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<\/a><\/p>\nCartoon by Alecus in <\/em>El Diario de Hoy<\/em><\/a>: “Economic takeoff”<\/em><\/small><\/p>\n <\/p>\n Two months in, the populace isn\u2019t using Bitcoin as currency. \u00d3scar Cabrera, former president of the Banco Central de Reserva (BCR),<\/a> told La Prensa Gr\u00e1fica how \u201cthe population continues to reject the use of bitcoin as legal tender.\u201d People take the $30 Chivo signup bonus and don\u2019t use Chivo again. [La Prensa Gr\u00e1fica<\/i><\/a>, in Spanish<\/i>]<\/p>\n Bitcoin purchases are quite popular in El Zonte, a.k.a.<\/i> Bitcoin Beach. [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n Bancoagr\u00edcola\u2019s Wompi payment network, which shops use to accept various cards, will soon allow purchases via Bitcoin, over the Lightning Network. The bitcoins are deposited in the business\u2019s bank account as dollars. Transaction times may be between one minute and fifteen minutes \u2014 which sounds like they\u2019re touching the Bitcoin blockchain somewhere. The Wompi transaction charge is 2.85%. [La Prensa Gr\u00e1fica<\/i><\/a>, in Spanish<\/i>]<\/p>\n The Ministry of Finance is finally accepting tax payments via Bitcoin, per article 4 of the Bitcoin Law.<\/a> [La Prensa Gr\u00e1fica<\/i><\/a>, in Spanish<\/i>]<\/p>\n Bitcoin seems to be unbanking the banked. Fundaci\u00f3n para el Desarrollo Econ\u00f3mico y Social (Fusades) runs monthly surveys on consumer confidence. In June 2021, the answer to \u201cHow do you prefer to keep your savings?\u201d was 52% banks, 36,7% cash \u2014 but from July 2021, that number\u2019s been over 50% cash. [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n Some Salvadorans have been getting into low-level day-trading on Bitcoin\u2019s volatility on their Chivo wallet \u2014 the thrill of watching your $30 turn into $25 or $32! [El Faro<\/i><\/a>, in Spanish<\/i>]<\/p>\n The day traders particularly liked the part where the Chivo wallet would let users freeze the price of Bitcoin for one minute when making transactions, so you wouldn\u2019t lose out to sudden volatility \u2014 like when the price went down $10,000 in three minutes on Bitcoin Day. With the wallet price frozen while the real price changed, the day traders could choose whether to buy or sell, and so make a few dollars.<\/p>\n Chivo has discovered why freezing the price of a volatile commodity doesn’t work, and is now striking out at this \u201cscalping\u201d \u2014 which they had to admit wasn’t actually illegal. You can no longer freeze the exchange rate for a minute, and there\u2019s now a three-minute wait between transactions. [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n The DUI fraud that I outlined previously<\/a> is still happening \u2014 you can create a Chivo wallet with just a DUI number (Documento \u00danico de Identidad \u2014 the national ID card) and date of birth, because nobody checks any of the photos or scanned documents. An unknown but large number of Chivo wallets are fakes created by stealing someone’s DUI to get the $30 signup bonus. This has been a huge scandal locally through October. [CoinDesk<\/i><\/a>; <\/i>Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n If your DUI is stolen to create a Chivo wallet, Elsalvador.com has set out steps to take: [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n The Attorney General of the Republic\u2019s office had 717 complaints as of mid-October; this is almost certainly just a drop in the bucket. The newspaper El Diario de Hoy also received 200 complaints in two days. [Elsalvador.com<\/i><\/a>, in Spanish; <\/i>Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n Chivo appears to have access to the DUI database. One lawyer got a phone call from Chivo: \u201cThey just called me from Chivo to tell me that I can now use my wallet, that they’d fixed the error. When I told them that I hadn\u2019t downloaded it, a deathly silence. When I asked them how they had obtained my cell phone number they hung up on me.\u201d [Twitter<\/i><\/a>]<\/p>\n The authorities are dealing with Chivo fraud thoroughly and predictably \u2014 they appear to be arresting the victims who had their DUIs stolen and abused by crooks. [Twitter<\/i><\/a>; Twitter, <\/i>archive<\/i><\/a>]<\/p>\n <\/p>\n El Diario de Hoy front page, Saturday 6 November 2021<\/i><\/small><\/p>\n <\/p>\n The government is no longer promoting Chivo. Radio, TV and social media advertising have stopped. The Chivo buses and vans have been sighted wth plastic taped over the Chivo logo.<\/p>\n Most call centre staff have had their contracts ended early: \u201cToday there was a sudden dismissal of personnel from the Chivo Wallet Call Center. The fired are not being recognized at all. And some are only being offered a one-month contract.” [Twitter<\/i><\/a>]<\/p>\n In fairness, you can tell there were very few real-world users of Chivo, because the call centres were ghost towns \u2014 and that wasn\u2019t because the app was working perfectly.<\/p>\n The Chivo street promoters are also complaining of getting screwed over \u2014 and not even being paid their final wages in full. [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n Chivo is still unreliable, the network is frequently down, and it loses people\u2019s money \u2014 and loses their remittances<\/i>. [Reuters<\/i><\/a>; <\/i>Elsalvador.com<\/i><\/a>, in Spanish; <\/i>Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n If you\u2019re in the US and want to send money to El Salvador via Chivo, you still need to pay in from a card \u2014 Chivo doesn\u2019t yet have money transmitter licenses. One user paid a $6 fee for an international payment on sending $200. [Twitter<\/i><\/a>; Twitter, <\/i>archive<\/i><\/a>]<\/p>\n Woke up this morning, I had a billion dollars in bitcoins! \u201cChivo is nuts,\u201d said one Facebook comment. \u201cNow it turns out that I\u2019m a millionaire. From $68 to more than $3 million.\u201d Chivo was displaying Bitcoin balances in the millions or billions of dollars. This was apparently two bugs: (a)<\/i> a negative balance was possible, and (b)<\/i> the negative number had an integer overflow<\/a> in Chivo\u2019s computer system, so it was displayed as a very large positive number. [Elsalvador.com<\/i><\/a>, in Spanish; <\/i>Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n Aviv Milner\u2019s When The Music Stops has an interview with Oscar Salguero, a Salvadoran living in the US who frequently visits home, about Chivo\u2019s failures in practice. \u201cThey\u2019ve ignored a lot of best practices, even common sense.\u201d Oscar has been testing out the various Bitcoin wallets so he can educate and inform his fellow Salvadorans. This is 90 minutes, but it\u2019s an essential rundown on how it\u2019s been going on the ground. [Anchor.fm<\/i><\/a>]<\/p>\n Aviv also interviewed Nelson Rauda, a journalist at El Faro, about how Bitcoin was going in El Salvador. This one is essential too. [Anchor.fm<\/i><\/a>]<\/p>\n The government is mining bitcoins<\/a> at the LaGeo geothermal plant in Berl\u00edn, Usulut\u00e1n \u2014 an area where a lot of villages and towns don\u2019t have running water. And additional geothermal wells do affect the local ground water. This article is a reminder that \u201crenewable\u201d energy isn\u2019t free of environmental impact either. [El Faro<\/i><\/a>]<\/p>\n How\u2019s the mining operation going? Well, they spent $4,672 worth of electricity to mine $269 in bitcoins. [Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n There was another large demonstration against President Nayib Bukele on Sunday 17 October. El Faro estimates about 4,000 attendees this time \u2014 less than September\u2019s 15,000, but still a remarkable number for El Salvador. [El Faro<\/i><\/a>, in Spanish<\/i>]<\/p>\n Bitcoin went up in price \u2014 so Bukele declared that the $4 million profit on the government Bitcoin holding would be spent on a veterinary hospital! This is being done without selling any of the bitcoins. The plan also coincides with slashes to funding for municipalities. [La Prensa Gr\u00e1fica<\/i><\/a>, in Spanish<\/i>]<\/p>\n On 27 October, the government bought 420 more BTC \u2014 a shout-out to the Elon Musk bros? \u2014 which adds to the 700 BTC already bought since 6 September. \u201cIt was a long wait, but worth it. We just bought the dip!” Nobody can find out which institution is holding these funds, or what\u2019s being done with them \u2014 presumably<\/i> funding Chivo signup bonuses, but who knows? Bandesal, the bank managing the Bitcoin trust (Fidebitcoin), claims customer privacy; others argue that the details must be released, as the money is public funds. [Elsalvador.com<\/i><\/a>, in Spanish; <\/i>Elsalvador.com<\/i><\/a>, in Spanish; <\/i>Elsalvador.com<\/i><\/a>, in Spanish<\/i>]<\/p>\n El Salvador is meeting with the International Monetary Fund this week, still looking for the $1 billion loan they were hoping for. The IMF didn\u2019t mention Bitcoin in its press conference on Thursday 4 November, but they did say that progress had been made \u201ctoward measures needed for a potential program supported by the IMF. Development since that time will require some recalibration of policies needed to ensure inclusive growth, fiscal sustainability and financial stability.\u201d Tobias Adrian and Rhoda Weeks-Brown from the IMF blogged in July<\/a> about why Bitcoin would be a terrible national currency. [IMF<\/i><\/a>]<\/p>\n The government of El Salvador wants the website domain name \u201celsalvador.com\u201d \u2014 for all Salvadorans! That elsalvador.com is also the domain for the newspaper El Diario de Hoy, and that the paper\u2019s been getting heavily stuck into Bukele\u2019s government over its stupid Bitcoin plan, is just a coincidence. The government already has the whole .gob.sv subdomain as well. [Twitter thread<\/i><\/a>]<\/p>\n El Faro ran an awful puff piece interview with Alex Gladstein of the Human Rights Foundation \u2014 which absolutely should not be confused with the much better-known Human Rights Watch. Gladstein said the things he always says about how Bitcoin is true freedom and talking bizarre conspiracy theory Bitcoin economics,<\/a> but I\u2019m mostly disconcerted that El Faro put this guy forward as someone to be taken seriously. He did call Bukele authoritarian and say not to use Chivo, though. [El Faro<\/i><\/a>]<\/p>\n Using Bitcoin as money on a national scale basically requires a custodial wallet \u2014 one run by a touchable entity who are held responsible for how they handle other people\u2019s money, with zero transaction fees inside the system. Like PayPal, but more accountable. Pretty soon, we\u2019re really talking about a system run by commercial banks.<\/p>\n Chivo is what\u2019s been put forward for that job. So I\u2019d have expected the problems with Chivo to slowly get fixed. But it seems the government is stepping away from Chivo. Despite spectacular \u2014 and frankly unbelievable \u2014 numbers<\/a> posted by Bukele, Chivo really doesn\u2019t have a lot of users for an official national payment system.<\/p>\n Self-hosted wallets are obviously more Bitcoin \u2014 but they\u2019re less like a currency. Because electronic peer-to-peer cash can\u2019t work with ten minutes for a transaction, high transaction fees and the incredible brittleness of using cryptocurrencies directly.<\/a> This is precisely why Bitcoin failed as cash the first time around.<\/p>\n I expect Bukele to keep promoting Bitcoin as a point of personal pride. But as a practical day-to-day currency, it\u2019s not doing so well right now.<\/p>\n <\/p>\nTrying to use Bitcoin in El Salvador<\/h3>\n
Gambling for everyone!<\/h3>\n
DUI fraud<\/h3>\n
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<\/a><\/p>\nFainting goats<\/h3>\n
Working in a gold mine<\/h3>\n
Trust me, I\u2019m from the Bukele government<\/h3>\n
Going forward<\/h3>\n
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