El Salvador passed legislation to make bitcoin legal tender in September 2021, the first country in the world to do so, but the bold experiment has enjoyed limited success. Hundreds of citizens claimed that payments weren鈥檛 being received by shops, or that funds were disappearing from their accounts. Traders also briefly exploited a loophole in the state-issued wallet app to turn a quick profit. Now a US company is being drafted in to replace the infrastructure and fix these issues, and the project is being entirely overhauled just months after launch.
A that financial services company will be providing technology for an updated Chivo Wallet 鈥� the state-controlled service that handles bitcoin payments. Igor Telyatnikov at AlphaPoint confirmed to New 杏吧原创 that the company would be providing technology 鈥渁t the heart鈥� of the Chivo system, including the smartphone app, sales processing for shops and core infrastructure.
鈥淢ost of the changes are indeed behind the scenes focusing on enhanced usability, uptime and scalability,鈥� he says. 鈥淏ut there are some notable improvements to the Lightning integration for nearly instantaneous Bitcoin transactions.鈥� Lightning is a technology that sits above the core bitcoin protocol and enables faster and more seamless transactions, because bitcoin transactions can ordinarily take up to an hour to process.
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Telyatnikov didn鈥檛 address questions about problems with the original system or provide technical details of the new infrastructure. But a representative working for AlphaPoint said that the original system had 鈥渋nitially opened the door to identity theft and false identity sign-ups鈥�.
El Salvador鈥檚 president, Nayib Bukele, made bitcoin legal tender in a bid to alleviate the country鈥檚 prickliest economic problems: citizens sending money home from abroad account for up to one-fifth of the country鈥檚 GDP, but they have to pay high transaction fees, and 70 per cent of people have no bank account. Bitcoin enables quick, cheap payments across borders, and doesn鈥檛 require banks.
In September last year, the government gave each citizen a Chivo wallet containing US$30 in bitcoin. The currency could be used for shopping, or to pay taxes. Chivo is run by a state-owned company, also called Chivo, and its source code is private.
While bitcoin is an open source and decentralised technology, El Salvador has opted for a state-controlled version with wallets created and issued by the government and back-end infrastructure operated by a company. This unusual approach attempts to centralise and impose government control on a system that was designed to avoid both.
Last week, the International Monetary Fund advised the country to drop bitcoin as legal tender, but the suggestion . Treasury minister Alejandro Zelaya said that 鈥渘o international organisation is going to make us do anything, anything at all鈥�.
The company behind Chivo and the president鈥檚 office didn鈥檛 respond to a request for comment.
