{"id":20480,"date":"2021-09-07T22:46:19","date_gmt":"2021-09-07T22:46:19","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=20480"},"modified":"2021-09-11T10:51:16","modified_gmt":"2021-09-11T10:51:16","slug":"el-salvador-bitcoin-day-how-it-went","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2021\/09\/07\/el-salvador-bitcoin-day-how-it-went\/","title":{"rendered":"El Salvador: Bitcoin Day! How it went"},"content":{"rendered":"

Today\u2019s the big day of good news for Bitcoin! I live-tweeted the day\u2019s events in a massive thread. [Twitter<\/i><\/a>]<\/p>\n

Chivo Wallet has launched! It then turned right thirty feet above the launch pad, and crashed into a lake.<\/p>\n

Having been there and done that myself in information technology, I’ve rarely seen a project set up for such obvious failure from the start, by upper management who think the critical details are just a matter of shouting at people loudly enough, as the El Salvador Bitcoin project.<\/p>\n

I’m pretty sure Chivo must not be subject to the regulations on Bitcoin wallets<\/a> set out by the Banco Central de Reserva (BCR) \u2014 because the BCR regulations are relatively sensible, and there is absolutely no way<\/i> this clown show could possibly<\/i> meet the BCR regulations.<\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

Photo by Jorge Reyes at Elsalvador.com<\/a><\/i><\/small><\/p>\n

 <\/p>\n

Chivo Wallet launches! And crashes immediately<\/h3>\n

The Chivo app was released to the Huawei store at midnight (local time, UTC-5), and the Apple and Google stores at 2am. (Huawei phones are popular in El Salvador, and can\u2019t use the Google Play store.) [WSJ<\/i><\/a>, paywalled<\/i>]<\/p>\n

At 3am, the app started failing repeatedly \u2014 people couldn\u2019t log in, or were told their phone number was invalid. The image upload servers for Know-Your-Customer verification were apparently out of space. President Bukele was up at 6am, tweeting an apology. [Twitter<\/i><\/a>; <\/i>Twitter<\/i><\/a>]<\/p>\n

The President’s excuse that the Chivo system self-DDOSed when the KYC verification servers overloaded is somewhat implausible \u2014 everyone is asleep at 3am.<\/p>\n

Unless the system is so badly constructed that just using it at all makes it fall over. Which is, to be fair, highly plausible \u2014 this system was built by coiners.<\/p>\n

The apps were withdrawn from the app stores while the problem was being fixed. They were re-enabled one store at a time, from about 11:30am on. [Twitter<\/i><\/a>]<\/p>\n

As I write this (coming up to 5pm in El Salvador), the app shows around 1,000 downloads on the Huawei store, and still doesn\u2019t seem to be on Google Play.<\/p>\n

Update:<\/strong> Chivo finally showed up on Google Play around 10pm local time, slowly being enabled for different models of phone, so as to keep the load manageable. [Twitter<\/em><\/a>]<\/p>\n

Ulter\u2019s customer service<\/h3>\n

Ulter is the company run by Lorenzo Rey, the Venezuelan crypto enthusiast who\u2019s running the Chivo project.<\/a> As you\u2019ll recall from the Chivo architecture diagram,<\/a> Ulter is doing customer service for Chivo. El Faro ran a long article on Ulter this morning. [El Faro<\/a>, in Spanish<\/i>]<\/p>\n

Rey and Ulter seem to have pushed aside Jack Mallers and Strike as the official government Bitcoin wallet providers.<\/p>\n

Rey\u2019s customer service experience is running Dash Help in Venezuela. Dash is a cryptocurrency, a fork of Bitcoin. Dash Help\u2019s efforts in Venezuela failed because crypto isn\u2019t good money \u2014 shops didn\u2019t accept it, if they did then there might be only one person in the shop who knew how to accept it, and it wasn\u2019t used for remittances because Dash’s price in actual money was too volatile.<\/p>\n

So Rey and Ulter\u2019s experience in cryptocurrency is experience in failing.<\/p>\n

Chivo is not a government company \u2014 it\u2019s a private for-profit SA. [Twitter<\/i><\/a>]<\/p>\n

Chivo\u2019s wallet design is controlled by Rey and another Venezuelan, Sara Hanna. The Ministry for Innovation have left the wallet entirely to Rey and Hanna.<\/p>\n

When Brock Pierce visited El Salvador in June, Hanna was one of those greeting him.<\/p>\n

The Chivo Wallet<\/h3>\n

Chivo is a custodial wallet. It works a bit like PayPal \u2014 you have US dollar and Bitcoin balances, and you can top them up or spend them. Your dollars or bitcoins are held by Chivo as liabilities to you.<\/p>\n

You can withdraw cash dollars at a Chivo ATM. These are rebranded Athena Bitcoin ATMs,<\/a> so I would be surprised if you couldn\u2019t withdraw your bitcoins from the Chivo system \u2014 your keys, your coins.<\/p>\n

Correction: you can withdraw cash dollars if there’s any cash in the machine. Some have been running out already. [Twitter<\/em><\/a>]<\/p>\n

You can withdraw and deposit dollars \u2014 and, I think, bitcoins \u2014 at a staffed Chivo kiosk. I found a photo of one Chivo kiosk with one cashier, nine paid promoters, and no customers. [Twitter<\/i><\/a>]<\/p>\n

When you sign up, you get \u201c$30\u201d of credit to your BTC account. You can\u2019t withdraw it \u2014 only spend it. When you do, the merchant can then withdraw the cash dollars themselves.<\/p>\n

So far, a lot of people are going to the kiosks because they\u2019d like $30, please \u2014 they know nothing about Bitcoin, and they don\u2019t care. They may or may not have a phone. [Twitter<\/i><\/a>]<\/p>\n

Chivo will be available internationally! The use case is, of course, remittances \u2014 actual dollars go into Chivo, the government subsidises transmission costs and keeps the dollars, and the recipient gets Chivo “dollars.”<\/p>\n

Aaron van Wirdum of Bitcoin Magazine tweeted how he successfully bought food at a McDonald\u2019s using Bitcoin \u2014 specifically, the Lightning Network, via OpenNode. [Twitter<\/i><\/a>] This is not<\/i> the official Chivo system, which doesn\u2019t use Lightning at all<\/del> \u2014 Chivo itself is \u201clayer two\u201d over a back-end of bitcoins. Correction:<\/strong> It turns out Chivo does<\/em> interface to Lightning, but this transaction wasn’t done with Chivo.<\/p>\n

The back-end Bitcoin exchange for Chivo is BitGo in the US [Forbes<\/i><\/a>] and\/or Bitso in Mexico. [Bloomberg<\/i><\/a>] Bitso is doing US dollars via Silvergate Bank,<\/a> the bank for large swathes of the US crypto industry \u2014 because nobody else will risk banking them.<\/p>\n

The Chivo app asks for permissions to access everything<\/i> \u2014 even audio. And your contacts. I suspect they just ticked all the boxes because it was quicker. Strike, for comparison, doesn\u2019t ask for nearly as much. I think<\/i> the Huawei store flagged the app as possible malware, because it asks for so many permissions. [Twitter<\/i><\/a>; <\/i>Twitter<\/i><\/a>; <\/i>Twitter<\/i><\/a>]<\/p>\n

The other Chivo site<\/h3>\n

The Chivo app\u2019s privacy policy is not linked from the app stores, but is on what looks like a third-party site \u2014 chivostatic.turpialtech.com. [Turpialtech<\/a>, in Spanish<\/em>]<\/p>\n

The front page of this site says \u201c\u00a9 Gobierno de El Salvador\u201d \u2014 but, obviously, it\u2019s not on a .gob.sv domain, as you\u2019d expect. [Turpialtech<\/a>, in Spanish<\/em>]<\/p>\n

The site appears to have been designed by Turpial Development, a Venezuelan web development shop. [Turpial Development<\/i><\/a>]<\/p>\n

This site is somewhat unfinished \u2014 there\u2019s a page to top up your Chivo wallet with a card … and you\u2019d be sending your card number over a plain-text HTTP link, without SSL encryption. The link in the site is directly to\u00a0 chivoweb-env.eba-bbxfkyip.us-east-1.elasticbeanstalk.com \u2014 the Amazon Web Services name for the functionality end point. [AWS<\/i><\/a>]<\/p>\n

Update:<\/strong> the Google Play page links to the privacy policy on Turpialtech. [Google Play<\/em><\/a>]<\/p>\n

Mixed messages<\/h3>\n

Are there fees on Chivo? Definitely not! Unless there are.<\/p>\n

President Bukele has flatly declared that Chivo will not charge a commission, and has budgeted for the government to subsidise the system.<\/p>\n

However, Forbes ran a droolingly fawning article on the Bitcoin scheme which says that there will be no fees for Chivo-to-Chivo transactions \u2014 but<\/i> \u201cFunds withdrawn from the wallet, however, will incur fees.” [Forbes<\/i><\/a>]<\/p>\n

Is accepting Bitcoin compulsory? Article 7 of the Bitcoin Law<\/a> says so. Article 12 says that Article 7 doesn\u2019t apply if a business doesn’t have “access to the technologies that allow them to carry out transactions in bitcoin” \u2014 but having the Chivo wallet would almost certainly count as having such access.<\/p>\n

The government has claimed a number of times that accepting Bitcoin will be entirely optional \u2014 and a number of other times that it will be mandatory. At present, the law still says it’s mandatory, and the government has resisted changing this.<\/a> [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n

In practice, even the merchants with a “BITCOIN ACCEPTED HERE” sign have to find the one guy in the shop who knows how to accept Bitcoin. [Economist<\/em><\/a>]<\/p>\n

Bitcoin protests at the Legislative Assembly<\/h3>\n

The people of El Salvador are not entirely happy. There were protests yesterday, so barriers were put up around the Legislative Assembly<\/a> early this morning to keep protestors back. [Sky News<\/i><\/a>; <\/i>Twitter<\/i><\/a>]<\/p>\n

Marching citizens gathered in the Plaza Moraz\u00e1n and departed for the Assembly around 10am, to demand the repeal of the Bitcoin Law. The number I’ve seen is that over a thousand marched. [La Prensa Grafica<\/a>, in Spanish; Twitter<\/a>; Reuters<\/a><\/em>]<\/p>\n

Protesting citizens reached the barricades and attempted to pull them down, or jump the barrier. [Twitter<\/i><\/a>; <\/i>Twitter<\/i><\/a>] Some citizens described the government in coarse and unflattering terms. [Twitter<\/i><\/a>]<\/p>\n

One group of protestors set some tyres on fire, providing an excellent visual representation of Bitcoin. [Elsalvador.com<\/i><\/a>]<\/p>\n

I did say in my June article for Foreign Policy<\/a>: “The question is whether he can get away with bitcoin-fueled monetary policy before an angry populace starts setting buildings on fire.” [Foreign Policy<\/a>, paywalled<\/i>]<\/p>\n

Opposition politicians came to today\u2019s session in \u201cNo Bitcoin\u201d shirts. [Twitter<\/i><\/a>] Nuevas Ideas politicians (Bukele\u2019s party) were heckled by their constituents. [Twitter<\/i><\/a>]<\/p>\n

 <\/p>\n

\n

Las diputadas del @gpfmln<\/a> @AnabelBelloso<\/a> @DinaArguetasv<\/a> @RocioMenjivarSV<\/a>, as\u00ed como @ClaudiaOrtizSV<\/a> de @vamoselsalvador<\/a> y se presentaron con camisetas en contra de la Ley Bitcoin previo al inicio de la sesi\u00f3n plenaria de hoy en la @AsambleaSV<\/a> pic.twitter.com\/68IxJvPi2g<\/a><\/p>\n

— LPGPolitica (@LPGPolitica) September 7, 2021<\/a><\/p><\/blockquote>\n