El Salvador’s President keen on ‘Bitcoin City’, but residents say plan is not working

El Salvador is the first country to recognise Bitcoin as a legal tender and planning to build an entire city based on the largest cryptocurrency Bitcoin. President Nayib Bukele of El Salvador is counting on Bitcoin to spur the country’s economic growth and investment.

“Most Salvadorans don’t use Bitcoin for daily transactions, so there hasn’t been any impact on the families’ economy whatsoever. Using Bitcoin as currency does not give Salvadorans an advantage over cash or digital money (debit/credit cards), besides getting the $30 bonus,” Diego Jozue, a resident of Sal Salvador, the capital city of El Salvador tells indianexpress.com.

The belief that every shop in El Salvador accepts Bitcoin does not hold any truth. Medium and big businesses still accept Bitcoin as payment since it’s law, but “small and informal businesses do not accept it, not because they’re against it, it’s just that nobody is using it,” he said.

Bukele in November 2021 also unveiled a $1 billion US “Bitcoin bond”—half of which he announced ($500 million) would be used to build energy and mining infrastructure, and the rest ($500 million) will be used by the country to buy more Bitcoins. The issuance of these bonds would be managed by Blockstream, a Bitcoin services-focused company. The tokenised bond will be available to several users in the world that will have access to invest in small amounts as low as $100 dollars. Dividends will be paid easily to bondholders using tools deployed on top of the Liquid network.

However, residents are not aware of these bonds. “The bonds have been postponed and we haven’t been given any information on this,” Jozue added. Indianexpress.com reached out to several other residents who also categorically denied any knowledge of Bitcoin bonds.

The citizens of El Salvador are also reporting that their Bitcoin has been disappearing from the government-introduced Chivo wallets. Chivo is a crypto wallet for citizens to facilitate transactions in Bitcoin. In the past few months, large banks and merchants within the country have increased acceptance and credit functionalities leveraging the Chivo wallet.

Jozue said that his father downloaded the Chivo app and he taught him how to use it. He added $80 to the wallet. “One day my father told me he couldn’t access the wallet and that’s where I found his account was suspended. I called the customer support channel which informed me that my father has to personally go to a Chivo point (the stand where the ATM is located) and get assistance from one of the people there.” But to date, the account is suspended.

“Whether my father gets his money back or not, he won’t be using BTC again,” he said.

Another Salvadorean, who wanted to remain anonymous also said that the biggest failure was the Chivo Wallet, as it was launched with many errors, and some people running their own businesses trying to use it as a payment method couldn’t receive funds or lost. “There were some days where the app couldn’t load and you had to clean cache in android every time you wanted to open it for it to work. Also, there was poor communication/education on how to use this technology,” they pointed out.