Mass-Chivo Bitcoin letdown? Is the BTC experiment failing in El Salvador?

Paigambar Mohan Raj
Source: Bitcoin News

According to a research published by the US National Bureau of Economic Research, only 40% of Salvadorans (4 in 10) who downloaded the state-run Bitcoin wallet, Chivo, stated they still use it after receiving the $30 Bitcoin (BTC) incentive offered by President Nayib Bukele’s government.

Several monetary experiments have been conducted in El Salvador. The US dollar became legal tender and the country’s only official currency in 2001. On September 7th, 2021 El Salvador became the first country in the world to make Bitcoin a legal tender, when it passed the “Bitcoin Law.”

The government released an app called Chivo Wallet, as well as an instructional campaign on how to use Bitcoin, shortly after it became legal tender. Users can convert bitcoin to dollars and vice versa for free, as well as send and receive either currency, using this digital wallet.

The study by the US Bureau of Economic Research was conducted in February with 1800 El Salvadorian households. The team used face-to-face interviews for their research.

The study says,

“Most users who used Chivo after spending the $30 bonus do not engage with the app intensively.”

Despite the fact that the majority of El Salvadorans have a cell phone with internet access, only about 60% of them have downloaded Chivo Wallet. In a given month, the average user reports no ATM withdrawals and no Bitcoin payments issued or received.

Over 21% of those polled were aware of Chivo Wallet but did not seek to download it.

As per the study,

“Chivo is not being widely used to receive remittances from abroad.”

Its numbers are consistent with recent statistics from the Salvadoran Central Bank, which stated that digital wallets received 1.6% of remittances in February.

The study goes on to say,

“In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch.”

The Bitcoin Law also permits El Salvadorians to pay taxes in BTC. However, only 5% paid their taxes using the Chivo wallet.