El Salvador's bitcoin move impacted by Chivo digital wallet issues

The Central American country was the first in the world to adopt the cryptocurrency as legal tender.
The Central American country was the first in the world to adopt the cryptocurrency as legal tender. Photo credit: Getty Images

El Salvador's adoption of bitcoin is being hampered by technical glitches with its chosen digital wallet, according to reports.

The Central American country became the first country to make the cryptocurrency legal tender last week, with businesses in the country now obliged to accept payment in bitcoin.

Chivo, named after a local word for 'good', is how Salvadorians are able to pay with the cryptocurrency rather than via the country's fiat currency, the US Dollar.

President Nayib Bukele, who introduced the law, had promised US$30 worth of bitcoin will be preloaded in the Chivo digital wallet being used in the country for everyone who downloads it.

But Reuters has reported that accessing the wallet, withdrawing money from ATMs and the US$30 not being deposited are among the most common complaints according to users it spoke to.

And both Apple's AppStore and Google Play have also attracted negative comments, with many one-star ratings and issues described in Spanish.

"It started fine, I deposited US$50 to try it but now it has been 2 days and are (sic) unable to login. I keep getting the "ups un error ocurrio!" [an error occurred]. I was really looking forward to using this app and it has now been a big flop, really disappointed," one Android user wrote.

"I open my wallet a day ago I set it up and purchase some bitcoin but now that I like to re-open my wallet to see my account I can’t open it anymore. Where do I call for help?" an iOS user wrote.

But not everyone is unhappy, with one writing "Excellent project Mr. President. The app is running great. God bless you, and God bless El Salvador."

Another also thanked President Bukele. "This is the best way to shop and send money to El Salvador, no fees or charges , I’ll give them 5 stars."

The country introduced cryptocurrency to try and avoid the high transaction costs associated with citizens sending money home from overseas - which accounts for up to a fifth of El Salvador's GDP.

Bitcoin's cheaper fees, instantaneous transfer and lack of requirement to have a bank account could save Salvadorians US$400m per year, Bukele said.

But the move hasn't been popular in international circles, with ratings agency Moody's downgrading El Salvador's creditworthiness.

The World Bank also said it would not help El Salvador adopt bitcoin as legal tender "given environmental and transparency shortcomings".

The move also makes citizens more vulnerable to massive price changes. Last week, prior to the law change going live, bitcoin traded at around US$52,722 per coin, but dropped significantly and quickly and is now trading around US$45,000 per coin.