El Salvador became the first country to accept Bitcoin as legal tender last month, eliciting both praise and criticism from the international community. Salvadoran President Nayib Bukele claimed that the government-backed Chivo cryptocurrency wallet was used by 2.1 million of his countrymen. Nonetheless, the Salvadoran government’s bitcoin digital wallet has been plagued by a series of technical issues.
Users of the Chivo wallet will not be able to see frozen price quotes, as stated in the following announcement (translated),
“We had to disable the option to see the Bitcoin price freeze for one minute temporarily.” Unfortunately, many of our users used it for scalping, which is legal, but there is no option for a frozen rate.”
The price freeze feature allows traders to keep the app’s Bitcoin price for up to one minute.
Is there a ‘fraud’ angle to this?
Yes, according to Chivo’s tweetstorm. As previously stated, using a frozen rate and comparing it to real-time exchanges is a form of fraud. Let’s take a closer look. Chivo’s executives provided some explanations to back up their story.
During periods of high price volatility, traders used the price freeze feature to scalp for arbitrage across other cryptocurrency trading platforms around the world. As a result, traders can take advantage of price differences in other exchange rates while using the Lightning Network quickly. The tweet stated once more,
“The’scalping’ was carried out by taking advantage of the fact that Chivo kept the rate frozen for 1 minute and using that minute to compare the rate with other exchanges and see if the price of Bitcoin went up or down.”
As a result, they (traders) generated an endless source of money, with the only limit being the number of times they scalped.
It’s no surprise that Chivo intends to remove the price feature in the future and instead provide real-time price references for Bitcoin traders who use its app. Specifically, to “reduce the visibility of the frozen rate.”
All other functions, however, remain unchanged. Nonetheless, the wallet had previously experienced other problems. Although the problem was quickly resolved, many Salvadorans protested its use in the region. For example, roughly 70% of those polled were opposed to the entire Bitcoin law. Using the wallet was still a distant dream.
Following the aforementioned update, the community also expressed their displeasure. One user in the same thread, for example, responded,
“You accuse me of deception. What exactly is fraud? Fraud is that I have a transaction that has been frozen for me since September 22; they deducted the money, but it never arrived at its destination because they rejected it, and I have called and called 192, but the only answer is the same.”
Nonetheless, El Salvador President Nayib Bukele’s recent announcement provided some light at the end of the long, dark tunnel for the wallet. At the very least for the most active users.
2 new Chivo Facts:1. People are inserting way more USD (to buy #BTC) than what they are withdrawing from the Chivo ATMs (any media outlet can independently confirm this by visiting the ATMs).2. Today, we received 24,076 remittances, adding up to $3,069,761.05 (in one day).— Nayib Bukele 🇸🇻 (@nayibbukele) October 16, 2021