What’s it Actually Like Using Bitcoin in El Salvador? A First-Hand Report

The Chivo Wallet

The first myth I want to bust is about the Chivo Wallet. This is the government sponsored bitcoin lightning wallet allegedly used by more than 50% of the population. While half of the population may have downloaded the wallet, it seems unlikely that they’re all using it to make payments with one another. The main anecdote received while speaking with the locals is that the wallet doesn’t work very well in general. Most people just downloaded the wallet in order to get the $30 worth of Bitcoin airdropped by the government. Many people then converted that $30 worth of Bitcoin straight into USD.

The other story heard is that the Chivo Wallet is essentially inoperable with other lightning wallets. If this is true, then the Chivo Wallet is not really a true lightning wallet as all lightning wallets are supposed to be completely interoperable with one another. Some locals said that once Bitcoin is sent to the Chivo Wallet, it is difficult to send it back out. In some cases, people said that they were forced to trade it for USD.

Another local had a good experience with the Chivo Wallet. They learned how to use it to the extent that they falsified my above claims. It is possible to send/receive bitcoin to/from any lightning wallet, you just have to know where to look within the Chivo Wallet. However, I was unable to verify either of these claims because the Chivo Wallet was only available to citizens of El Salvador in the first place.

Regardless of which story is true, the Chivo Wallet needs to have a better user experience. The best case scenario is that it is seamless and easy to use for people of all ages. If you’re introducing a completely new and digital currency to the people of your country, the last thing you want is for the wallet you’re endorsing to be difficult to figure out.

Bitcoin in San Salvador

San Salvador is the capital city of El Salvador. Surprisingly, the largest adopter of Bitcoin in the city appeared to be fast food restaurants like McDonalds and Starbucks.

Ben Arc, a developer of lightning network hardware devices, tweeted himself paying with bitcoin through lightning at McDonalds. What this says to me, is that big multinational businesses like McDonalds are using El Salvador as a testing ground for accepting BTC. They’ve actually gone so far as to offer a 30% discount to customers paying with Bitcoin.

This makes me believe that they want to incentivize, learn, and optimize the experience of having their customers pay them with Bitcoin. The idea is that they’re anticipating other locations in other countries also accepting BTC, and they wish to iron out the kinks in El Salvador.

Bitcoin at Bitcoin Beach

Bitcoin Beach is considered ground zero for Bitcoin adoption in El Salvador. Michael Peterson, the director of Bitcoin Beach, started the project in 2018 with the help of an anonymous donor.

The donor gave an undisclosed amount of Bitcoin to Bitcoin Beach in order to bootstrap a circular economy. Two years later, the youth have taken the initiative to work for, earn, and then spend their Bitcoin at all participating shops in the area. The first thing I did after arriving at Bitcoin Beach was find a place to spend some satoshis. I bought some mango and guava from a street vendor. The experience was relatively simple, but not frictionless, as we had some issues getting the payment to send from my phone to hers.

If I wanted to, I could have paid for my hotel, groceries, or meals with Bitcoin. I chose not to because at the end of the day, I still want to hang on to my Bitcoin as I value it more as a store of value, than a medium of exchange. I paid for some things with Bitcoin as a novelty rather than a convenience.

One of the important things worth noting about the people in El Salvador, is that they’re more comfortable using Bitcoin in general. None of them used the government endorsed Chivo Wallet, as they all had their own open-source wallets. They were either using the Wallet of Satoshi, or the Bitcoin Beach Wallet. They all had QR codes printed out and attached to their shops or stalls in order for people to make payments to them. They were ready, and able to accept bitcoin, should the customer offer it to them.

I had the opportunity to interview Michael Peterson on my podcast in 2020 before El Salvador made Bitcoin legal tender. Check out the episode on Spotify.

The Whole World is Watching

One of the prevailing narratives at the Adopting Bitcoin conference was that other people in other countries are watching. Everyone from politicians, to business people, to everyday citizens have their eyes set on El Salvador. They’re watching to see whether or not this experiment of making Bitcoin legal tender is actually going to work out for the country at the end of the day.

It is certainly still early days for bitcoin adoption in El Salvador. Bitcoin-Twitter might have you believe that half the population of El Salvador is on board and enthusiastic about using bitcoin, but this is really not the case.

Regardless of how many people are actually adopting and using Bitcoin in El Salvador, the whole country now knows about it. They might not be able to explain, use, or accept Bitcoin, but they’re talking about it. The conversation has begun for many people, and once that journey of learning about Bitcoin and cryptocurrency begins, it is hard to stop.

I think the important thing here is that there is a dialogue amongst the people about how Bitcoin can help solve some of the economic issues that the people of El Salvador are facing. One thing is for sure; the whole world is watching.

Check out my newsletter or podcast where we go into detail about the experience of living in El Salvador and participating in a bitcoin-based economy.