As with any new project, with grand design, new-fangled technology, a seismic shift in the way people do thing, it starts with an announcement, some fanfare and then the bumpy reality.
In El Salvador, the promise and promotion of bitcoin as legal tender comes from the top down, touted by presidential tweet. The whole thing, from announcement to legislation to deployments of digital wallets took only several weeks.
Read here: El Salvador Could Become First Country To Accept Bitcoin Like Cash
In this, our inaugural tracker of bitcoin’s journey as currency in El Salvador, we find that there’s been one commonality in the 10 days since bitcoin’s use in mainstream commerce became official on Sept. 7: unevenness.
In a series of tweets, President Nayib Bukele said that the total tally of Chivo Wallet downloads (Bitso is the service provider for the wallets and has also been managing the government’s own purchases) has surpassed more than half a million. And in a sense of the brick-and-mortar strategy that is taking shape, 200 Chivo ATMs have been installed in El Salvador, and 50 have been installed in cities across the United States, including Atlanta, Houston and others. Those ATMs, said the president, enable users to “recharge” their wallets and bitcoin holdings with credit and debit cards without paying commissions.
It’s important to note that Bukele has said that on the consumer side of the equation, embracing bitcoin as a payment method is entirely optional. So in terms of optics, 500,000 downloads out of a country where the populations is less than 7 million does seem impressive. And yet, it’s entirely possible that the $30 in bitcoin that comes with the wallet — to incentivize use “out in the field” so to speak — has a role here. The stated goal is to get to 2.5 million Chivo users, which would be a broad swath of the population. The government has been putting its money where its proverbial mouth is — having bought a few million dollars’ worth of bitcoin to hold on its balance sheet.
As for the adoption by the traditional financial services players: Three of the country’s main banks — Agrícola, Cuscatlán and Davivienda bank — are equipped to take bitcoin for debit and credit-related payments, according to reports. Doubtless we’ll see at least some ripple effects of additional activity through those channels as time goes on.
Read also: El Salvador Buys $21M Bitcoin as It Marks Crypto’s Cash Debut
The downloads themselves have had a bit of headwind: They were halted, temporarily, amid glitches and blocked accounts. Bukele tweeted that the technical issues have been 95 percent fixed. We’ll track the downloading activity moving forward, as 70 percent of the country’s consumers polled have said that were opposed to adopting bitcoin as legal tender, as estimated by Central American University (UCA). The old maxim bears testing here — namely, whether if you build it, they will come, and once they come, if they will keep spending (after that $30 in freebies has been spent, of course). There have been protests against the bitcoin move, and at least one bitcoin ATM was destroyed.
Read here: Poll Shows 70 Pct of Salvadorans Are Anti-Bitcoin
And as for the merchant side of the equation, commerce-related enterprises are obligated to take bitcoin payments (or risk sanctions), and before the bitcoin “law” took effect last week, at least some companies had sought a delay in the mandate, which was refused by the government.
Bitcoin’s own price volatility shines a spotlight on just how bumpy the rollout has been – and the wild swings in pricing are maybe the only sure thing on the horizon for now. We’ll continue to track how El Salvador’s grand bitcoin experiment fares as it forges ahead.
Underneath the mechanics of the rollout are some key questions: Just what is all of this for? The U.S. dollar — the greenback — is the currency that has long been in force here. But bitcoin is, perhaps, at least in the eyes of some skeptics, a way to sidestep the dollar’s might and operate outside the traditional financial system. The Wall Street Journal has noted that the country can, eventually, issue its own digital fiat, with at least some of the technical heavy lifting already accomplished. The consumers who use the Chivo wallets don’t get dollars in those wallets, they get dollar stablecoins.
That opens the door for the government to get its own, home-grown digital coins into the mix, should it choose to do so, and should geopolitics be a prime mover — here, the president (critics charge he is a dictator) would have even more control over the economy and could evade the economic impact of any sanctions. Time will tell, of course, if bitcoin is here to stay, or if its adoption is only one step of a grander crypto plan.
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