SAN SALVADOR — El Salvador rushed to iron out snags on Tuesday after becoming the first country to adopt bitcoin as legal tender.
Chivo digital wallet became available on the app platforms hosted by Apple and Huawei shortly before midday local time Tuesday, after President Nayib Bukele, who pushed for adoption of the cryptocurrency and has promised $30 of bitcoin for each user, railed against the tech giants for not carrying the application.
Earlier on Tuesday, Salvadorans trying to download the Chivo digital wallet had found it was unavailable on the main app stores. Bukele said the government had temporarily unplugged it, in order to connect more servers to deal with demand.
Bukele blamed Apple Inc, Alphabet’s Google and Huawei’s app download platforms for the delay.
The country's adoption of Bitcoin is being seen as a real-world experiment, with proponents saying it will lower commission costs for billions of dollars sent from abroad, while critics are warning it may fuel money laundering.
The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.
The government purchased an additional 150 bitcoins on Tuesday, worth around $7 million, and McDonalds began accepting the cryptocurrency in its restaurants in El Salvador.
Carlos Garcia, who went to a booth giving out advice on the new currency at a shopping mall on Tuesday to learn about how transactions would work, said he was excited about the opportunities bitcoin could provide.
“El Salvador is taking a great step forward today,” he said.
However, the poorest may struggle to access the technology needed to make bitcoin work in El Salvador, where nearly half the population has no internet access and many more only have sporadic connectivity.
“I’m going to continue suffering with or without bitcoin,” said sweets seller Jose Herrera, who said he had trouble accessing a mobile phone.
Pres. Bukele, 40, is popular with the public but has been accused of eroding democracy, including by the U.S. Biden administration.
Doubters say bitcoin could increase regulatory and financial risks for the Central American nation, and polls show Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of dollars in value in a day.
To warm up a skeptical public, Bukele has promised every citizen $30 in bitcoin if they sign up for a government digital wallet. Ahead of the launch, El Salvador bought 400 bitcoins, Bukele said, helping drive the currency price above $52,000 for the first time since May.
“It’s going to be beneficial ... we have family in the United States and they can send money at no cost, whereas banks charge,” said Reina Isabel Aguilar, a store owner in El Zonte Beach, some 49 km (30 m) southwest of capital San Salvador.
Known as Bitcoin Beach, the town of El Zonte aims to become one of the world’s first bitcoin economies.
In the run-up to the launch, the government has installed ATMs that will allow bitcoin to be converted into dollars and withdrawn without commission from the digital wallet, called Chivo.
Bukele on Monday looked to temper expectations for quick results and asked for patience.
“Like all innovations, El Salvador’s bitcoin process has a learning curve. Every road to the future is like this and not everything will be achieved in a day, or in a month,” he said on Twitter.
The cryptocurrency has been notoriously volatile, rising to more than $64,000 in April and falling almost as low as $30,000 in May this year.
The move to make bitcoin legal tender alongside the U.S. dollar has muddied the outlook for El Salvador’s quest for more than $1 billion in financing from the International Monetary Fund (IMF).
Analysts fear adopting the cryptocurrency could fuel money laundering in a country with serious problems of government corruption and organized crime.
Bukele has promised to clean up graft, but the Biden administration recently put some of his close allies on a corruption blacklist.
In barely two years in office, he has taken control of almost all levers of power. Last week, top judges appointed by his allies ruled he could serve a second term.
After the bitcoin law was approved, rating agency Moody’s downgraded El Salvador’s creditworthiness, while the country’s dollar-denominated bonds have also come under pressure.
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El Salvador hits snags as it adopts bitcoin as official currency, first country to do so - NBC News
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