El Salvador’s bitcoin debut stumbles over tech problems

El salvador Pioneering recruitment Bitcoin as fiat currency will be available within hours of its launch on Tuesday after the government has to use an app to temporarily store volatile digital assets offline and global prices have fallen. It became a problem.

Around dawn local time, President Nayib Bukele told Twitter that a digital wallet app called “Chivo” (a slang term for El Salvador) would stop working while server capacity was increasing.

The app, which offers El Salvador citizens to download the first $ 30 free Bitcoin, returned online a few hours later, and it seemed that Bukele personally oversaw the testing process via Twitter. By noon, the Chivo app was available on Huawei and Apple phones.The government also wants to make it available via Google

Due to the crash of the country’s wallet system, the global price of Bitcoin fluctuated, dropping 17% to $ 43,119 before recovering to a 10% down transaction. Coinbase, a US cryptocurrency exchange, has encountered a technical problem of delaying or canceling transactions for some clients.

The crash occurred the day after El Salvador spent millions of dollars to buy 400 Bitcoins. Bukele said on Tuesday that the country had purchased another 150, for a total of 550.

A small country in Central America beginning To make Bitcoin the legal tender in the world, the plan rushed through Congress in a few hours and was implemented in just 90 days. Economists and the international financial community have criticized the move, which is also unpopular with Salvadorans.

Rating agency Moody’s has downgraded the country’s debt rating, partly because of the law, but the IMF is currently in talks with the government on a new loan. warning Such a plan could destabilize the $ 25 billion economy.

Siobhan Morden, head of Latin American fixed income at Amherst Pierpont, said Bukele’s Bitcoin Gambit was in line with his move to strengthen his power, which has been sharply criticized by the United States.

“The official BTC launch may dominate the headline,” she wrote in a memo. “But more important was the Supreme Court’s decision from the Constitutional Chamber. [last Friday] This allows for consecutive reelections. “

On Tuesday, hundreds of people carry placards against both Bitcoin and recent reforms from the ruling party demanding the dismissal of all judges over the age of 60 across the capital of San Salvador. Marched in protest.

According to a video posted on Twitter, “something is stolen with Bitcoin,” says a group of young protesters outside Chivo’s automated teller machines.

According to local media, some opposition lawmakers wore black anti-Bitcoin T-shirts to confront the legislature.

Cryptographic fans around the world have been obsessed with Salvador’s pioneering moves on social media and have launched campaigns to convince people to buy $ 30 Bitcoin to show their support.

Bukele said he had decided to bring investment to the country and help improve access to financial services. But Tuesday morning, he said, his team is still working to increase the capacity of the server to scan images.

“This is a relatively simple issue, but it cannot be fixed with the system connected.” He said on twitter.. “A little patience.”

Under the law, all domestic businesses are required to accept Bitcoin as payment for goods and services, but citizens can choose to use the national currency, the US dollar, since 2001.

Luis Membrenho, an economic consultant who advises local and international companies in El Salvador, said the app’s problems were foreseeable.

“It’s a disaster,” he told the Financial Times, adding that if Bitcoin couldn’t be converted to dollars, current and future problems with the app could cost people. “That means people lose trust in the system.”

While the debt remains largely in dollars, many economists believe that the plan is not large enough to address the risks posed by allowing tax payments in Bitcoin. It is backed by $ 10,000 in government funding.

The bigger story was that crypto proponents weren’t upset, saying that it was a country that ultimately took a step to help reduce remittance costs.

Antoni Trenchev, co-founder of Nexo, a digital asset specialist, said: “In 12 years of history, Bitcoin has overcome the barriers of abuse and refusal to be adopted by individuals, businesses, and now the country.”

But in reality, Bitcoin usage has so far been limited by app issues, said Leonor Selva, executive director of ANEP, a business lobby. “At the economic level, it’s overlooked … It was a flop.”

Additional Report by Philip Stafford in London

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