The launch of El Salvador’s national Bitcoin wallet, referred to as Chivo, has been a flop, with the majority of users having ditched it already, according to a paper published last month by economists at the National Bureau of Economic Research.
Researchers say that those who continue using the Chivo Wallet are using it to hold and transfer dollars, El Salvador’s official currency, similar to how one uses any digital wallet or bank.
Chivo was rolled out in September 2021, when President Nayib Bukele made El Salvador the first country in the world to make Bitcoin legal tender.
Though around half of the Salvadorans surveyed have downloaded Chivo to date, with 40% of those downloads happening in September 2021, around 61% of those have abandoned it after withdrawing the $30 dollar sign-up incentive, the National Bureau of Economic Research found.
“Don’t even talk to me about Chivo,” said Carolina Reyes, who sells snacks to tourists in the surf village of El Palmarcito.
The median active user does not send or receive a single Bitcoin payment a month nor make any Chivo ATM withdrawals, the survey found.
The fact that Chivo saw mass adoption but most abandoned it after withdrawing the bonus suggests that Bitcoin in its current form “is not such an effective means of payment,” Álvarez said.
The findings suggest that millions of dollars in taxpayer money may have been spent on creating an app that serves more as a rudimentary digital wallet than a novel technology that could help transform El Salvador into a regional tech hub, said Óscar Salguero, a software engineer and cryptocurrency enthusiast from San Salvador.
But even holding dollars in Chivo may also not be as safe as it seems. On April 27, local media outlet El Faro revealed that users are not actually holding U.S.