El Salvador’s adoption of bitcoin as legal tender, alongside the dollar, was marked by a computer system crash on Tuesday. As well, the cryptocurrency suffered a sharp drop in value, before bouncing back.
Some platforms, including Apple and Huawei, did not support the government-backed digital wallet, known as Chivo, and the servers had to be taken offline after they could not keep up with the pace of user registrations.
“@chivowallet is not working. We disconnected it to increase server capacity,” wrote on Twitter early Tuesday the popular Salvadoran president Nayib Bukele, who initiated the currency reform despite a strong backlash from the population. The Salvadoran government recently purchased 400 coins with a market value of $21 million.
It also launched the “Chivo” (“Super”, in colloquial language) electronic wallet needed to carry out everyday transactions in bitcoins with one’s cell phone and gave $30 as a welcome gift to those who downloaded it.
Bitcoin will save El Salvador’s head of state and his government $ 400 million in bank fees when sending money by remittance, especially to the United States (and other countries), which represents 22% of the country’s GDP.
“We don’t want it”
Nonetheless, recent polls indicate that over two-thirds (66%) of El Salvador’s 6.5 million people want to keep using the U.S. dollar exclusively as legal tender, a practice that has been in place for the past 20 years.
Besides economists, the World Bank, the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) have also expressed skepticism.
Bitcoin lost $5,000 in a few minutes on the first day of its legalization in El Salvador, its biggest loss since its plunge in May. At around 6:15 p.m. (local time), the crypto-currency was down 9% to $47,225, erasing much of its gains of recent weeks, before rebounding slightly.