here” in front of a shop that accepts cryptocurrency as a payment method in San Salvador, El Salvador, September 24, 2021. REUTERS / Jose Cabezas

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However, the foundation, which surveyed 233 companies from different sectors, found that overall usage was still low as 93% of companies did not report Bitcoin payments.

“We’re still not sure what benefits the government expects,” said Leonor Selva of the National Association of Private Enterprises, one of several groups of companies that remain skeptical of the introduction.

MIGRANT MONEY

The Bukele government hopes 2.5 million Salvadorans living in the United States will eventually send remittances through Chivo.

So far, 30 Bitcoin ATMs have been installed in Atlanta, Chicago, Houston and Los Angeles to send wire transfers, and Bukele says around $ 2 million is sent through Chivo every day.

Juan Moz, a construction worker who has lived in the United States since 2005, recently selected Chivo to send home transfers to his family – a decision that saves him up to $ 18 compared to traditional money transfer services.

“I will definitely keep using it,” he said in a phone interview from San Francisco.

However, most of El Salvador’s $ 6 billion annual remittances – about a quarter of the country’s gross domestic product – are still made through money transfers, with many suspicious of the volatility of the cryptocurrency.

Last month El Salvador bought 700 bitcoins. Prices initially fell sharply after launch on September 7th, but rose to around $ 54,000 per coin in late September this week.

Several people told Reuters that they downloaded the wallet and received a $ 30 bonus that the government offered at the beginning of the program.

The handout was big enough to benefit some small business owners like Alexander Diaz, whose restaurant, which serves chicken wings, saw a surge in business.

“Most of the people who had this bonus wanted to test how it could be spent, so several customers have made payments to us using bitcoin,” Diaz said, adding that around 20% of his customers are now using the cryptocurrency.

“Chivo has helped small business owners by making the payment method easier for customers,” said Diaz.

Reporting by Wilfredo Pineda and Nelson Renteria; Letter from Stefanie Eschenbacher; Editing by Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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