Juan Carlos Rivera is a 20-year-old university student whose studies are paid for by his older brother, Guillermo, who emigrated to the US over 15 years ago. Guillermo takes care of the living expenses of his brother and their father, a 64-year-old widower whom diabetes has disabled.
When Rivera heard that El Salvador would have the possibility to send remittances in Bitcoin through Chivo Wallet, an electronic wallet that the government would enable for the use of this cryptocurrency, he was relieved. Like millions of Salvadorans, he decided to trust the app to carry out remittance transactions from Bitcoin to dollars. Since then, he’s begun to question the wallet, which he says has been plagued with errors since its launch.
Chivo Wallet falls short of promises
When the Bitcoin Law came into force in El Salvador last month, making the country the first to adopt Bitcoin as a legal tender, so did the Chivo Wallet, a digital wallet the government created for crypto transactions. The president of El Salvador himself, Nayib Bukele, said that Chivo Wallet would greatly improve sending or receiving remittances, a process which traditionally requires paying high commissions and negotiating cumbersome systems.
For Rivera, the wallet hasn’t delivered on its promises. “The Chivo Wallet does not work,” he told us in an interview. “Since they enabled that application, my brother living in the United States and I have tried to make the transaction, and always had an error. One time, my brother sent $500 to my Chivo Wallet account. The transaction seemed to work, but the night had begun, so I decided to wait the next day to go to the Chivo ATM. My surprise was that, upon reaching the ATM, the transaction was not recorded and the money sent was lost. Nobody could give me an answer.”
President Bukele has said that the use of Chivo Wallet would allow Salvadorans to save up to $400 million in commissions for sending and receiving remittances.
“Citizens will have greater financial freedom by not continuing to pay high sums in charges for the service, which in some cases is up to 25% for each transaction,” Bukele said in a statement. “This will give them financial freedom and security and savings of $400 million a year in fees to send and receive remittances.”
The government of El Salvador enabled Chivo Wallet in the United States, Canada, Spain, Italy and Australia — countries that, according to the Central Reserve Bank (BCR), are the ones that send the most remittances to El Salvador. The idea was that Chivo Wallet would allow the flow of remittances in a simple and uncomplicated way. But, in practice, this has not always been the case.
Remittances: the daily bread of thousands of Salvadorans
To understand this problem, it’s necessary to understand what value remittances have for El Salvador. According to the country’s Central Reserve Bank, family remittances received from abroad in El Salvador accumulated $4.9 billion between January and August 2021. Family remittances from the U.S. so far total $4.68 billion, 95.4% of total family remittances, with a growth rate of 33.7% since last year.
Remittance volume is so big, in fact, that it rivals El Salvador's government budget. In 2020, the country’s budget was $6.4 billion, about $2 billion more than all the remittances in eight months of 2021. The numbers show that remittances are one of the strongest pillars of the Salvadoran economy, providing support to millions of families.
Roberto López, a bricklayer and father of four, is part of that economy, and lost money as a result of the Chivo Wallet. "I wanted to withdraw $300 that my daughter sent me," he said. “The application never loaded the shipment that my daughter sent me, but it did report it as completed. In the end of the day that money was lost. I went to the Chivo ATMs and no one gave me a solution. My daughter was disappointed. Finally, I told him that we'd better go back to using Western Union, because we already know that system. Besides, I don't know anything about Bitcoin.”
An app that requires too much troubleshooting
Gerardo Rivas is a 27-year-old Salvadoran living in Columbus, Ohio. Like many people, he wanted to try the Chivo Wallet to send remittances. “The application was simple at first,” he said. “I was able to download it, enter the data and have my account. I received the $30 that the government promised to install and I decided to use it to send to El Salvador. However, I had a lot of problems at the time of shipment. I did what I could but couldn't make it. After several days, I was able to get the shipment done, but it took a lot of patience. There are people who have not had the same luck and have lost money.”
Since its launch, Chivo Wallet has been under constant observation due to its initial glitches and errors. During the first week, President Bukele repeatedly announced that Chivo Wallet should be enabled for all smartphone models in El Salvador, little by little. And for about two weeks, the app suspended operations at dawn to enter a constant review.
For her part, María Jiménez, a housekeeper in Los Angeles, had a positive experience with Chivo Wallet, but after seeing her friends lose money due to errors in the app, she preferred to wait. “I didn't want to risk it,” she said. “When I saw that several of my friends’ [transactions] were not working, I decided to wait. I think I used it between September 15-20. I was able to make the transaction, but my daughter in El Salvador could not withdraw the money. It took her almost five days to be able to withdraw it because the ATMs did not work.”
On September 16, Bukele announced that Chivo Wallet had reached 100% of its operation. Then, on September 27, he said that more than 2.2 million people use Chivo Wallet worldwide and that 99.9% of Chivo ATMs were active and functional. However, user experiences continue to swing between positive and negative, in a digital wallet that many still consider highly questionable.
In El Salvador, Roberto Medrano is a baker who used Chivo Wallet without a problem, but empathizes with those who haven’t had the same luck. "I could [use Chivo] indeed,” he said. “But I do not recommend it. A lot of people I know lost money or it just didn't work out for them. It has worked for me. But it is very difficult to know if it will work or not. I hope they improve the Chivo Wallet, because not everyone has had any luck using it.”