On September 6, El Salvador became the first country to adopt Bitcoin as legal tender, drawing praise and criticism from the global community. President Nayib Bukele revealed that over 2 million of its citizens are already actively using its crypto wallet Chivo.
Bitcoin rising in popularity in El Salvador
Salvadorian president Nayib Bukele recently announced on Twitter that 2.1 million Salvadorians were actively using its Bitcoin wallet called Chivo. That would put Chivo past the user numbers of any bank in the country and even eclipse all banking users combined. The state-issued Chivo wallet launched in early September as part of the country’s adoption of Bitcoin as legal tender. It is available on Apple and Android and allows citizens to send and receive payments in bitcoin or dollars. Its name is a play on words on the word “chivo,” meaning cool in Salvadoran Spanish. Bukele himself recently took a dig at his critics when he announced being the “coolest dictator in the world,” jokingly using the name of the country’s Bitcoin wallet.
The update indicates that Bitcoin adoption in El Salvador is progressing despite active protests from citizens that took to the streets to speak out against the controversial move. Even though crypto bulls around the world and crypto companies welcomed El Salvador’s groundbreaking measure, Mexican cryptocurrency exchange Bitso signed on as the core service provider for Chivo, Salvadorian citizens were not as unequivocal in their support for Bitcoin. On September 15, protesters even burned down a crypto kiosk in the nation’s capital as protests reached a breaking point. Despite the government airdropping $30 worth of bitcoin to every citizen’s wallet, studies indicate that half the country’s citizens still have no familiarity with the digital currency.
The next steps
Bukele also announced that El Salvador had bought the dip during recent price tumbles of Bitcoin, bringing the country’s official bitcoin holding to 700 BTC. The controversial president plans to turn El Salvador into a Bitcoin mining hub and announced plans to build eco-friendly Bitcoin mining facilities. Supposedly, Bitcoin is to be mined with “very cheap 100% clean, 100% renewable, 0 emissions energy” from the country’s volcanoes. Bukele also implemented a measure that is to attract foreign investors by not taxing them on income in bitcoin or capital gains derived from it.
Criticism still abounds
Despite Bitcoin adoption being well and truly underway, even the country’s fast-food chains started accepting payments in bitcoin; El Salvador has also drawn plenty of criticism for its measure. India’s finance minister Nirmala Sitharaman questioned Bitcoin’s transparency, a truly bizarre statement given the fact that payments are visible to everyone on the Bitcoin ledger. Others have criticized the user experience of the Lightning Network El Salvador has chosen to adopt as a Bitcoin scaling solution, indicating it may be too complicated for widespread adoption. And then there’s the IMF, which has repeatedly issued warnings to El Salvador and other countries, calling the adoption a systemic risk.
Still, countries around the world will continue to follow the experiment, which could see El Salvador become an early adopter or push the country into a serious political crisis.