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Inside El Salvador’s Bitcoin Law Implementation

Inside El Salvador’s Bitcoin Law Implementation


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Bitcoiners who were in El Salvador as its Bitcoin law was implemented reflect on the good and the bad of state-sponsored Bitcoin adoption.


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Earlier this month, El Salvador officially implemented its revolutionary Bitcoin law, recognizing BTC as legal tender, compelling businesses across the country to accept the currency and introducing a state-sponsored bitcoin wallet called Chivo.

The date was generally celebrated by the international Bitcoin community, but to share a more precise account of what this implementation meant for Salvadorans, Bitcoin Magazine hosted a Twitter Spaces discussion between several Bitcoiners with firsthand experience in the country.

After spending ten days in El Zonte, El Salvador’s infamous Bitcoin Beach, before the bill officially went into effect, Bitcoin Magazine’s Aaron van Wirdum said that he was impressed by the level of real-life Bitcoin use that he saw.

“El Zone is a very cool initiative, it’s really great, these bottom-up projects,” he said. “It’s really kind of working… It’s inspirational.”

But then, traveling to the country’s capital of San Salvador, he was left with a different impression.

“I immediately realized that there’s a very big contrast. Like you have Bitcoin Beach, and it’s sort of this small citadel at the sea,” he said. “But the rest of the country is still — was still … very far from adopting Bitcoin on any sort of large scale.”

Following the enactment of the bill, on September 7, 2021, van Wirdum offered two ways of looking at El Salvador’s attempted transition to become the first Bitcoin nation: a “glass half full” perspective and a less rosy one.

He noted that McDonald’s and Pizza Hut franchises in the country accepted BTC, representing noteworthy adoption by global businesses that came directly as a result of the Bitcoin bill. The country’s state-sponsored Chivo wallet did officially launch and some were able to download and use it. But, he noted, the transition did not go as well as it might have.

“Now, the glass-half-empty perspective is that it’s definitely not widespread yet,” van Wirdum explained. “You definitely can’t spend bitcoin everywhere yet. And still a lot of people have no idea what this is or how it works. And also, the Chivo app, for example, has lots of issues. Like I mentioned, some people could download it, but also lots of people could not download it. It was very buggy. If you did try to use it, sometimes it will work, sometimes it would not. The user interface is a little bit confusing.”

The participants also noted that, while Chivo granted everyone in El Salvador $30 in bitcoin, these funds can only be sent to other Chivo applications, essentially creating a custodial solution with many of the same problems as central-bank-controlled fiat currencies.

Still, van Wirdum said, Bitcoin is being more actively used in El Salvador than he would have thought six weeks ago.

Sergej Kotliar, the CEO of bitcoin-for-gift-card merchant Bitrefill, emphasized a high volume of orders coming from El Salvador on the law’s launch day, saying that he got 40,000 orders in three hours — ten times what the platform normally sees. He also offered some insight into how Chivo was built and launched, and the potential reasons for its limitations.

“The [Chivo] app is built by four or five different teams, which is why there are inconsistencies in the app,” he said. “A lot of this stuff in terms of the Chivo wallet, Bitcoiners complaining about how it is custodial and it’s centralized and you need to submit your private information … and that it’s limited in functionality. But, if you put it in perspective, I mean this is a government project to build a Bitcoin wallet. And they had three months from the presidential announcement to building out something that — well, it works for some people.”

Kotliar added that his team is providing feedback on how the government can improve Chivo, and that he’s hopeful that additional improvements will be made.

But some have been less positive about the nature of Chivo’s rollout, questioning whether you can even really call El Salvador’s state-sponsored adoption a true Bitcoin initiative. Mario Gómez, the founder of Hackerspace San Salvador and an outspoken critic of the law’s rollout who was detained by the country’s national police, offered nuance on that perspective.

“The way the [Chivo] application is working, it looks like more of a centralized system and only when you interact with external wallets it actually connects to the main chain or with the Lightning Network,” he explained. “Whatever the government releases is not truly Bitcoin. It looks like a centralized banking system.”

Van Wirdum pressed Gómez, asking him to clarify his specific issues with Chivo and a lack of transparency around how government funds have been used in this rollout, how the wallet actually works and details around its BTC custody.

“I think all of this lack of transparency is giving a really bad image not only to Bitcoin, but it removes any reason for us to trust these government wallets,” Gómez said. “Why am I going to trust this application if they are not giving us any details about how it works? How the money is spent? So, I think that’s not acceptable, as a citizen.”

The full recording of this Spaces conversation includes many more details and discussion from those on the ground in El Salvador as its legal framework for Bitcoin takes effect. To read the whole conversation, check out the unedited transcript below:

[00:00:07] CK: Aaron is going to be joining us soon. We already got Bitcoin Beach over in the house. How’s it going Mike? Welcome.

[00:00:15] Mike: Good. Good to be here with you guys.

[00:00:18] CK: So pretty usual. Before we get started, I want to talk about Bitcoin 2022 Conference. Again, we’re waiting for Aaron to join and we’re going to be reflecting on this journey. So it’s exciting to have Mike here. But part of this journey kind of had a big moment at Bitcoin 2021 with Jack Mallers and President Bukele announced the initiative in Miami. And Bitcoin 2021 is coming back again next year as Bitcoin 2022. We’ve been working extremely hard to put together the best Bitcoin conference possible, the conference that is going to be the pilgrimage for Bitcoiners to come together from across the globe and celebrate this amazing technology. So something that we are super proud of.

The website is really coming together. So you can learn a lot more about the conference on the website, b.tc/conference. And on the site you can see our four tickets. So we have four different types of tickets. We have a VIP ticket. That’s called the Whale Pass. That gets you into four days of conference. VIP access to a bunch of stuff, golf cart to take you around the venue, the whole nine yards. We have a GA ticket, which is a three-day event to Bitcoin. Again, full access to the best of the conference. We have an industry day. So this is more like a b2b ticket with more kind of activations and an entire day that’s focused around all the businesses and industries that are thriving and growing in the Bitcoin space.

And then lastly, we’re bringing something new. We are putting together a sound money music festival the last day of the conference. That’s going to be Saturday, April 9th. And that’s going to be more of like a Coachella vibes, but celebrating Bitcoin. And if you just want to be in Miami and party the whole time, you don’t care about the talks, you’re a hardcore Bitcoiner, you’ve seen and heard it all, we have a festival pass. So right now it’s just a hundred dollars. Get a festival pass. Book your trip to Miami for April 6th through 9th. Party the whole week in Miami and then come to the sound music festival at the end. So a lot of options, I could keep going on. The content is going to start dripping and leaking as our team puts that together. My man, Pete, who is behind Bitcoin Magazine over here recently accepted the role to lead programming. So can’t kill the conference enough, Bitcoin 2022. But that is enough for me. Thank you everyone for sitting through that. I want to hand it off to Aaron. And thanks again.

[00:02:50] Aaron: Thanks, CK. Can you guys hear me? CK, can you confirm?

[00:02:53] CK: Yes sir. We hear you. All right. We got Mike on the mic.

[00:02:59] Aaron: Yes. Mike is on the mic. Perfect all right. Welcome back everyone to my weekly El Salvador Twitter spaces stream where I discuss what’s going on with the legal tender law here. This is the seventh time I’m doing this now. So to recap, first week was about one and a half months before the legal tender day where we discussed how financial institutions basically didn’t seem ready for the law at all. Then we had one about Bitcoin Beach and the reception in El Salvador. Then we had one of the Bitcoin Smiles initiatives that was fundraised for dental care in the Bitcoin Beach area El Zonte. We had one opening offices El Salvador. This was a month ago, three weeks ago, something like that. Then we had one on the No El Bitcoin protests to protests against the Bitcoin law. Then last week it was legal tender day where we discussed legal tender day. And today we’re back. We’re going to discuss the first week of Bitcoin being legal tender in El Salvador. It will be a bit of an open discussion to just share some experiences, answer questions. And, yeah, give a little bit of insight what has been going on in El Salvador.

[00:04:15] CK: I have a question for you. Sorry, Aaron. Before Mike jumps in, I have a question for you. So after the conference you were like, “I needed to go to El Salvador.” And you planned on kind of just staying there throughout this kind of cycle of launching the bill and actually making it happen. I would love to hear your reflections, Aaron, on kind of landing there and then getting to where we are today.

[00:04:39] Aaron: Yeah, sure. So my first impression – Well, first I was in El Zonte. I spent the first, I think, two weeks. Or let’s see, at least a week, maybe 10 days just in El Zonte. And El Zonte is a very cool initiative. It’s really great, these bottom-up projects. And it’s really kind of working. Like people do use Bitcoin not all the time. People also use dollars. But it’s working. It’s inspirational. It’s great. And then I spent the next week or a couple of days in San Salvador. And I immediately realized that there’s a very big contrast. Like you have Bitcoin Beach and it’s sort of this small citadel at the sea. But the rest of the country is still – Was still. Well, yeah. Let’s speak in the past tense. Was still very far from adopting Bitcoin in any sort of large scale. This was completely confirmed. I spent a couple of days in the states in between then I came back. And then I started doing these streams and all of that stuff.

Like I mentioned, the first episode we did, I spend some time with other Bitcoiners that were visiting in El Salvador, and we visited banks. It was kind of cool though. We were actually let in into the boardroom. But our main impression was they have no idea what’s going on. And this was just six weeks before it became legal tender. So my impression was this is going to be – It looks like this could be a complete nothing border. Like there’s just going to be no event at all in the 7th. It’s just going to be nothing basically. Now it has been the 7th, and we can sort of give two perspectives on it I guess. You could sort of give that glass half full perspective or the glass half empty perspective. That glass half full perspective is, “You know what? There’s actually quite a bit going on. There’s this big change, the McDonalds’, the pizza house that are accepting Bitcoin. This seems to be growing as well.

The Chivo Wallet actually launched. There was actually a Chivo Wallet that some people could download. It was sort of working some of the time. Now the glass half empty perspective is that it’s definitely not widespread yet. And you definitely can’t spend Bitcoin everywhere yet. And still a lot of people have no idea what this is or how it works.

And also the Chivo app, for example, has lots of issues. Like I mentioned, some people could download it, but also lots of people could not download it. It was very buggy. If you did try to use it, sometimes it will work, sometimes it would not. The user interface is a little bit confusing. But there’s definitely more happening than I expected six weeks ago. So that’s interesting to see.

Can we get Serge the mic? I know you only have a couple of minutes. So let’s start immediately. I already discussed this very briefly with you earlier this week, which is also why I invited you on. People can use bitreferral in El Salvador. I use it personally. I use it to top all my phone balances. My phone balance. I only have one phone. And you guys have been having firsthand experience essentially with six million people being on-boarded with Bitcoin, right? What has been the experience in your end?

[00:07:50] Serge: I mean, we’ve been preparing for this and doing what we can. The first launch day was fun. We got in three hours 40,000 orders created on Bit refers from people trying to buy stuff, which is I guess 10X the normal rate, which is fun.

[00:08:07] Aaron: Did you make $30,000?

[00:08:11] Serge: 40. I’m not sure if it was 40,000 individuals, but there was a lot of people trying to make a purchase on Bit refer with the Chivo Wallet, which didn’t work at the time because the Chivo Wallet has this restriction that you couldn’t send the money out. So I’m glad really people have been figuring out how it works, how it doesn’t work, how to get the money out. At this point I think people know how to get the money out.

[00:10:50] Aaron: So to clarify that, the restriction, as I understand it, is everyone got $30. That’s sort of part is the introduction present if you download the Chivo app. However, this first $30 can only be spent to other Chivo applications.

So if someone would walk into McDonald’s with a Chivo expecting to be able to buy a Happy Meal, then they were out of luck, because McDonald’s uses open nodes. And the first $30 can’t be spent to open nodes, which I can tell you has been causing a lot of problems and a lot of confusion in El Salvador as well. Apparently a lot of people try to top-up their balance or whatever they would do. What were they doing? Do you have insights of that? What were they trying to buy?

[00:09:19] Serge: Yeah, sure. I mean, our products in El Salvador, we have a couple of games that are popular amongst the young people. Most prominently, again, called Free Fire, which we’ve been joking about a lot internally that Bitcoin in El Salvador is a lot about Free Fire, which is just a popular game among the kids. But also, we have a partnership with the Uber apps, which is an El Salvadorian Uber Eats and sort of lots of other stuff. It’s like the super app they can themselves. And it’s like the number one thing that people do on their do on their smartphone.

[00:09:51] Aaron: But people try to buy that on a pretty scale, I understand. But in most cases, it would just fail.

[00:09:57] Serge: Yeah, exactly. That fails, and the Chivo Wallet didn’t give a nice error. And so that’s not great, because we get blamed for it and so on. And so we spent the whole week last week all night, European time, figuring out the different behaviors and issues and trying to do the best we can. That’s our interface to fit with the particular bugs that the Chivo Wallet has.

I think there’s a positive side to this. And maybe I should be the positive voice in this call. The launch was not perfect. But frankly, rolling out a Bitcoin wallet to millions of people with a strong incentive to install it, organizing one by the bureaucracy of the government of a Latin-American country. The app is built by four or five different teams, which is why there’re inconsistencies in the app in terms of that’s like here. You get that feeling that it’s like it’s built by different people in this space together.

A lot of this stuff in terms of the Chivo Wallet, Bitcoiners complaining about it is custodial and it’s centralized and you need to submit your private information. All these things, right? And that’s it’s limited in functionality. But if you put it in perspective, I mean, this is a government project to build a Bitcoin wallet. And they had three months from the presidential announcement to building out something that – Well, it works very a bit for some people. And now we’re getting the feedback that they need to fix it. And we are trying to provide advice as we can to some of these teams on how and where to improve.

[00:11:38] Aaron: Serge, do you get the impression that it has been improved already?

[00:11:43] Serge: Yeah, I would definitely say so. There’s a lot of stuff and there’s still a lot of stuff that’s not great with the Chivo Wallet. And, I guess, I think that people kind of – Governments aren’t known for making high-quality anywhere really. So with that in mind, it should be expected that it’s something like this will have bugs on launch. I would hope that at this point they should be able to figure some of these things out. But some of these things are hard, like setting up Lightning channels for massive amounts of money that should move. And we can understand the political implications if people don’t want – Or if the government doesn’t want people to just send the money out of the country or whatever is seen. But at the same time, so you kind of can see how it happened the way that it happened. But I mean, end of the day, people are gradually getting access to it. They’re getting access to real Bitcoins that with a little bit of work currently can be used real Bitcoins. Maybe you can give me feedback on that, Aaron. Is it clear to people that many of the issues are related to the Chivo Wallet and not necessarily Bitcoin as a whole and that other wallets maybe don’t yet have these issues?

[00:12:55] Aaron: I mean, it depends. Some people seem to understand that there was in fact the difference between Chivo and other wallets. I’ve walked into stores and they would ask me what wallet I using, Chivo or something else. So they did recognize that there was a difference there and that something else would work and the Chivo would probably not.

Others have no idea and they would just blame Bitcoin or figure that it was a problem with Bitcoin or don’t understand the difference between Chivo and Bitcoin. So that’s to be expected. Some people understand a little bit more than others. But in general, I do think it costs a lot of confusion. And I do wonder if – I think the main reason to make the first $30 is limited to only Chivo to Chivo. But still people wouldn’t just walk to an ATM and get $30 dollars out and be done with the whole Bitcoin deal. It was meant to really sort of incentivize people spending Bitcoin. However, I do really wonder if this did more harm than good in the end, because it caused so much confusion.

[00:13:54] Serge: Yeah, of course. It’s also inconsistent with the policy that companies should accept Bitcoin payments, right? And then the ones that do get penalized with customers that have a less than ideal experience like McDonald’s that’s integrated with open node for example.

[00:14:08] Aaron: Yeah. That’s a very good example. I mean one of the reasons McDonald’s did it, I’m sure, is because they knew everyone’s going to get $30 and they want everyone to spend that $30 at their store. So they put in the extra effort in tying the money to get ready. And then when they were ready, it turned out that no one could spend these $30 at their locations [inaudible 00:14:29]. And I think that was really a bad choice.

[00:14:32] Serge: Yeah. No. I think every company in El Salvador, and yes, including ours kind of like can do the math exercise and realize that there’re a lot of potential customers to be had here with people spending these $30. And so a lot of people have been trying specifically to capture that. There’s like telcos that have a Chivo package. There’re a lot of things you can buy that cost 29.95 and so on. Yeah.

[00:14:56] Aaron: So to give us an idea, you said 40,000 people tried to spend these funds at bitreferral. How many – Or at least over 40,000 attempts. How many eventually succeeded?

[00:15:09] Serge: That day, it was hundreds. But now it’s a bit more. It’s still kind of low, and it’s calmed down a little bit. And we’re, I guess, waiting on when it gets enabled and the rest – It’s only been enabled for a couple of phones on the Android App store. And so we’re waiting for it to be enabled in all phones including the most popular ones. I mean, an optimist, I’m hoping that there will be some kind of communication that, “Okay, order is now restored and things from now on should be working more reliably and that people go in and try.”

I mean, big picture, we get so cycled in about this $30. But if you look out at the bigger picture thing of this, yeah, the $30 is just like – It’s a ploy to get some initial adoption of it. The real question is this. First of all, will merchants integrate Bitcoin in a sufficiently good way for people to be able to use Bitcoin in El Salvador? And I would say that from what I’ve seen, the answer is very clearly yes. Many companies, retail companies will have like a special cashier with a special person that sits in the cashier. And it probably just has a mobile phone wallet to accept the Bitcoin, which I would even argue is probably the best way to do it if I was a local merchant as well.

But from here, the real challenge isn’t – And this is the same as it is with Bitcoin everywhere. The challenge is never about getting merchants accepted. Merchants will accept it with those customers. The challenge now, which is the interesting challenge, beyond the $30, is will El Salvador be able to convey to the diaspora of the El Salvadorians that live abroad, mostly in the U.S. But in fact it’s better than sending money through all of the different channels that are being used now to just buy Bitcoin from the cash app or on Strike or what have you and send the Bitcoins back home or to buy something for someone back home.

And if this thing is unsuccessful, and there’re a lot of question marks here. But if it is successful, then there is a chance that there can be a vibrant Bitcoin circular economy in El Salvador. And that’s entirely dependent on whether or not they succeed at achieving the inflow. And that’s the next step. Right now we’re dealing with early bugs and this and that and all the things that one could have expected to go wrong. And now I think we’re all sort of, “Okay. There will be a day, hopefully soon, when things work.” And we’ll see people spending their $30. And then after that, the interesting work will begin in whether or not Bitcoin will be used circularly in El Salvador.

[00:17:50] Aaron: Absolutely. Yeah. On the Chivo app I will mention that my experience has also been that it is improving. I don’t have to have to add myself, because I’m not Salvadorian, but I have been playing around with other people’s apps. And on day one it was basically not working at all. And then on day three, it was still so buggy that you could say it wasn’t working at all. But yesterday, I actually did manage to spend some funds from it and it seemed to be a lot smoother than earlier this week. So there does appear to be some improvements going on.

Edgardo, do you have a question for Serge or –

[00:18:31] Edgardo: I don’t have a lot of the question for us. I’ve have been following you guys since the beginning. I mean, I see Serge talking about the issues. And the problem with all the Bitcion and Chivo app was that there was not a prelaunch. I mean, they throw it the day that it was supposed to be on. I mean, there’s been a lot of bugs and a lot of people who have been – Has been trying to do is that they want to cash-out $30 of Bitcoins. And then some of these stores that you guys are not aware, that they said we’re accepting Bitcoin, but not Chivo apps.

I mean, they’re accepting what Strike [inaudible 00:19:07] everybody’s using it. I mean, I’ve been following you guys for a while. I’ve been using Coinbase since 2014. And I hadn’t had an issue about the last couple of days. Even Coinbase or Strike had issues with their platforms. So it’s been kind of crazy though.

[00:19:24] Serge: Yeah. Well, I mean, you’re right. I mean the scale alert is bigger than – I mean Bitcoin on-chain does 700,000 transactions per day. That’s not so much compared to five million people who would theoretically get access to free money on the same day. So you can imagine, a lot of stuff is like breaking down and having scaling troubles. I mean, I know how much scaling troubles we had when Strike launched in El Salvador and so on. And so I hundred percent agree that the right way to launch things is to do a soft launch with a small group. Or the way we often do it with bitreferral is that we turn a feature on and then we don’t tell anyone. And we announce it a couple of days later after the first people have tried it. We know this works and so on.

But I can also understand that in a political environment when there’re a lot of people that want to weigh in on decisions and decide, and this is a whole pride project that needs to go live on one day. And so then maybe by necessity it put us in this situation where they did go live and things couldn’t scale to the to the demand. But I’d also remind people that scaling issues are champagne issues. Most projects never get to scaling issues. So scaling issues shows that there is a demand for this, which at least is a good thing.

[00:20:43] Edgardo: Well, I mean there is a lot of people here that – I mean, I’m from a little town [inaudible 00:20:47] I’m on the part of central area, Cabañas, what they’re trying to do is cash it out and they were like doing a running around. They were downloading the app. And one of the ways they found out to cash out, I mean, to get the cash actually was to link an account, for example Banco Agricola and [inaudible 00:21:08] and they are indeed were able to take those $30 out. I mean they have to do the running round. I mean, for example, they will send it to me, I will send it back to them, and that was an actual transfer. So it was not just that like spending $30. Now you can go ahead and link your account and download it to your bank account and you go ahead and get it from your ATM from the Banco Agricola. And they’ve been doing it kind – It’s been crazy around here. I mean, Cabañas, [inaudible 00:21:35], San Vicente. I know a lot of people, San Salvador also. They’ve been doing like a workaround. There are a lot of people also they’re saying I buy Bitcoins. I’ll give you $25 cash and you gave me the $30 bonus that the government is giving. It is crazy though.

I mean, they always say no. Nobody’s going to like it. But I mean everybody everybody’s trying to get their hands on some money. I mean, it is free money anyway. At least it is the people’s money. So why don’t we just spend it?

[00:22:06] Serge: Yeah. Like you said, people solve the problem. And at the end, this is the problem with airdrops, is that people are going to figure out the fastest way to claim the free money. And it is difficult to stir them to whatever behavior it is that you want them to have, and especially with an open system like Bitcoin. And at the same time when they’re promoting the openness of it, it gets hard. You can’t lock it down completely.

[00:22:31] Aaron: I do want to go through Mike. Yeah, Mike. Let’s hear it for Mike.

[00:22:34] Mike: Yeah, just to follow up on that. I think that’s what’s so great about this is it shows people’s ingenuity. They’re already finding a way to use that for remittances. I mean that’s basically what a remittance is, somebody sending them Bitcoin and them finding a way to cash that out. So I think that that’s exciting to see the ingenuity of people and see that they’re figuring out how to actually use it.

[00:22:53] Aaron: Yeah. I’ve also heard that the ATMs are actually being used a lot. I don’t have any exact numbers. But yeah, lots of orders on the ATM. Lots of people getting cash outs I think especially. In general, Mike, what has been your impression of this first week?

[00:23:09] Mike: So I would say overall, it’s been much better than I anticipated. I really thought that there wouldn’t be a working wall at all. I think it was smart of the government to release certain phones at certain times. I mean, obviously, if they would have given more information ahead of time and people would have kind of known how they were going to do it. That would have been better. But all in all, I mean these rollouts are always disastrous. So it was better than I expected.

I was definitely pleasantly surprised at the number of stores and locations where you could spend Bitcoin. My daughter bought an outfit at Zara using Bitcoin. I did notice that a lot of the stores they’re using either the Athena or the Chivo application to receive Bitcoin, I was having issues to send to them. So I had several locations tell me they were accepting Bitcoin, but I kept getting error messages. I’m not sure if that was just the Chivo app optical issues. So I don’t know. What have you found with that?

[00:24:04] Aaron: Yeah, I’ve been having mixed results with the ATM. Sometimes it worked very smoothly. I have to try with the Chivo app and then it didn’t seem to work at all. It wasn’t clear why it wasn’t working. But when I used like my regular Bitcoin wallets, then it actually did work. There was still some confusing user interface, user experience type of things where it said it required one confirmation. They need to – You get a code and you come back after. There is one confirmation. Then you get the actual money. But it seemed to actually wait for more confirmations or something or at least it didn’t come out at first. So there’re definitely confusing things going on.

I think one of the – But it worked other times. So again, it’s glass half full, glass half empty. And I think that’s one of the things. On the legal tender day, we saw a lot of mainstream media headlines about what a mess it was. And I think that comes down to expectations a lot. People like you and me, like you mentioned, you didn’t expect that to be an app at all. I had similar expectations. From everything, I thought this is just going to be nothing at the seventh. And then if there’s something, that’s actually a pleasant surprise. While if you’re a major media outlet that you’re not really into Bitcoin or you don’t really understand how complicated it is to roll something out, then it might look like a mess because not everything is working. So it comes down to expectations probably.

[BREAK]

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[INTERVIEW CONTINUED]

[00:28:56] CK: I just want to highlight, we’re all in Twitter Spaces right now. But I think most people here can remember what Twitter Spaces was like a month ago. So rollout at scale. Not easy to do even for the most well-capitalized companies.

[00:29:10] Serge: Yep. And to summarize, think of what’s been achieved. Yeah, there are proven many ways to convert Bitcoin into real world value, to bank transfers, to online purchases, to in-store purchases. People know about it. Yeah, the ways work. There is a Bitcoin wallet that many people in the country have. The word is out that there is Bitcoin and it’s a thing that it mostly works. So a lot of things have been achieved even despite the launch difficulties.

[00:29:37] Aaron: Can you hear me, Mario?

[00:29:39] Mario: I was about to call you up. But –

[00:29:41] Aaron: Well, introduce yourself, Mario. Maybe that’s better.

[00:29:44] Mario: Well, I have been working in technology for a couple of years. I am the founder of the Hackerspace in El Salvador, and I have been following the implementation of Bitcoin here in El Salvador during the last days, and in particular, the Chivo app. I would like to give like a couple of uh technological sights, because I have my inbox full of people reporting issues with the applications. And I know that, I mean, it’s a new development. It’s a new release. I will think that they were missing an adequate testing procedure. And I would like to know why the reason of that, because, I mean, it’s a critical system that is going to be used by so many people.

The other thing that I want to mention is I have my doubts that this is really a stress test for Bitcoin and Lightning, because the way the application is working, it looks like more is a centralized system and only when you interact with external wallets it actually connects to the main chain or with the lightning network. So it’s hard to evaluate how good has been this deployment and the scale up of it. If we don’t have like true real data about the users, about transactions and about everything. And I think that um the main problem is that, for me, whatever the government release is not truly Bitcoin. It looks like a centralized banking system, and that will explain the a lot of issues that people reported when trying to use the application.

And, yeah, I mean it’s not a bad idea by itself, but –

[00:31:27] Aaron: Mario, let’s be clear about what you mean. What you mean is that the Chivo app is custodial and transactions from Chivo to Chivo are basically just ledger entries, right?

[00:31:39] Mario: Yeah, yeah, yeah.

[00:31:41] Aaron: Yes, exactly. Yeah.

[00:31:42] Mario: So the whole area was to give like this government owner banking system to the population. I mean, it’s fine. It’s not a really bad idea. But I think that what we always point about this is the way that it was forced all these obligations that the business or where owners needs to comply. We even have one politicians tweeting about that they were asking a business owner to install Chivo application. And I think that if you think a little bit about this, these coins against all the things that bitcoiners tries to do and the Bitcoin philosophy. So I think that that’s the main problem.

And if you look at the experience of several users, is the users that didn’t use the government applications, the ones that have less issues and even these big stores, they decided to not use the Chivo Wallet. And they have less issues than the rest of the people. We’re still having issues regarding to, let’s say, the compatibility with other applications and these kind of things that I think is not acceptable from the perspective of the citizens. I mean, we are paying for this. We are paying a lot of money to make this work. Oo one was asked to approve this. I think that if this law – I mean, if Bitcoin was implemented but in an optional manner, I think it was not going to be a problem. But I think that they promised it too much and delivered just too little. And we are paying for this. And they need to uh take a position about this.

I mean, the government needs to explain what happens with the money of the people, because at the end of the day, many business owners trust the government to implement this solution. And to this day, they’re still losing money for this. So I think that someone needs to be made responsible about what has happened. That’s my take on this. Thanks.

[00:33:44] Aaron: So let me see if I understand you correctly. It sounds like you have two concerns. One is a lack of transparency from the government on how taxpayer funds essentially are being spent on the creation of this wallet. And the other one, but I’m not sure about this, is, well, it’s obvious that the wallet isn’t very smooth or there are a lot of kinks to work out. Are you also of the opinion that it shouldn’t be custodial in the first place? Or do you think that’s an acceptable tradeoff?

[00:34:14] Mario: I think that for the second point. I mean, it’s an acceptable tradeoff if it’s transparent enough so we know how all the funds are being used. But what we know about this Chivo application and the development team is that it’s a private business. We don’t even know if there was a tender or something like that to decide who was the development host that was going to develop the application. So I think it lacks a lot of transparency. And I don’t think that the –

[00:34:50] Aaron: Hang on. Do you do you mean transparency about how the funds are being used itself? Do you also mean transparency on how the wallets actually works and how the custody works and where the funds are and that kind of stuff?

[00:35:02] Mario: Everything. Because, I mean, everything is speculating here. I think even you guys do not have any details about the technical side neither of the way or taxpayer money is being spent on these applications. So I think all this lack of transparency is giving really a bad image not only to Bitcoin, but it removes any reason for us to trust on these government wallets. So why I’m going to trust on this application if they are not giving us any details about how it works? How the money is spent? So I think that that’s not susceptible as a citizen.

[00:35:39] Aaron: Yeah, it’s not exactly in line with the open source philosophy. That’s for sure. We don’t know how the world works. Or we also don’t know how, or where, or who is storing the funds since it’s custodial.

[00:35:51] Mario: Yeah. Yeah. We don’t even know who is the custodial of all these 550 Bitcoins. If you know, please tell us, because apparently no one in government wants to tell these kinds of things.

[00:36:03] CK: I just want to jump in and say that the majority of international Bitcoiners that are very interested in El Salvador, I don’t think many of them are necessarily rooting on the Chivo Wallet or anything like that. Obviously, the government effort is going to be a very strong effort and a big effort especially early on and we want that to be successful for the best of Bitcoin. But a government is going to be a government, and I don’t think any of us have any false expectations on what the government rollout is. But ultimately, I feel like the majority of us are excited about what Bitcoin offers and excited about the idea of a lot of people being introduced to the benefits of Bitcoin in whatever way. And hopefully they do it the right way, the open source way. And as you said, they’ve already had a better experience if they use Bitcoin straight up versus the government version. So I do kind of want to like just point that out just so we don’t – We’re not rooting necessarily for you know everyone to get on the Chivo Wallet and for that to be the dominant thing. We just want Bitcoin to help really, I think.

[00:37:06] Mike: If I could fill in just a little color from some things that I’ve seen on my end. One as far as who got the government contract, and there’s this perception that there’s companies out there making a bunch of money off of this. I think it’s actually the opposite. I know some companies that were approached, and basically the deal that was being tendered to different people would involve them having to make a substantial investment that they would probably never recoup. And the benefit for the company was to be the company kind of related to this project. So that going forward when they possibly could have more profitable deals with countries that could pay them kind of more market rates. And so I definitely understand the desire for transparency, but I don’t think that this is a case of there’s some company making a bunch of money off this. I think whoever’s behind this, they’re definitely losing money on it, and at least that for several years they will be. And I think that’s one thing.

I think the other thing is and what we’ve seen is the vast majority of companies do not want to use the Chivo Wallet, and I think that’s great for the project. And I would hope that the government would actually be happy about that, because that puts less stress and risk and demand on them. And my hope is that from the government side that the wallet that they offered was just so that people had some option that they could say that the government was standing behind ,but that ultimately the government doesn’t want to be in the wallet business. And I really think they don’t. I don’t think that that’s their desire. I think they feel that this will be better handled by private enterprise. And I think in their rush to roll it out and the timeline they did, they may have cut some corners, and there’s some stuff that I know all of us are uncomfortable with. But I don’t think that there was some perverse trying to steal money from this type thing behind it. There’s much easier ways to do that in government and with a lot less publicity.

[00:38:57] Mario: Well, I would think that the thing here is that the lack of transparency is something that is going against all local laws. And I think that – I mean, it’s the law. It’s the obligation of the government to explain what is the process that I use to hire all these companies independently if they’re making money or not of the implementations. And I think that it is the less that we can ask to these companies. Because if the government is not clear, is not transparent about what they use that they’re making to our money, at least we will think that these companies needs to say, “Okay, I’m working with them. We are providing this kind of technologies.” Because, again, what I say is that the law says that they need to be transparent about this kind of implementations, and they are not doing this. And I don’t think that this is going to end well if they keep hiding things from the people, if they keep hiding up all these technical details.

I mean, again, and I want to explain that we were never against the technology. I mean, I am a technologist myself. I consider all technologies just a tool is the way that is implemented. And I think that we cannot expect to do something good if we just leave them to act in complete darkness about what they are doing. And again, I think that the point here is that there is a legal framework that the government needs to respect, and you can have a lot of good intentions. But you know, good intention is what pays the way to hell. And I think that this is the bulk of the message that I want to leave you guys. And yeah, the problem is that normally, in this kind of spaces, and on Twitter you know that these are a lot of discussions, and it gets one-sided, and there is little space for rational discussion about what is happening. Again, if it was open, if it was transparent, if it was open source, if it was optional, I think that I even will like to support this kind of initiatives, even including other kind of crypto assets and technologies. But what we have here is completely different what you would expect to deploy this kind of technologies.

[00:41:12] Edgardo: So to do a compliment of what Mr. MXGX is saying. I mean, the main point of the Bitcoin community, I’m guessing, and I don’t know if everybody’s going to be right with me, is El Salvador is the first country that make this kind of legal. What that means is like Bitcoin Beach, you are saying, I mean not everybody using Chivo, and everybody using different wallets. I mean, that is great. I mean, we’d have been following Bitcoin for a while, and we’re happy to see that this is the first country – What the three percent. I mean, and that’s what his speech is about. I mean, his speech about the transparency and all that. It’s like the three percenters that do all the time.

I mean, the point is here, El Salvador is the first country that legalized Bitcoin. I mean, it’s not like mandatory that, yeah, you’re going to Chivo Wallet. I, mean you can use now every single wallet that you can. And more investment is going to come, for example, Stike, Coinbase. I mean, it’s not going to be like just [inaudible 00:42:14], and that’s what [inaudible 00:42:18]. I mean the private investment is the one that’s going to be the key here, because now that – I mean, for how many years we’ve been waiting so we can cash out Bitcoins. I mean, Bitcoins have been around back and forth, back and forth, but there was not a place, I mean a legal place where you can go ahead and see that money in cash, in paper. I mean, what most of the people don’t see here is that, “Come on, we’re the first country to legalize Bitcoin. They don’t see the investment that they’re bringing to our country.” And when he’s saying transparency, Chivo app, I mean, yeah, it is a government app. It is a private app. That’s what they’re saying. But I mean, look at the point of view there. He’s saying how much money that they’re making underwater and so and so on so. That’s a three percentage picture. Come on, man. Look at the future though. I mean, we’re happy here that we legalize Bitcoin though. I mean we’re the first country that is legal. Most countries [inaudible 00:43:18].

[00:43:17] Aaron: Bitcoin is legal in most countries. The difference is that it’s legal tender, which is a legal definition of a currency that you can [inaudible 00:43:27] comes into play.

[00:43:28] Mike: As these things take time to roll out, and quite honestly I think a lot of the deals were done with the companies just acting in good faith.

[00:43:36] Edgardo: Yeah. Yeah. But, again, we have a legal framework. I mean if this happened in one of your countries, guys, I think that you will not accept this kind of actions by your government or the companies that participated in this. And I think this doesn’t help Bitcoin. That’s the point.

[00:43:56] Speaker: Hey, I just want to add something from what Mario says, because I only have little much time to be on this space. I’m Salvadorian too. I live here in Salvador. And what Mario is trying to say is that we are not against Bitcoin. We are not against what Bitcoin can bring to the country. But how it’s implementing here in El Salvador, it’s really shady. It’s wrong. It’s without transparency. And what he was talking about, that private enterprise that he’s talking about, it’s actually a private enterprise that is funded with government money. So and it’s run by people that works in the government. The people that it’s – Well, the names on the enterprise, on the register, on the national register of El Salvador, there are people that work in the government. And we don’t know where the funds are going.

And, well, the 550 Bitcoin that El Salvador possesses, it was bought with taxpayer’s money, because the government doesn’t have no money. They have our money. So that’s why we need transparency. That’s why we need that they give us account, they hold accountable of what they’re doing with our money. That’s the difference. That’s what we’re protesting against, it’s the lack of transparency and the way they do things. That’s the main issue.

[00:45:05] Aaron: Mario, I want to ask you something else. You were in the news last week. Is that something you want to discuss on this call or not?

[00:45:11] Mario: Well, the problem is that I don’t even know why they did this to me. But once I get more information, I will share it with all of you guys.

[00:45:21] Aaron: All right. Yeah, you were briefly arrested, right?

[00:45:24] Mario: Yep, yep. But up to this day, we don’t know the real reasons for that.

[00:45:29] Aaron: All right. Got it. We have Nature of Type One on the stage. What’s up?

[00:45:34] CK: Nature, welcome.

[00:45:35] Nature: Hey, what’s up. Yeah, I guess following up on the transparency conversation. I mean, the biggest concern I have is just the survivability of Bitcoin in El Salvador over the long term. And that comes with a knowledgeable user base. So I was just wondering with the people who are in El Salvador right now, I’m not sure if there’s any initiatives, but is there like any ongoing education programs provided on the national government level like that will be after this initial onboarding period? Or is that like assumed to be left to the private sector, and which you guys would think will be best for that?

[00:46:16] Aaron: Mike, do you want to answer this?

[00:46:17] Mike: Sure. I think there’re both right now. The government has actually put more of an effort than i was expecting specifically around the launch of the Chivo app and helping people onboard, but just some general education also. But I think that that’s really going to have to fall on the private sector. And I think that’s what’s great about Bitcoin. It’s decentralized. We have projects that we’re working on in our little area, but there’s dozens of other people that are doing kind of similar things. And we coordinate when we can, but it’s great that all these things are kind of happening independent of each other. And it’s going to take time. I mean, anybody who’s coming to the Bitcoin space, it takes really years for them to really understand. And we kind of go through the stages. And I think that’s going to be the same that’s going to happen here.

[00:47:05] Aaron: Yeah. Anyone else on topic, education topic? Any other comments here? Mario or –

[00:47:11] Mario: Yeah. I mean, we have been trying to educate people mostly on the use of other wallets if they are really interested in using Bitcoin to get payments or to transfer it to cash. But yeah, the problem also is they try to keep all the details of the application until the last moment. I mean, that generated a lot of confusion. The system was not ready. I’m really worried because some people lose actual money, right? So they are still waiting to transfer their funds out of the application. Yeah, I mean, it’s a lot of lack of education on the government side. And I think that the good – I mean, the correct way of doing it was to explain about the technology and explain the alternatives. I think that a more organic way of implementing make a lot of more sense that way they have done currently with the Chivo app.

[00:48:07] Edgardo: I have question to Bitcoin Beach. I know you guys had the project since the beginning. What app were you guys using? I mean, I got very concerned about that. I mean, because you were the pioneers using the Bitcoin here in El Salvador, but which app do you guys use? Which one in other words?

[00:48:24] Aaron: Bitcoin Beach has the Bitcoin Beach Wallet, which is basically a wallet designed by the Bitcoin Beach Project. I noticed that the Bitcoin Beach Wallet was actually the second most downloaded app in El Salvador last week. So people definitely also trying out other wallets. And it seems that one in particular.

[00:48:44] CK: I have a quick question about the Chivo Wallet. Are they utilizing the wallet to do any sort of education? Or is it just like here’s an interface and that’s it? Any sort of onboarding or anything like that within that wallet? Is that something that they’ve like leveraged?

[00:48:58] Aaron: I don’t think so. I’ve browsed through the wallet a little bit. It’s Spanish, so it’s clear to me what everything does exactly. Or it’s clear enough, because I know how Bitcoin works. So it’s sort of I can fill in the gaps. And I don’t think I saw any sort of educational course. The Bitcoin Beach Wallet actually does have that. The Bitcoin Beach Wallet has an education page and you get to learn and answer questions, just very basic Bitcoin questions. So you get to learn what Bitcoin is in the app itself. I’m pretty sure I haven’t seen that in the Chivo app now.

[00:49:30] Edgardo: The, Chivo app has no education whatsoever within the app. They were doing a lot of ads on the news about how to use it. But I mean, the app itself, I mean, it’s just straightforward. Here’s the application. And you deal with it. So [inaudible 00:49:44].

[00:49:47] CK: Maybe Mike can answer some questions about the Bitcoin Beach Wallet first.

[00:49:51] Mike: I mean, specifically on Bitcoin Beach, the majority of people are using the Bitcoin Beach Wallet just because it has the integrated map function. They can find all the stores, where people are using it. It’s a very user friendly wallet. It has the username function, and also just because we’ve been going out and doing education and trying to onboard people. But we believe it’s probably one of the best user experience wallets out there. But we want to promote multiple wallets and have people using whatever wallet they feel most comfortable with. The Bitcoin Beach Wallet is a shared custodial wallet, which has its downsides. And so people who are willing to go the non-custodial route, we definitely want to push them in that direction and we hope to eventually move our wallet in that direction. But yeah, I think just for usability in our area, the majority of people are using the Bitcoin Beach Wallet.

[00:50:41] CK: Mario, I actually have a quick question for you. And I would just like start the question with a statement. But I don’t think a lot of Bitcoiners per se expect a lot out of governments. If you say like, “Hey, governments are misusing taxpayer money and not being transparent and doing things that we don’t like.” I would say, “Yes, that’s probably to be expected, and that’s happening everywhere in the world especially because of COVID restrictions.” So I don’t know what your opinion is about all that stuff. But I don’t really expect too much from government. So a lot of your criticisms kind of have to do with like the governments doing this. The government app is like that. And I get it. And they’re implementing something you don’t maybe do or do not like. But for us, it’s really, it’s like is Bitcoin entering into El Salvador, and is that a good thing? And I think a lot of people here think that it is a good thing. What’s kind of your fear here beyond like the government itself acting in malicious ways? Or are you just really concerned only strictly about the government and Bitcoin is just kind of a sad issue. Do you think Bitcoin in El Salvador in general is a good thing? Or is it just neutral and the government’s just being that? I’m just kind of curious to set the conversation a little more straight.

[00:51:50] Mario: Okay. I have actually two fears. Fear is related to the use as Bitcoin as money, because I pretty understand that everyone use this as an investment tool, and that’s fine for me. I mean, I don’t have any issues. But the problem is with the small Americans in the streets, people that live life to life, they cannot cope with all these volatility of Bitcoin. So this gives people a lot of problem troubles.

And the other thing that we are starting to observe is that people is trying to increase a little bit the prices. I mean, we kind of expected this, because the way that the American protects itself against volatility is to increase a little bit the price. So if they are going to bet on accepting Bitcoin, they have a little bit of margin in case the price reduces by the next day or things like that.

So apart from the government, the way that they are implementing these, I think that there is a lot of things that we don’t really know how they are going to work in the actual economy with the actual Americans in the markets. And I really believe that if the people that promotes Bitcoin – I mean, I’m not a promoter of Bitcoin by myself. But I think that some kind of pilot-wise needed to implement this kind of things, to see the effects, to see if really it’s worth it. And I’m sorry for the Bitcoin Beach guys. But I think that their context is completely different to the context of the rest of the country, because I mean they are a touristic place. They receive a lot of foreigners. They have like a small community where everyone knows each other. So they can have this like this closed economy that – I mean, it’s not a bad idea about itself, but it doesn’t represent a full market like the big market of San Salvador that is completely different to rest of the country.

So I think that there are so many questions. And I think that it’s not fair to run this experiment with all the population. It’s what we call – I mean, I’m a developer. So this looks like we are developing on production. And you know that this kind of thing do not end good.

[00:54:10] Edgardo: I got a question for you really quick. Before you got arrested, there was a Chivo Wallet. Approximately what? Six hours before you got arrested it disappeared before the original launch. You got anything to say about that?

[00:54:26] Mario: Well, we warned people that there was a lot of scams. And we were talking about this for weeks before. I think that a couple of people expert in security warned about this this wallet, because people were trying to scam people out. And I think that even the government guys warned about this. And if you look at my older tweets, I pointed that it was needed to the government to educate people, because without education anyone can fall in this kind of scams. And the problem is that they wait to the last moment to give information about this wallet, and they didn’t even gave any warnings about the scams. And that’s the thing that bothers me really, because we actually we’re trying to do the education that was not being done by the government at that time.

[00:55:24] Edgardo: Yeah. The reason I asked you is because even though the newspaper El Salvador Punto Con tweeted it and also put it on Facebook Chivo Wallet, I mean [inaudible 00:55:35]. And everybody went to the play store. And I even went myself and I looked at it. I mean, I was not as calm and tried to roll out it and I saw it. There were like two days before the original launch of the Chivo app. That happened that even though the newspapers El Savador Punto Con went and posted the actual app itself [inaudible 00:55:56]. I was like, “What the heck? I mean, didn’t they say they were going to launch it in the 7th?” But two days before, it was already on the play store. I mean, it was kind of crazy.

And they were tying you down with that. I mean, that’s what I asked you straight, because they were saying, I mean, that is all over in the news, I mean, the Salvador Punto Con [inaudible 00:56:14]. They were saying that you were the one behind that Chivo app and that there was a lunch on the play store. And that’s why, I mean, to clarify to the Bitcoin community, I mean that was not you. I know it was not you, but I mean it’s great to clear that out, because a couple hours before they arrest you with no charges, the Chivo app went away from the play store.

[00:56:37] Mario: Well, you say it. I mean, I don’t know the reason why they arrested me. And I mean, they didn’t filed any charges or anything. And for me, it’s really suspicious that we have all these information. We were trying to educate all the people to tell them, “Please, don’t fall into scams.” We even asked the government to give an official information regarding their app, because there was a lot of lack of information. And you know, if people doesn’t have the information, if they don’t have education, if they don’t have the tools to really identify what’s real and what’s a scam, what you can have is people trying to put money on this kind of scam. So I don’t know what’s behind all of this, but I will not trust any government sources recording this. Because, again, I don’t know what’s behind or what’s the idea of these people behind all of these scams. Obviously, they want to trick people. They want to make people think that they are the official ones. But again, what we are trying to do is to educate people. And you can see all my posts. And you can see that even if I criticize the implementation of Bitcoin, my work all this time has been on educating people and warning about all the risks that they are exposed.

[00:57:56] Serge: Mario, did you spend Bitcoin anywhere this week?

[00:57:58] Mario: Not this week. I mean, I only have a small bunch of Bitcoin to test the technology. But I don’t use it to spend it or to invest anywhere. A mean, I’m here for the technology and not because I think this is a good money replacement or investment tool.

[00:58:18] CK: Mario, if you don’t think it’s a good investment, you haven’t spent enough time researching the technology.

[00:58:24] Mario: Yeah, I mean this is my opinion, because I don’t really like to give any money value to anything that is virtual. But that’s a long discussion. I mean, we can spend hours talking about that.

[00:58:39] CK: Fair enough. That would be an interesting conversation.

[00:58:42] Mario: Yeah, of course.

[BREAK]

[00:58:50] Pete: Bitcoiners, I am so excited to tell you about the Bitcoin 2022 Conference. You guys, Bitcoin 2021 was absolutely a smash hit success. It was over 13,000 bitcoiners coming together, breaking the barriers on who can come together and celebrate freedom, celebrate Bitcoin in the energy was absolutely electric. Unfortunately, it was just oversubscribed. There’re just people flowing out everywhere. And this year, we are learning. We are making the conference bigger and better. We are moving over to the Miami Beach Convention Center. And we are going to be throwing a massive four-day festival for Bitcoin, celebrating Bitcoin, bringing together the greatest minds in Bitcoin, and the greatest businesses in Bitcoin, and lastly, the culture of Bitcoin altogether.

We have a four-day extravaganza planned for you guys for Bitcoin 2022. Day one is going to be industry day. It is a day where you can buy a special ticket in order to just mingle and make business deals happen. Day two and three is going to be a full-blown Bitcoin conference. This is our main conference is going to be on April 7th and 8th. And then lastly, we have the Sound Music Festival day four. Imagine going to Coachella, but for Bitcoin. There’s going to be very few talks. It’s going to be all about the culture of Bitcoin. It’s going to be all about hanging with your fellow plebs. And it’s going to be an absolutely amazing time. There’s going to be Bitcoin musicians, Bitcoin artists, and all your favorite bitcoiners, and just an amazing environment to party and just see it all, soak it all in, and to get people to realize that a Bitcoin world, a world filled with Bitcoin people doing Bitcoin things is the world that they want to live in. That’s what Bitcoin 2022 is all about. That is what the Bitcoin Conference is all about. That’s what Bitcoin Magazine is all about. So it is going to be a celebration of Bitcoin, the bitcoiners, and this amazing movement that is going to make the world a better place.

Go to b.tc/conference, learn more about the Bitcoin conference. Learn more about all the amazing things that are happening in Miami around the Bitcoin Conference, and buy your tickets. And guess what? If you buy your tickets with Bitcoin, you save $100 on all the tickets and $1,000 on the whale pass. So if you want the VIP pass, the Big Kahuna, you buy with Bitcoin. You save $1,000. That’s a lot of sats. So go and do it right now today. Don’t wait. Prices are only going up. This is going to be a can’t miss event.

Bitcoiners, let’s take a break from the content, and I want to tell you about Qubix. Qubix is an awesome Bitcoin hardware wallet. It’s been around for a really long time. They are building an amazing Bitcoin wallet called the Cool Wallet Pro. The Cool Wallet Pro is state of the art Bitcoin hardware wallet technology. Is form factor is like a credit card. You can put it into your wallet and it is designed to go with you on the go. So that way, even when you’re on the go, you can have the benefit of a two-factor hardware wallet design when you’re trying to spend your Bitcoin. So you can have your Bitcoin wallet UX on your phone and make it really easy to scan, decide what you want to do. But then you sign with a Qubix, which is in your back pocket. It is tamper proof. It is waterproof. It is flexible. It has an awesome secure element in it. And it is a really awesome way in order to have some more flexibility, yet security when you’re taking your Bitcoin on the go.

I personally am a fan of this idea of making Bitcoin into a medium of exchange and making it into something that people use. I know it’s going to take time, but they are working on the UX for making that possible in a secure way possible. So have some peace of mind, check out the Cool Wallet Pro from Qubix. And thank you to them for sponsoring this podcast.

[INTERVIEW CONTINUED]

[01:02:44] Aaron: Let’s say, CK, last round of questions before we wrap this up?

[01:02:48] CK: Sure, yeah. That sounds good to me. I’m no longer a co-host. So up to y’all to bring people up.

[01:02:54] Aaron: All right. I brought Oscar up, I think, if it works.

[01:02:58] Oscar: Hey, Aaron. Well, thank you for letting me speak. First of all, I want to tell you that I am Salvadorian. I am part of the diaspora that lives in the United States, in several states for the last 15 years, sending remittances to my family to support my family. And I am also a Bitcoiner. I was one of the first guys that went to the first ATM in the financial district in New York City to use the Bitcoin ATM. And also I had the luck of going to one of the first coffee shops in Long Island in the area of Brooklyn where I was able to buy a coffee with Bitcoin. And I’m a coder. I’m a developer too. So I have the technical view of these kind of things.

I came to El Salvador, I’m actually in San Salvador. I came on the um first. I came to use the app and everything and spend money and try it out. I was here before like some months ago and I went to the Athena ATM in El Zonte. And I was able to use Muun to exchange $20 bill in exchange for Bitcoin with my Muun Wallet in El Zonte a few months ago. And this week I was able to go to Starbucks and buy a 550 pumpkin spice latte using my Muun Wallet. And I’ve been trying to use it in the country as much as I can. I went to a supermarket, but the Chivo app was down and they didn’t accepted my Bitcoin. And I went to Pollo Campero and I tried to buy also a combo meal that was like five bucks or something, and it was down. Unfortunately I couldn’t try it.

But I have a question. After sharing my experience so far, I have a question about remittances, because eventually I’ll go back to the states and I would like to know with the remittances, if let’s say that I use the Chivo Wallet – This morning, my US dollars are going to be purchased probably in Coinbase where I’m going to pay a fee. And then I’m going to transfer some of that money into the Chivo Wallet, I guess. Or maybe I’m going to link my checking account with my routing number and my account number to the Chivo app to replenish the balance and send some money to my family.

You guys have the certainty that this is going to work well in the sense that the Bitcoin is like converted into a Stablecoin and then it comes to El Salvador, and then it goes to the Chivo Wallet and gets converted into either US dollars or BTC. Do you have any like any say, like any words about this? Do you trust the Stablecoins? Because in New York some months ago, there was like a scandal between Bitfenix and Tether Inc. where um the New York AG fined them with 18 million dollars because they were saying that only part of the one dollar to one dollar relationship between the Stablecoins, and the dollar was true, that it had like three percent in cash and 74% in some other economic documents.

[01:06:00] Aaron: Why are you talking about Stablecoins exactly? We could just add the cash out of the ATM if you want dollar.

[01:06:06] Oscar: Yeah, because when I – No. Because when I put my money from the states into, let’s say, Strike or Chivo and I’m going to send it to El Salvador, it doesn’t go through Bitcoin. It goes through as a Stablecoin and then it gets converted. That’s what I understand from the Strike application. I don’t know how Chivo works, because I haven’t been able to use it yet in that scenario. But apparently what Strike does is that. So I just wanted to know your opinion, because I am a Bitcoiner. I do have an investment in Bitcoin. And I am a little bit worried that some of the value of Bitcoin may be inflated with the Stablecoins that don’t have any backing. And if that fails, we’re going to lose a lot of money. If Tether Inc., for example, goes down, we may lose some BTC value.

[01:06:53] Aaron: I think you might be conflating a couple of things now. So one of the theories is that Stablecoins are pumping the value of Bitcoin, which I think is – Well, I don’t subscribe to that theory. Let’s just put it that way. But I would recommend against holding Stablecoins, and there’s no reason to hold Stablecoins if you don’t want to. You can just cash out whatever you have in your wallet in an ATM here. I’ve done it. And then you have the actual cash in your hand. So if you don’t trust the USD balance in your Chivo wallets, then just cash it out and you’re done, or keep it in Bitcoin and spend the Bitcoin, in which case you’re obviously dealing with the volatility of Bitcoin. But there’s no real reason to keep the UDSD as digital USD in your Chivo Wallet, I think. You can just go for one of the other options.

[01:07:41] Oscar: The thing is that – Yeah, I understand that, and I will never keep it. I don’t have any Stablecoin. I don’t have USD or whatever. But what happens in the in the way there, because the government is going to have this in their custody. What happens if at some point they decide that they’re going to use like an intermediary like Stablecoin. Would you guys still trust that? Because that may be subject to inflation if the government comes up with like a Stablecoin and then it’s not one-to-one with the dollar. I don’t know. It’s one of one worries that I have basically.

[01:08:15] Aaron: I mean, I guess if you’re using it to transmit funds, you’re only trusting it to call it that for like five minutes or however long it takes you to get to an ATM over here. Or you can just send it in Bitcoin. That’s definitely possible. I’ve done it. So you don’t if you don’t trust the digital dollar in the Chivo Wallet, you don’t have to use it at all.

[01:08:33] CK: Oscar, I’d like to add some context. I think that there are fears that this is going to be leveraged into some unbacked fiat coin that is going to be imposed on the people. Who knows if that’s going to be the case? We recommend you know just sticking with Bitcoin. And we’re excited about Bitcoin in El Salvador. But you know we can’t vouch for what governments are going to do with CBDCs and this technology into the future. Every central bank pretty much is stating that they’re exploring this technology. And if you really go back to it, all fiat is pretty much air. So that’s why we’re trying to move to Bitcoin in the first place, because it’s kind of a solution to this problem that you know every government can print some dollar thing in their inner bank ledger or on their app or whatever. That’s kind of the key problem.

[01:09:19] Oscar: Yeah. And the final the final thoughts that I want to give my connections, my fellow Salvadorians here, is that they should learn how to use a self-custodial wallet just like Muun or any other wallet that they trust. And they should keep their BTC on that self-custodial wallet, because we don’t know what’s going to happen you know with the government economy. And we don’t have any transparency tools. For example, all of the transactions with the Chivo, they happen online, and we cannot go to a BTC explorer and explore that, right?

So I would say try to use a self-custodial wallet and get educated. And, yeah I hope everything works out. No Salvadorian, even if it’s a critic of the government wants the El Salvador economy to crash, right? So we want it to go up. So that would be my two cents. Thank you.

[01:10:10] Aaron: All right. Thank you. Let’s go for the last question. We have Ms. Rodelman. Am I saying that right? Yes, Ms. Rodelman on stage. How are you?

[01:10:18] Maria: Yes. Hi, guys. You can call me Maria. This is not a question. It is actually just something that I would like to say what you have been talking about. One of the things why people here are not happy about this Chivo app is because if you see the numbers, only 23% of the population here in El Salvador have a bank account. Of all that people, some of them have access to the online banking of those banks. And some of them don’t, because they don’t know how to use it.

In El Salvador, we have a lot of trouble with Internet connection, because not all the population have Internet. We even have trouble with education because there are kids that cannot go to classes right now because we have online classes and they don’t have Internet. So this is just something like the background of all this. I think that we have been very clear saying that we’re not against Bitcoin, at least people that understand how it works. We are against how the government has been implementing this new Chivo Wallet. So um that was just something that I would like to tell you just for you to have an idea why all this is a problem besides that they’re buying this with taxes money and everything, right? So this is just something that I just wanted to mention.

Besides, Mario has been doing the work that the government had to do months ago when they decided to buy this, because they had to educate the people. They don’t even know how to use an online banking app. So how would are they going to know how Bitcoin works when they probably didn’t even hear about Bitcoin before they actually talk about it? So there are a lot of things here that the government has been doing very wrong.

[01:12:07] Aaron: So let me zoom in on one of these points. So let me zoom in on one of these points, because we’ve discussed a number of them on this stream already. But you mentioned that a lot of people don’t have banking. Isn’t Bitcoin a solution then?

[01:12:18] Maria: It is not because we do not solve all these problems that they don’t have access to internet. They don’t have access to a proper education. And that’s something that Mario has been talking about too, that we cannot –

[01:12:30] Aaron: But that’s a different issue, right? So that they don’t have a bank account it’s not a problem. That they don’t have Internet, that’s the problem then.

[01:12:38] Maria: Exactly, the Internet. There are a lot of old people that don’t even have to use a cellphone, etc. So there are a lot of issues that will not be solved with Bitcoin.

[01:12:48] Aaron: Sure. It is true that Chivo app – I think as long as there is an Internet connection, then you can use the Chivo app, right? So you don’t actually need to have Internet credits. As long as it’s getting free Internet basically if you have that for the specific app.

[01:13:06] Maria: Yeah. But what happen if you don’t have money to pay for your Internet? How do you think that they’re going to have money to buy some Bitcoin through the app or something like that?

[01:13:16] Aaron: Sure. But it’s an extra option that people can use if they want to. And not everyone will want to or be able to, I would say.

[01:13:22] Maria: Exactly. But the problem is that they want to make it mandatory.

[01:13:27] Mario: I think that I kind of understand the whole – The whole point is that using Bitcoin requires an integral education where you need to know about the technology, you need to know about how to prevent being a scam or trick it into using anything else. So I think that has been lacking from the government implementation. And I think it’s a critical issue, because many people doesn’t have the access to the tools that will allow them to solve or to use any technology. Let’s talk about any technology, not only Bitcoin, in an appropriate matter.

So I think that, again, I kind of understand the reasons why you think that Bitcoin is going to help the people. There is a lot of things that needs to be solved before the implementation. And most of them are related to education to make people understand how to use their own finances, because, again, there is people that let’s say they improve their economic situation, they have access to a banking account, but they never receive financial education. So they have a lot of depths and this kind of thing. So I think that if we are thinking on banking, the population that doesn’t have access to it, we need to tackle this problem in a more integral way so people can have all the tools not just the technology.

[01:14:51 01:14:51] Aaron: Yeah. I was going to say, one of the arguments is that Bitcoin actually helps leapfrog these kinds of problems exactly because people can’t get a digital bank account. Now with Bitcoin, they sort of leapfrog that and they can – There’s still a lot of education to be done. And of course not everyone has the tools or the skills for it yet, but you got to start somewhere, right?

[01:15:10] Mario: Yeah, but at least in the case of El Salvador, we also have this law regarding simplified bank accounts that doesn’t have all the requirements that traditional bank accounts have. I mean, it’s the technology, it’s this law that allow the use of the Stablemoney solution and also allow the banks to provide these simplified bank accounts that are electronic accounts that work only within the application. So if we already have like these experiments using electronic money, electronic solutions that doesn’t have these entry barriers because, I mean, it asks you for the same kind of information that the Chivo app asks you just your identification number and nothing else. So the question is why these solutions, these technical solutions didn’t work?

I think that the appropriate way to understand this is to explore this. And I mean, Chivo has like a million users. So if you want to compare the rollout of Chivo Wallet, I think that you need to compare with an existing solution. I know it’s not the same. It’s not the same technology, but it has – I mean, it lacks the barriers that the traditional bank system has. So it could be a good start to understand the implications, the kind of problems that the people face, and obviously understanding all of these and learning from the previous experience will allow us to think what’s the best way to implement Bitcoin or any other cryptocurrency or related technology.

[01:16:47] Aaron: Yeah. Well, actually, so I think that the big reason to do this has a lot to do with the dollarization of the country. And I think the government recognizes that this is a problem. And I would agree that it is a problem. You’re using – You’re very dependent on another country. You’re very dependent on the United States and their monetary policy. But I think this point has somehow not been brought up a lot and that might have something to do with it being more controversial. It’s very uncontroversial to say we’re going to help people use you know mobile app, and they’ll get electronic payments for the first time, and it’s cool. It’s much more controversial to say we’re going to move away from the dollar. It’s my suspicion, but I’d be curious to hear your thoughts about it. It’s my suspicion that they’re sort of intentionally not mentioning that very much even though that might be an underlying motivation to do this.

[01:17:36] Edgardo: Well what the problem that Mario was saying, and that’s why you’re totally right, is like the fight is like they’re saying they’re going to move away from the US dollar, because Mario talked about Tigo money itself. Tigo money has been around for what? Like five, seven years. What Tigo money does is you can utilize your actual cash money, go to a Tigo agent, put money into your electronic wallet and you can pay whatever – I mean, whoever will accept Tigo money.

I mean here, for example, if you go to your marketplace and you try to order something, either you go ahead and pay in person or you can go ahead and do a Tigo money transfer. But nobody says anything about it. I mean a lot of people, what it does from Cantonese, that’s what we call them here, canto, I personally have a Tigo money [inaudible 01:18:28] in my house. And there are people that are saying, “Old people don’t know how to use it.” They’re very smart. They learn how to use it. Why? Because Tigo money don’t allow remesas from Western Union and Moneygram. And they come to the house and says, “Oh, I got a remesa.” And you download it to your phone. And if you want it, you can cash it out or you can use it as electronic money to pay your water bill [inaudible 01:26:03]. I mean but they’re not saying anything as you mentioned. They’re kind of afraid that they want to move away from the dollar because people are used to use electrode money, I mean, since the last five, six years since Tigo money was implemented. So I don’t know why is that Maria is saying, “Oh, there is a lot of old people that don’t know how to use it.” Well, believe me, I mean 70% of the customers that I got on my house that come and get remesas are people that are like 65 years and older. And we teach them how to do it. And they do now the remesa and we give them the cash money there. So it’s not like about, “Oh, the old people don’t know how to use it.” They have learned how to use it. We teach them how to use it.

I mean it is the same thing with Bitcoin. I mean, nobody knows about it. I mean, but if they take the time to teach you how to use the Bitcoin, everybody will learn. And why is everybody afraid of? Because what the el president said was you can download the Chivo app on the states. You can send money with no fees. What was the headline of the newspaper? Western Union would lose $400 million of remesas this year if they use Chivo app. That’s what everybody’s afraid of, the big guys, the big sharks that, I mean, with the Chivo app, we know that it’s not working probably 100% right now. But say it is between the 40% and 50%.

But I mean, I talk to a lot of people, they’re on Texas, Los Angeles, they’re saying once the Chivo app gets all set up, what they’re going to do is they’re going to load the money to the Chivo app. They’re going to recargar, what they call it here. They’re going to send remesas. There is one problem here that the limit that you can withdraw here right now is one thousand dollars. I mean, when you go to Western Union or Moneygram, how much do they charge you to send one thousand dollars? They charge you around like $10 to $12 per each transaction. And with the Chivo app, it supposedly is going to be free. I mean, if you send it to me, for example, the United States, and I decided that I don’t want to receive it on BTC because the Chivo app has the option when it says if you want to receive the transaction, they send it to you. You have the option either to receive it via BTC or via USD.

I mean, if they send is whatever way they send over there, my Chivo app is set up to receive remesas only USD. So I just go ahead and cash it out.

So when they’re saying all people don’t know how to use it, that’s such a lie though, because 60% of the customers that I have with Tigo money that they go ahead and download remesas from Western and Moneygram in my house. They’re older people that comes and requests. They don’t allow to be made. So it’s not an excuse. And what they’re saying, “Oh, they need an Internet pakete. No because what we’re saying is if whatever area you have there is an actual Internet signal, even though you don’t have a pakete, you can go ahead and use the Chivo app. So there is not a thing of you have to buy a pakete of Internet or you don’t have to. I’d say you don’t need to buy a pakete of Internet so you can use the Chivo app.

I mean, at the end, once the application it is all set up, basically we will see exactly how it’s going to work. But I mean, there is a lot of backing forward. And I think what they’re afraid of is that I mean the El Salvador is trying to move away from the dollar. Remember what the speech of the el president said is, “Yes, we want us for you to help us out, but we don’t want to depend from you guys.” I don’t know if you remember that speech that he did. And that’s why everybody’s worried about. So it is a lot of political back and forward thing.

I mean, hoping once the Chivo app is all set up, I mean, everything runs and move for the Bitcoin community, that’s what all I have to say about. Thank you.

[01:22:51] Mario: Yeah. I just want to add a couple of things. First, I think that, well, nothing is free. And yeah, maybe Chivo is offering users no charges to whatever they send independently of the amount they send. But we are actually paying all these commissions with taxpayer money. And one user is telling me that people sending remittances can use bank to bank transference and they only pay $8 up to quantities from 1k. So people leaving Western Union and Moneygram to order cheaper options that doesn’t necessarily use Bitcoin or other technologies.

Again, I think that the problem here is that if you look at – I mean, if the government is paying for or all these small transactions, because at the end of the day, the guy that buys the Bitcoin at the US and pays for it, they are going to be charged by the operator of the credit card – The card operator. And there is a lot of small costs that the government is paying. That means that every citizen, salary is paying for this. And what this means is that this affects the adoption or other alternative options, because people think that it’s free even if it’s not true.

So this difficult the adoption of other solutions that maybe are working with Bitcoin or not that ideally they must compete in an open market. So people decide what kind of application they want to use if they want to use another different type of application that charges less or more. So this is not happening. I think that, again, I cannot be against a technology by itself, but I can oppose the way that is implemented because I think it affects the market. It affects the way that other participants can really offer the solutions. I mean, you say that there is a lot of investors that might want to participate on this on El Salvador economy offering their solutions. But if they are going to compete with a government wallet that offers a set of fee, you will not have any opportunities to participate on this market. And I think that’s harmful to the whole ecosystem and it’s against what you are trying to do guys with Bitcoin.

[01:25:18] CK: Thank you very much, Mario. I think we lost Aaron P. I think it’s getting uh close to time to wrap this one up. I appreciate everyone joining. And I thought that this was really helpful conversation. This conversation was recorded and will be available on Bitcoin Spaces in your podcast player or on the Bitcoin Magazine YouTube page in about two days. So check in on Thursday. We’ll be tweeting about it as well.

But again, a lot of good takes here. There’re a lot of issues with this implementation. It’s not perfect. I think you all the El Salvadorians have made it clear. Obviously, bitcoiners think that Bitcoin is a Trojan horse for freedom and financial literacy. So this is going to be the test. Does Bitcoin have the financial kind of robustness and purity as an asset to do what we think it will do for El Salvador despite pretty much every mistake potentially from the government according to many of the people here? And hopefully the values of open source continue to perpetuate.

I guess just one last word is check out Bitcoin 2022. Would love to you know continue to host these conversations and see what happens to Bitcoin across the globe and have that be the pinnacle again like with El Salvador for announcements and big moments in Bitcoin history to happen. So I think that’s going to be an incredible event, April 6th through the 9th in Miami, Florida. So b.tc/conference, check it out. A lot of great amazing things will be happening there.

But thank you to everyone who joined. Thank you to Aaron for hosting. Thank you to Bitcoin Beach. And, yeah, thank you again for just Bitcoin in the world and just seeing how all of this kind of shakes out. I do think that we’re living through history. But with that, let’s wrap this one up. And P feel free to close it out.

[END]



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