Without a sharp enough jump, bitcoin will end the year below the $ 51,000 level at which El Salvador bought its first 200 BTC, a dark note for the largest cryptocurrency’s turn as the official national currency. .
But then Salvadoran President Nayib Bukele did not have much luck with his experience. The initial announcement that the country would make bitcoin El Salvador’s second legal tender, alongside the US dollar, was greeted with dismay by economists, growing concern from international financial organizations – notably the International Monetary Fund – and protests from citizens unhappy with the idea. of such a volatile currency.
President Bukele didn’t hesitate, however, buying more bitcoin in its first drop and touting the program in the face of growing discontent. Much of this dissatisfaction can be attributed to the lack of transparency in the program, which was approved almost “without any discussion of the risks of implementing a high volatility crypto-asset as legal tender,” according to ElSalvador.com. Late November survey found only 4.9% of the population preferred cryptocurrency
Notably, the law adding not only a new currency but a new type The legal tender had only 16 items and was widely “characterized as too brief and failing to clarify many of the aspects that Salvadorians to this day continue to fail to understand,” the new outlet said on December 23. .
Among the issues is the $ 300 million price tag, which includes approval to purchase 1,370 BTC, depositing $ 30 worth of BTC into each citizen’s Chivo wallet – created for the program – and a $ 150 million trust with no public details released on how or by whom it is run, ElSalvador.com said.
On November 20, President Bukele announced his intention to build a geothermal-powered “Bitcoin City” with funds from a billion dollar bitcoin-backed bond issue.
See also: El Salvador plans to build a tax-free Bitcoin city
And on December 23, he said in a tweet that the world was watching what international organizations were calling “The #Bitcoin experiment” in El Salvador would show “how mass adoption is changing a country’s economy,” according to Diario El Salvador.
Read more: Bitcoin and Stablecoins to Transform El Salvador’s Economy, Says Stellar Foundation CEO
“If it’s for the good, it’s over for FIAT,” said President Bukele. “El Salvador is the spark that ignites the real revolution. “
Holes in Chivo wallets
The biggest problem facing the experiment is the Chivo Wallet, a bespoke digital wallet that doesn’t have open source code that can be examined for holes. It does appear to have some holes, however, as the number of complaints from citizens about the disappearance of funds from their wallets keeps increasing, ElSalvadorgram noted.
And it’s not just the unspent $ 30 signup bonuses that Chivo Wallet users are reporting as stolen, the outlet said. He cited one user complaining that $ 16,000 was missing, while another said $ 3,921 was missing in 13 unauthorized transactions.
Even more frustrating, they said, was the lack of action from Chivo’s technical support staff.
See more : El Salvador’s Chivo wallet rocked by threat of sanctions, identity theft and privacy concerns
This brought in a vigorous I told you from Steve Hanke, a professor of applied economics at Johns Hopkins University and a currency expert who is director of the Troubled Currencies Project at the Cato Institute, a libertarian think tank.
In a December 28 tweet, Hanke pointed to continued reports that the Chivo wallet “is in the throes of malfunction” amid disappearing fund accounts.
“As I said from the start, Chivo Wallets would make ELSL the # 1 global target for hackers.”
While that might seem a bit thick considering the $ 30 targets, Hanke said earlier this year that making Bitcoin legal tender alongside the US dollar was unfortunate, according to ElSalvador.com.
The biggest threat, he said, would come from the “dark forces” targeting El Salvador not for its bitcoin, but for its ability to exchange bitcoin for dollars. “They will come like vacuum cleaners to take all the dollars that El Salvador has in no time,” he added.