El Salvador’s National Bitcoin System Crashes As Cryptocurrency Becomes Legal Tender | News from science and technology
El Salvador’s move to become the first country in the world to make Bitcoin legal tender was tarnished on launch day when the government’s digital wallet system crashed.
President Nayib Bukele confirmed that the Chivo wallet has been taken offline following complaints about installation issues. No time has been given when it will be back online.
He said that server capacity will be increased – a “relatively easy problem to fix” but one that will require the system to be disconnected.
“Mejor despacio y con buena letra,” he tweeted, an idiom that translates as “slowly and with good handwriting” – which means that it is better not to rush.
“Un poquito de paciencia,” he added, which means “a little patience”.
Even Chivo Wallet’s website went offline on Tuesday when a recently passed law recognizing bitcoin as legal tender came into force in El Salvador.
Citizens have protested and complained that officials have given too little explanation about the benefits Bitcoin will bring and how transactions with the cryptocurrency will work.
42-year-old Claudia Molina, who sells T-shirts and souvenirs, criticized the plan.
“We don’t know the currency. We don’t know where it comes from. We do not know whether it will bring us profit or loss. We don’t know anything, ”she told Reuters.
“They didn’t train us. They didn’t tell us what we’re going to use or how we’re going to make the change,” she added.
Foreign cryptocurrency enthusiasts have backed El Salvador’s move, with a move causing people to collectively buy $ 30 (£ 21.76) in cryptocurrency to mark the entry into force of the law, potentially skyrocketing the price drives.
Bitcoin has been trading steadily at around $ 51,000 (£ 37,000) for the past few days – the highest since May when it was fell sharply after China announced curbs on cryptocurrency transactions – but no price pump has emerged.
El Salvador has started installing Bitcoin ATMs in cities across the country where citizens can convert their digital tokens into cash, backed by a government fund of $ 150 million (£ 108 million).
Surveys have shown that most Salvadorans are opposed to the adoption of Bitcoin, despite the government’s pledge to provide $ 30 (£ 22) tokens to each citizen through the government-provided digital wallet.
Carlos Carcah, professor at the Superior School of Economics and Business in El Salvador, argued that the introduction of Bitcoin as legal tender “is neither necessary nor convenient”.
He added, “As long as there is someone who accepts payments in Bitcoin, just as they accept dollars, there would be no problem.”
He noted that Bitcoin is extremely volatile, so investors “run the risk of getting rich and getting poor the next day.”
El Salvador’s own currency, the Salvadoran colon, was replaced by the US dollar in 2001.
The country relies heavily on funds sent home by citizens abroad, often in the U.S., and those remittances to El Salvador totaled nearly $ 6 billion in 2019, accounting for 16% of El Salvador’s gross domestic product.
The country has moved to using the US dollar as legal tender as a result of these remittances, and the move to Bitcoin is based on the expectation that more Salvadorans will send money home using the cryptocurrency – and the Chivo wallet is said to be available to nationals with Residence abroad.