El Salvador is considered a Bitcoin paradise. On the occasion of a conference, numerous Bitcoiners from all over the world travelled to the country. We talked to a traveller from Germany about how Bitcoin acceptance is actually going in El Salvador.
El Salvador has been the heartland of many Bitcoiners for a few months now. The small country in Central America has made Bitcoin the official means of payment, and President Nayib Bukele is a die-hard Bitcoiner. What could possibly go wrong?
Bitcoiners from around the world are watching with longing and delight as the experiment to make Bitcoin a national currency plays out; the International Monetary Fund and other international organisations are also watching, albeit less delighted than worried, fearing “currency chaos and economic collapse”.
But amid all the discussion, one question is meanwhile being lost: What is it really like? How is bitcoin doing in El Salvador? Not with the president, who boasts on Twitter that he bought the dip, and not in El Zonte, the showcase surfer’s paradise for Bitcoiners. But in the ordinary, everyday lives of ordinary Salvadorans.
How do Salvadorans find Bitcoin? Do they really pay with the cryptocurrency in everyday life? Does the country share the Bitcoin enthusiasm of its president?
Kilian Rauisch’s Twitter profile.
As a large Bitcoin conference recently took place in El Salvador, Bitcoiners from all over the world travelled to the country. Among them were also numerous Germans. They were able to catch a taste of what will sooner or later be normal everywhere – a world in which paying with Bitcoin is part of everyday life. At least that was the plan.
Kilian Rausch, one of the German Bitcoiners who visited El Salvador, tells us how it really works.
Two-class cash registers
At first, acceptance is mixed. Although the “Ley Bitcoin” formulates a kind of nationwide acceptance obligation, Bukele apparently meant it when he said that no one would be forced to accept Bitcoins. As a result, the country is embracing Bitcoin at different speeds.
“The big corporations like McDonalds or Starbucks are openly accepting and advertising bitcoin acceptance, and the technical integration is also very well implemented and works smoothly. McDonals, for example, uses. @OpenNodeCo, Starbucks @IBEX_Mercado. Tested both, both 10/10.”
For Bitcoiners arriving in the country, it was almost a chore to grab a burger at MacDo and a coffee at Starbacks just to be able to pay with Bitcoin. Burgers for Bitcoins – who can resist? And above all: it doesn’t seem to be a problem. If the MacDo in Munich and Starbucks in Paris don’t accept Bitcoin today, it’s obviously not because they can’t, but only because the will is missing. Technically it is feasible.
Bitcoin Lightning Network payment experience was excellent at McDonald’s El Salvador.
Same touchscreen self ordering machines as in the States. No different from credit card checkout. @OpenNodeCo processing integrated into a smooth experience.
(Thread 0/4) 👇 pic.twitter.com/VWPRCjdp1X
– Warren Togami (@wtogami) November 24, 2021
“Unfortunately, I don’t think this reflects the reality in El Salvador at all,” Kilian puts it into perspective, “because things look very different for local businesses: My hotel couldn’t accept Bitcoin ‘yet’ and, for example, only one of two gas stations I went to accepted Bitcoin. “
Solution becomes problem
In the process, something that was supposed to be a solution turned out to be a central problem: the government-developed wallet Chivo.
Kilian recounts an experience at a petrol station: “The Chivo POS web app was used there, where I had to generate and scan the Lightning Invoice QR code myself around the terminal because the cashier didn’t know anything about it. The good thing, however, was that my payment was promptly recognised by the POS and I was able to walk away with my purchase.”
There was a lack of education at the petrol station. But the technology worked. It was a completely different story in other shops. Kilian had resolved to at least ask whether he could pay with Bitcoin every time he made a purchase. As a rule, the cashiers also tried to make this possible for him, very often by using their private Chivo wallet. So the wallet seems to be very common privately, but less so commercially.
Unfortunately, trying to use the Chivo wallet “on mobile always resulted in the following serious problem: my proven successful payments didn’t show up in the merchant’s Chivo app.” Restarting the app, clearing the cache and refreshing it also did nothing. The Chivo wallet did not recognise the payment.
“Most of the merchants remained very nice despite the unsightly situation and would have let me go as well, but I still mostly ‘double donated’ with USD notes. I had this situation several times in a number of shops, restaurants or even with taxi drivers before I finally stopped paying with Bitcoin when the other party only had Chivo on offer.”
Other Bitcoiners also report slightly more awkward situations. “I paid $125 for dinner and the money flowed out of my Phoenix wallet but never reached the Chivo wallet. The waitress was sweating bullets, no joke, and I ended up having to pay with dollar notes to settle the bill.”
Governments, even if they like Bitcoin, are not good software developers, and the old adage that government-owned products rarely stand a chance in the market also applies in El Salvador. The reports about Chivo could fill several volumes of horror, and some Bitcoiners wonder how a government that can’t even manage a working wallet is going to build a Bitcoin City.
How can you have a successful BitcoinCity if you can’t even build a functional Bitcoin wallet? FixChivo https://t.co/pC7FKlaiFH
– Satoshis_Dragon ⚡💧🔴 🌋🇸🇻🗺️ (@Satoshis_Dragon) November 25, 2021
FixChivo
The problem with Chivo was so common that it became a standard experience for most travellers. It was simply impossible to pay with Bitcoin when a shop used Chivo.
Kilian and other Bitcoiners drew attention to this on Twitter with the hashtag FixChivo. He and the others had frequent contact with Chivo’s support, who sometimes seemed a bit overwhelmed with Bitcoiners themselves.
But honestly – who understands that? Bitcoin itself is complicated as hell, but, at least, transparent. Lightning adds another layer of complication, turning payment into a mystery for pretty much everyone.
At least the developers of the wallet have the problem on their radar. Presumably it has to do with the fact that the sender immediately has the received bitcoins converted into dollars, possibly because the wallet cannot identify the transaction due to the exchange rates.
Actually, the problem could be solved, says Kilian, slightly annoyed: “I don’t understand why something like this doesn’t get absolute priority and is fixed. Especially because even the official Chivo support had contacted me via Twitter DM and asked for the payment hash to see what had gone wrong.”
Yet the problem with Chivo only seems to occur when paying with a different wallet. “Some merchants have noted that they can receive payments from local Chivo wallets without any problems. That makes sense too, because Chivo-to-Chivo payments are only Chivo-internal database transactions and don’t use the public Bitcoin or Lightning network.”
This assumption by Kilian is also confirmed by many Bitcoiners who have visited El Salvador:
Shopping in El Salvador.
First store: @chivowallet LN transaction instant, doesn’t show up on POS. Call support. One unsuccessful hour later, payment is made in cash.
Second store: @IBEX_Mercado LN transaction instant, immediately shows up. ⚡
Time to FixChivo pic.twitter.com/F3bQtUyU7N
– Fulmo ⚡ (@fulmolightning) November 24, 2021
Chivo to Chivo works great, but when Bitcoin is added, the app ticks. So as it stands, it’s not so much Bitcoin acceptance as Chivo acceptance. The government has, presumably rather unintentionally, used Bitcoin as a pretext to force a mediocre payment system on the population that runs entirely on government servers. This is neither decentralised nor functional.
In essence, it is no better, and may even be worse, than the Chinese Central Bank’s Digital Yuan, although at least El Salvador does not have the scary competence of the Chinese government.
Nada education, nada acceptance
However, even with Chivo, the situation remains subdued outside of large chains and cities. “Bitcoin acceptance at small pupusa stands and virtually everywhere in more remote areas can be summed up relatively simply: nada. People had heard of Bitcoin, but that was basically it.”
The Bitcoiners’ flagship beach, El Zonte, “is the big exception and by no means representative of similar smaller towns. Also, bitcoin payments work well in El Zonte because the Bitcoin Beach wallet is common there, not Chivo.”
This is an impression shared by numerous Bitcoiners with Kilian. For example, someone named Zender writes on Twitter:
“The big chains in the capital accept bitcoin, but most small shops don’t. Except for El Zonte, all other small towns have almost no bitcoin acceptance. I asked people why not, and 90 per cent of them said because they don’t understand it.”
It starts with the absolute basics. Zender asked many Salvadorans what the maximum amount of all Bitcoins was. The answer is the very smallest Bitcoin ABC, the number that every Bitcoin noob gets drilled into them on first contact: 21 million, and not a crumb more! But hardly anyone in El Salvador knew that. “I would have expected that making Bitcoin a legal tender would come with some education,” Zender states disappointedly.
Mostly rather positive
Under these circumstances, one would not blame Salvadorans for being sceptical about Bitcoin. There have been repeated reports in recent months about how the country’s inhabitants are demonstrating against Bitcoin. Kilian, on the other hand, hardly found this attitude.
“I have had mixed, but still mostly neutral or positive conversations about Bitcoin with Salvadorans. Neutral-positive was, for example, the conversation with the taxi driver, directly after arrival, which gave me many interesting insights into everyday life in the country, including why he justifiably prefers dollar notes in many situations. He saw Bitcoin more as an opportunity for the country’s economic recovery. After a tough discussion, the cap of 21 million and thus the saving technology also made sense to him. “
GM San Salvador! Some unfiltered impressions from my first hours in Bitcoin land (no McDonalds receipts, promised) 👇
(Scroll to the end for the most interesting part: my Taxi driver coming up with very unique product requirements for Bitcoin wallets in El Salvador)adopt21 pic.twitter.com/AfiNIVoOto
– Kilian Rausch (@kilrau) November 13, 2021
More positive was the conversation with two Salvadoran women Kilian met at a Chivo ATM, where they withdrew money sent to them by a relative from the USA – “without a fee”, in quotes, because there will already be a fee somewhere, but also not entirely wrong, because the transaction is still much cheaper than with other service providers. Hence the positive impression by the two women.
Two Salvadoran women in front of the Chivo ATM. Picture by Kilian Rausch
The only really negative reaction Kilian experienced was from a slightly older lady. “She saw me with the Chivo support team in the mall and walked past me with a thumbs down. I stopped her right away and asked her about the thumbs down. Her short version: Bukele and his war on gangs are bad because they have led to more crime and millitary on the streets, and because he is the head ‘of all this’, Chivo and Bitcoin are also bad. “
The work has only just begun
Despite some mixed experiences, Kilian left with a “thoroughly positive conclusion.”
“BitcoinWeek alone should have brought an immense positive financial and also image boost to the country, and I’m in contact with some projects that want to get active in El Salvador and help it succeed.”
So something is happening, and the general mood is good. But Kilian also realised how much still needs to be done. “In particular, the functionality of the Chivo app to receive payments from other wallets via Bitcoin or Lightning needs to be fixed ASAP, as Chivo’s market share is likely to remain high due to the government-sponsored promotion ($30 USD for everyone, discounts on petrol at gas stations), and simply because many Salvadorans probably equate Chivo with Bitcoin. The danger now is that bad experience with the functionality of the Chivo app will be equated with ‘Bitcoin doesn’t work’.”
But Kilian believes something else is more important: “Most of the work, however, needs to be in the form of education: You have to teach the population the basic functioning and the special features of Bitcoin and how to practically deal with Bitcoin in everyday life, how to choose wallets and how to easily secure private keys. And that Chivo does not = Bitcoin. “
