El Salvador Struggles With Bitcoin National Currency Rollout

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El Salvador Struggles With Bitcoin National Currency Rollout
Demonstrators marched in the country's capital to protest the first national adoption of Bitcoin as a form of legal tender.

El Salvador became the first country to adopt Bitcoin as legal tender Tuesday, but the rollout stumbled in its first hours and President Nayib Bukele said the digital wallet used for transactions was not functioning.

For part of the morning, El Salvador’s president became tech support for a nation stepping into the world of cryptocurrency. Bukele marshaled his Twitter account — with more than 2.8 million followers — to walk users through what was happening.

Bukele explained that the digital wallet Chivo had been disconnected while server capacity was increased.

The president said it was a relatively simple problem. “We prefer to correct it before we connect it again,” Bukele said. He encouraged followers to download the app and leave comments about how it was going.

More than a thousand people marched in the capital to protest the move. Many say it won't help El Salvador's working class, who can't access it easily.

Meanwhile, the value of Bitcoin plummeted early Tuesday, dropping from more than $52,000 per coin to $42,000, before recovering about half of that loss — an example of the volatility that worries many.

The government has promised to install 200 Chivo automatic tellers and 50 Bitcoin attention centers. But some citizens say they're skeptical to adopt the new currency.

"I still have doubts about using that currency," Emanuel Ceballos said.

Three face-to-face public opinion surveys performed recently showed that most Salvadorans did not agree with the government’s decision to make Bitcoin legal currency. Bitcoin joins the U.S. dollar as El Salvador’s official currencies.

In June the Legislative Assembly enacted the Bitcoin law, and the Central American Bank for Economic Integration is providing the government with technical assistance.

The law says that Bitcoin can be used for any transaction and any business with the technological capacity to do so must accept payment in the cryptocurrency.

The government will back Bitcoin with a $150 million fund. To incentivize Salvadorans to use it, the government offered $30 worth of credit to those who use Chivo.

Critics have warned that the currency’s lack of transparency could attract increased criminal activity to the country and its wild swings in value could quickly wipe out users’ savings.

Bukele has said the cryptocurrency — originally created to operate outside government controlled financial systems — would help attract investment and save Salvadorans money when they transfer earnings in the United States back home to relatives in El Salvador. But its use would be voluntary.

Additional reporting by the Associated Press.