President of El Salvador steps in to resolve bitcoin deployment issues

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SAN SALVADOR, Sept. 8 (Reuters) – Salvadoran President Nayib Bukele intervened on Wednesday to deal with the difficult deployment of a payments app that underpins the country’s adoption of bitcoin as legal tender, and called on users to report any problem on his Twitter. food.

Adopting language similar to that of IT departments in offices around the world, Bukele instructed users to shut down and restart the app if an “undergoing maintenance” error screen appeared.

The historic adoption of bitcoin as legal tender by this Central American country has been hampered by issues that have contributed to a rout in the value of digital currency globally.

Bitcoin continued to lose ground on Wednesday, closing at $ 46,000, down 1.7%.

“Any financial innovation on this scale is going to lead to start-up problems. However, if we’ve learned anything from observing the markets over the past year, it’s that bitcoin maximalists will be looking to push digital currency up as well. quickly that it fell, ”said Michael Kamerman, managing director of Scandinavian fintech firm Skilling.

Some market watchers see a bullish future, with a new cryptocurrency research team at Standard Chartered forecasting bitcoin to hit $ 100,000 early next year and could be worth as much as $ 175,000 at more. long term.

Bukele has sent a stream of Twitter messages over the past 36 hours explaining to users how to download the government-backed Chivo app that promises commission-free transactions and that his administration is hoping to be adopted by the unbanked.

Overnight, the president said the app, a digital wallet, was offline for the second time to “improve the user experience and the issues he encountered during the day.”

“We hope tomorrow will be much better,” he wrote in a tweet.

Several users responded in its comments section to report ongoing installation issues.

Douglas Rodriguez, head of El Salvador’s central bank, told an event in the Honduran capital Tegucigalpa that the “eyes of the world” were on his country and the adoption of bitcoin was a process that needed time. to “mature”.

Responding to concerns that digital currency could encourage illicit activity, Rodriguez said the rules set by the bank for the use of bitcoin were designed to meet money laundering standards and have been well received by international authorities. .

Salvadoran bitcoin law states that the market will set the exchange rate between the cryptocurrency and the US dollar, the country’s other legal tender. It states that all prices can be expressed in bitcoin and that tax contributions can be paid in digital currency, while bitcoin currency transactions are not subject to capital gains tax.

FINE TUNING

Despite the technical issues, the app’s rollout created waves in El Salvador, in part due to a government handing out $ 30 in bitcoin to every local user who signs up, and despite polls showing that many people are wary of bitcoin’s volatility.

On the El Salvador edition of Apple’s App Store (AAPL.O), Chivo was the # 1 downloaded financial app on Wednesday.

Bukele said earlier that only a few phone models would initially have access to Alphabet’s Google Play app (GOOGL.O) to avoid a rush that could collapse the system.

On Wednesday afternoon, he wrote on Twitter that Google Play was available for Alcatel smartphones and that more models would be added, although it was important to “not saturate the servers” with too many registrations at the same time. .

“We are still working out the little details,” he said.

Reuters could not immediately determine how many times the app had been downloaded.

JP Morgan Chase said in a note Wednesday that some technical issues were to be expected.

“These technical issues should come as no surprise given that the country only had three months to prepare for this great experiment,” the bank said. “In contrast, China has been preparing / testing its digital yuan for years and has yet to officially launch it.”

Global retailers operating in El Salvador accepted bitcoin at select stores, including McDonald’s Corp (MCD.N) and Starbucks Corp (SBUX.O), as well as several local outlets.

Bukele, 40, who does well in opinion polls but has been accused of eroding democracy, has used social media extensively to govern and engage with Salvadorans.

Report by Nelson Renteria in San Salvador; Writing by Frank Jack Daniel; Editing by Rosalba O’Brien, Aurora Ellis and Alistair Bell

Our standards: Thomson Reuters Trust Principles.


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