According to a recent study, less than 2% of transfers in El Salvador use the government-run Chivo bitcoin (BTC) app and wallet, and less than a year after their debut, bitcoin ATM booths there are “empty.” But as per the authorities, a lot of people still use the app.
One of El Salvador’s top publications, El Diario de Hoy, claimed that “few Salvadorans use the Chivo app and the ATMs to receive payments.” The media source frequently disagrees with President Nayib Bukele’s administration and his aspirations to adopt bitcoin.
It cited Central Reserve Bank information demonstrating that $120.46 million entered the nation through cryptocurrency wallets between September 2021 and June 2022. That amounts to barely 1.8% of the $6.4 billion in transfers that were sent to the country during the same time period, the majority of which were sent by Salvadorans living abroad.
The data also reveals that $29.68 million was transferred in bitcoin, using digital wallets in October 2021, one month after El Salvador legalised bitcoin as currency. Senders have since only sent a maximum of USD 20 million per month— that amount dropped to about $10 million within those months.
But in May of this year, BTC worth USD 15.6 million was sent from abroad to El Salvador, a significant increase over the previous month. Capital inflows are frequently larger than typical in May, the month when Mother’s Day falls, according to a media outlet. Just ten months after Chivo’s introduction and the BTC adoption law, this would still suggest that a tiny but significant proportion of people are already using BTC as a payment method.
The Central Reserve Bank declined to say whether the figures included data from other BTC wallets or just those sent via Chivo when local news organisations queried about them.
There were reports of bitcoin ATMs being taken down in El Salvador on Twitter, but many of them turned out to be incorrect because the booths were simply being moved.
Yet even with this, there are indicators that the app has not been as successful as the government had planned. The app’s technical leadership shifted earlier this year, and its social media presence is essentially dormant.
Alejandro Zelaya, the minister of finance, retaliated by saying that El Salvadorans “continue to use” both bitcoin and the Chivo wallet. He also denied that any Chivo ATM booths were being pulled down, saying instead that El Salvador’s adoption of BTC still had “many steps to be taken.”
Traditional banking institutions have criticised El Salvador’s adoption of cryptocurrencies. In January, the country received advice from the International Monetary Fund (IMF) to revoke bitcoin’s legal tender status.
Between September 2021 and July 2022, El Salvador spent a total of $103.9 million on 2,301 BTC. At some point in early July, the value of its portfolio appeared to be $46.6 million, a loss of more than 55%.