El Salvador’s world-first adoption of bitcoin hits snags

El Salvador rushed to iron out snags on Tuesday after becoming the first country to adopt bitcoin as legal tender, unplugging the digital wallet to cope with demand and pushing for popular app stores to carry the government-backed app.
Bitcoin business
The Chivo digital wallet became available on the app platforms hosted by Apple and Huawei shortly before midday local time Tuesday, after President Nayib Bukele, who pushed for adoption of the cryptocurrency and has promised $30 of bitcoin for each user, railed against the tech giants for not carrying the application.

The government purchased an additional 150 bitcoins on Tuesday, worth around $7 million, and McDonalds began accepting the cryptocurrency in its restaurants in El Salvador.

Bukele said using bitcoin will help Salvadorans save $400 million a year on commissions for remittances, while giving access to financial services to those with no bank account.

Carlos Garcia, who went to a booth giving out advice on the new currency at a shopping mall on Tuesday to learn about how transactions would work, said he was excited about the opportunities bitcoin could provide.

However, the poorest may struggle to access the technology needed to make bitcoin work in El Salvador, where nearly half the population has no internet access and many more only have sporadic connectivity.

Over a thousand people protested against the implementation of bitcoin around noon, marching to the Supreme Court building, burning a tire and setting off fireworks.

Some say the move may fuel money laundering and financial instability. It has already muddied the outlook for more than $1 billion in financing that El Salvador is seeking from the International Monetary Fund (IMF).

Bukele, 40, scores highly in opinion polls but has been accused of eroding democracy, not least by the administration of U.S. President Joe Biden.

Earlier on Tuesday, Salvadorans trying to download the Chivo digital wallet had found it was unavailable on the main app stores. Bukele said the government had temporarily unplugged it, in order to connect more servers to deal with demand.

Bukele blamed Apple, Google and Huawei’s app download platforms for the delay.

Ahead of the launch, El Salvador bought 400 bitcoins worth around $20 million, Bukele said, helping drive the price of the currency above $52,000 for the first time since May. Hours later, bitcoin had weakened and last traded down 8.84 percent at $47,327.32.

The World Bank reiterated on Tuesday that it could not help El Salvador in its process of adopting bitcoin as legal tender given environmental and transparency shortcomings, a World Bank spokesperson told Reuters.