A cloud of doubt hangs above the El Salvador Bitcoin dream following plans to privatize or shut down the Chivo cryptocurrency wallet created and supported by Salvadoran President Nayib Bukele when BTC became legal tender in the country in 2021.
According to an announcement on social media platform X by Stacy Herbert, the director of the National Bitcoin Office, the government decided on an agreement for a $1.4 billion loan deal with the International Monetary Fund (IMF) that addressed its controversial embrace of the El Salvador Bitcoin dream.
El Salvador Bitcoin Dream in Doubt as Chivo Faces Shutdown
While maintaining that Bitcoin will still be legal tender in the country, Hebert said that the Chivo cryptocurrency wallet “will be sold or wound down.” Nonetheless, she did not disclose the number of people still using the digital wallet, which has been in use since September 2021, when the government allowed Salvadorans to make payments in Bitcoin.
The El Salvador Bitcoin dream made the headlines in 2021 when the country announced the establishment of Bitcoin as a legal tender in the Central American country alongside the US dollar, perhaps in a bid to revitalize the remittance-reliant economy. While a 2023 survey by the Central American University revealed that over 88 percent of Salvadorans were not using Bitcoin, Hebert reiterated that “El Salvador will continue buying Bitcoin (at possibly an accelerated pace) for its Strategic Bitcoin Reserve.”
Chivo Cryptocurrency Wallet Offered a $30 Incentive During its Launch.
According to Bukele, the chief architect of the El Salvador Bitcoin dream, stockpiling Bitcoin was “the most unpopular measure that this government has taken.” However, according to the National Bitcoin Office, El Salvador owns 5,969 bitcoins worth around $582 million. The Chivo cryptocurrency wallet became the world’s first government-operated digital wallet, aiming to enhance crypto adoption.
During its inception, the government offered a $30 BTC incentive for anyone who downloaded and used the Chivo cryptocurrency wallet. Unfortunately, what followed was a widespread eruption of fraud and identity theft, with numerous reports of Chive-wallet-related bugs that led to the freezing of thousands of accounts. Moreover, most of those who downloaded the Chivo cryptocurrency wallet immediately converted the $30 handout to fiat currency, and that was all they had to do with Bitcoin.
IMF Opposed the El Salvador Bitcoin Dream
The global lender IMF has consistently opposed the El Salvador Bitcoin dream since its inception. While admitting that the risks associated with BTC’s adoption could have lessened following its widespread adoption by businesses worldwide, the global lender stated that “The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies.”
Whereas Bitcoin has made headlines by trading for more than $108,000 in recent weeks, the IMF maintains that “Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”
Conclusion
The new loan deal that has seen El Salvador signal closing down or privatizing the Chivo cryptocurrency wallet aims to support the country’s fledgling economy. The global lender has continuously opposed Bukele’s pro-crypto policies, stating that they could become an obstacle to extending financial assistance. Despite all the warnings, Bukele has always celebrated on Social media as BTC rallied following Donald Trump’s victory during the last US prudential elections.
When Bitcoin topped $100K in early December, Bukele announced that his country’s crypto holdings had more than doubled in value. As the rest of the world and specifically the cryptocurrency community celebrate the ascending to the White House of a pro-crypto President, observers aren’t sure what trajectory the El Salvador Bitcoin dream is going to take.
Frequently Asked Questions (FAQs)
What is Chivo Wallet?
Chivo cryptocurrency wallet is a Bitcoin wallet designed to facilitate secure financial transactions. It gained immense popularity in El Salvador following the adoption of Bitcoin as legal tender.
Can the Chivo wallet be used outside El Salvador?
The wallet has primarily been available in El Salvador, but there have been plans to expand its reach.
Are there fees associated with using the Chivo wallet?
Chivo cryptocurrency wallet offers competitive transaction fees, the details of which are available in the wallet app.
Does the Chivo wallet integrate with Bitcoin’s network?
Chive allows users to buy, sell, and hold Bitcoin within the app, providing easy access to cryptocurrency.
