Finally, let's find out what President Bukele will have ambitious plans for the people as well as the future of Bitcoin in El Salvador.

Expectations far from reality

Salvadoran users say basic functions, like using the Lightning network to process payments, are not reliable. This makes it especially difficult to transfer money from Chivo to other apps like Strike. Sometimes transactions don't appear in the recipient's wallet, increasing the risk when sending money from abroad.

When two WIRED reporters visited a Chivo ATM inside a Salvadoran restaurant in Oakland, California, they were greeted with an error message on the screen. The staff here said that the machine often fell into such an inactive state.

In the weeks following the launch, hundreds of people reported having their identities hacked to steal $30 in pre-approved credit. The Bukele government did not respond to WIRED's request for an interview on the matter.

“Lack of transparency is a government policy. The Bitcoin system and the Chivo wallet system are part of that confusion,” said Ruth Lopez, an anti-corruption lawyer at Cristosal, which represents 235 victims of identity theft.

Ambiguous right from the production unit

Chivo SA de CV Company - the unit behind Chivo wallet - is a private company, but 99% of the shares are owned by the state. According to a report from El Faro, the company has outsourced the development of the application, even its legal representatives include a government official who has been sanctioned by the US for corruption. When Lopez asked for the company's financial information to be made public, the government said Chivo SA was under no obligation to make it public because it was a private company.

Bitcoin remained a top concern at the pro-democracy rallies in San Salvador in October and December. For activists like Gomez, widespread adoption of a digital currency is unlikely. contest in El Salvador - a country with a per capita income of only about $ 3,650, among the lowest in the western hemisphere.

Gomez thinks Bitcoin is not a lifeline for El Salvadorans, especially since 68% of the workforce works in the informal economy. “Sometimes the problem is not a lack of technology but a lack of education,” he said.

Some El Salvadorans think these numbers are exaggerated. Many people download the app just for the free 30 USD credit inside the wallet, then delete the app.

At the end of August, the finance minister transferred $75 million in public funds from the El Salvador Development Bank to “Bitcoin Finance,” which the government said will be used to support Chivo wallet customers. The government also said it bought $60 million in Bitcoin. Since then, Bukele has announced more Bitcoin purchases, bragging on Twitter that El Salvador is “bottom fishing.”

The origin of the above investment is also full of mystery. Lopez said that the government has presented no evidence that it has actually bought Bitcoin. The lack of transparency is going against the principles of electronic money management.

The First Bitcoin City

At the end of November during another government Bitcoin conference, the hashtag #FixChivo climbed to the top of Twitter as many English-speaking customers reported their money disappearing when moved to another wallet. However, currently, Bukele is busy with next projects, so it has not been able to solve the problem of losing users' money. After summarizing the progress of the Chivo Pets hospital project, he headed to the “Bitcoin city” plan.

The city will be built on the edge of the Conchagua volcano, he said, allowing easy access to geothermal energy for Bitcoin mining, and there will be no taxes (except sales tax). The question is how does the government manage to afford such a huge project? The answer is a $1 billion bond backed by Bitcoin.

Standing next to Bukele on stage was Samson Mow, chief strategy officer of Blockstream, a company that develops Bitcoin products. Mow said the plan has been in the works since the summer after he was introduced to the president by Mallers. Mow presented the idea of ​​bonds as an effective way to finance Bitcoin mining infrastructure.

Blockstream will issue the bond in conjunction with Bitfinex, a cryptocurrency exchange that issues Tether. Bitcoin bond structures are not yet legal in El Salvador, so Bukele will ask Bitfinex owners to help rewrite the country's securities laws and get the first license.

The idea of mining was not emphasized when developing Bitcoin city, but Mow was not affected. He compared it to the idea behind Hong Kong or Dubai: bringing international investment, creating a safe regulatory environment and bringing benefits to locals.

However, the government has a long way to go to realize this dream. Some analysts have noted that financial firms are reluctant to take risks, and hobbyists simply buy them directly.

Mow said that he has noticed interest – mainly from Bitfinex “whale” investors – and expects support from global Bitcoin players. If there is an investor willing to spend a lot for the project, they will receive the right to permanently settle in Salvador.

Many in the industry argue that the authorities see Bitcoin bonds as a potential solution to the shortfall of USD. The country now has a high wasted bond rating, and the number of allies is down.

“It is a big gamble. That's why I think such a decision is only for the personal benefit of [Bukele] or for the benefit of his family," said political scientist Gamarra.

According to Gamarra, Bukele's fate will be easily determined by the value of Bitcoin. “If the price goes up, he will be the captain with the foresight, otherwise the loser.”

If Bukele succeeds in his experiment “combining Bitcoin as the representative currency of libertarianism with authoritarianism”, then surely the “Bitcoin Law” will not be the final piece of legislation. The upcoming journey of the people of El Salvador will be full of surprises.

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