Nayib Bukele Intervenes Directly To Overcome The Problem Of Implementing Bitcoin In El Salvador

Siman, El Salvador's largest convenience store, accepts payments in bitcoin. (photo: twitter)

JAKARTA – El Salvador President Nayib Bukele stepped in on Wednesday 8 September to manage the full launch of a payment app that supports the adoption of bitcoin as a legal tender. It even asks bitcoin users in the country to report any issues on its Twitter feed.

Adopting a language similar to that of IT departments in offices around the world, Bukele prompts users to close and restart the app if a "currently under maintenance" error screen appears.

The historic adoption of bitcoin as a legal tender by this Central American country has been beset by problems that have contributed to the digital currency's rout in value globally. Bitcoin continued to weaken on Wednesday, and closed at $46,000, down 1.7%.

“Any financial innovation of this scale will come with a tooth problem. However, if we have learned anything from observing the market in the last year, it is that bitcoin maximalists will seek to push the digital currency back as soon as it has fallen,” said Michael Kamerman. , chief executive of the Scandinavian-owned fintech company Skilling.

Some market watchers see a bullish future, with a new team of cryptocurrency researchers at Standard Chartered predicting bitcoin will hit $100,000 early next year and could be worth as much as $175,000 in the longer term.

Bukele has been sending a stream of Twitter messages over the past 36 hours instructing users on how to download the government-backed Chivo Wallet app that promises commission-free transactions and which the unbanked hopes will adopt.

Last night President Bukele said the app, the digital wallet, was disconnected a second time to "improve the user experience and issues that existed during the day."

"We hope tomorrow will be much better," he wrote in a tweet. Some users immediately responded in the comments section to report ongoing installation issues.

El Salvador's largest department store is now accepting #Bitcoin.Founded in 1922, it's ushering in the future of money pic.twitter.com/OTAyXN9kpN

— Bitcoin Magazine (@BitcoinMagazine) September 8, 2021

Douglas Rodriguez, head of El Salvador's central bank, said at an event in the Honduran capital, Tegucigalpa, that the "eyes of the world" are on his country and that bitcoin adoption is a process that takes time to "mature."

To address concerns that digital currencies could encourage illicit activity, Rodriguez said the rules set by banks for using bitcoins are designed to meet money laundering standards and are well accepted by international authorities.

El Salvador's bitcoin law states the market will set the exchange rate between the cryptocurrency and the US dollar, another legal tender in the country. It says all prices can be expressed in bitcoin and tax contributions can be paid in digital currency, while currency transactions in bitcoin are not subject to capital gains tax.

Despite the technical difficulties, the launch of the app made some waves in El Salvador, in part because of the government's gift of 30 dollars in bitcoins for every local user who signs up. But polls show many people are still wary of bitcoin's volatility.

In the El Salvador edition of the Apple App Store, Chivo is the No. 1 last Wednesday. This proves that Chivo is now in great demand and being hunted by citizens who want to use bitcoin.

Bukele previously said only a few phone models would initially have access to the app on Google Play. This is to avoid the great interest of citizens who can actually damage the system due to too many downloads.

On Wednesday afternoon, Bukele wrote on Twitter that Google Play is available for Alcatel smartphones and more models will be added. He warned citizens "not to overcrowd the servers" with too many registrations at the same time.

"We're still refining the small details," he said.

JP Morgan Chase himself said in a note Wednesday that some technical hurdles are expected as a result of bitcoin's endorsement in El Salvador.

"This technical issue should come as no surprise given that the country has only three months to prepare for this major experiment," the bank said. "In contrast, China has been preparing/testing its digital yuan for years and hasn't officially launched it yet."

Global retailers operating in El Salvador accept bitcoin at several stores, including McDonald's Corp and Starbucks Corp, along with several local outlets.