Most Salvadorans have already ditched their national bitcoin wallets | Rest of Worldrestofworld.org/2022/el-salvador-chivo-bitcoin-wallet/
53 sats \ 9 comments \ @cryptocoin 17 May 2022 bitcoin
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5 sats \ 0 replies \ @cryptocoin OP 17 May 2022
I find it interesting that the Rest of World article did not mention Lightning network at all, and the working paper for the research referenced it just twice. The survey apparently did not distinguish between on-chain and Lightning payments at all, so there's no data saying that of the retail payments, how much was on-chain versus Lighting network, and as far as merchants accepting bitcoin, how much of that is on-chain online, Lightning network only, or both on-chain and Lightining. To be fair, there was Chivo wallet only added LN support in December, just a matter of weeks before the survey began.
From the working paper:
The survey was done at households in El Salvador. That means no Salvadoreans in the diaspora outside the country were interviewed, yet they are eligible to download and use Chivo wallet. So the survey missed a chunk of the Chivo user base.
Also, the survey only asked about use of Chivo wallet. If you were surveyed, and used Bitcoin Beach wallet, or BlueWallet, or Strike even, whatever, and used it daily, but never used Chivo, you would fall under the "Didn't download" category, which gives unfair weight to the "Chivo failed beyond the free money" and "Bitcoin fails as a medium of exchange" conclusion that was made. Salvadorean minors and foreigners in El Salvador wouldn't be Chivo users either (only Salvadoreans can use Chivo, and even then only those 18 or older).
The survey was at the beginning of 2022, so things may have changed between then and now (May 2022), but:
In my (limited) experience in El Salvador, everyone was using Bitcoin Beach Wallet and lightning over strike and chivo.
https://twitter.com/SteveDunleavy/status/1526234047038599168
The willingness to pay [a fee] to convert bitcoin into dollars is $2.9 on average, and that the median respondent would be willing to pay only $0.05.
That means half the surveyed users would not be willing to pay bitcoin's typical on-chain fees (which will always exceed $0.05). Good thing Lightning network exists, so they can use bitcoin essentially free of fees. (Though, because Chivo is a custodial wallet, sending bitcoin person-to-person incurs no fee and payment in bitcoin to merchants who use Chivo also incurs no fee. Withdrawing cash at an ATM, using bitcoin, incurs no fee.)
The only thing I cannot understand is, .... why would there be the expectation that Chivo users would have bitcoin to spend, beyond their initial $30 worth that was airdropped? They cannot buy bitcoin through Chivo, as far as I can tell (I could be mistaken, but I don't see it). And the survey showed that 88% of merchants who had any bitcoin revenues are cashing out into dollars the bitcoin they receive for payment. Nobody is going to go use Strike, for example, to acquire bitcoin that they then transfer to a Chivo wallet, only to then spend bitcoin at a merchant who uses Chivo. Why not just spend from Strike!
About the only use I think I myself would find with Chivo if I lived in El Salvador is that the ATMs can work well as a cash-in / cash-out (CICO) method. With 60% of commerce occurring in cash, adding Chivo gives a way to carry around less cash, but have access to more cash when needed. Similar to how mobile money is used in some African countries, except automated with ATMs instead of using an agent CICO network.
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40 sats \ 3 replies \ @KingZing 17 May 2022
The fact that Chivo saw mass adoption but most abandoned it after withdrawing the bonus suggests that Bitcoin in its current form “is not such an effective means of payment,” Álvarez said This quote only makes sense if Chivo was the ONLY bitcoin wallet.
Honestly it doesn't surprise me if most don't keep the bitcoin, they aren't exactly wealthy enough to sit through volatility. But that doesn't mean bitcoin isn't a great remittance tool, especially with lightning.
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20 sats \ 2 replies \ @ideasourcing 18 May 2022
they will regret it, as will all the poor people of the world, those who were forced in these inflationary times to sell their stack for fiat by force
though I'm not rich, I'm glad I'm not poor and forced to sell my stack
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20 sats \ 1 reply \ @KingZing 18 May 2022
Inflation isn't a scary beast until it lost control. they already have USD, which is the strongest fiat against other currency by far, trading 5 years ATH against many others
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11 sats \ 0 replies \ @ideasourcing 18 May 2022
Good morning, Plebs
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20 sats \ 1 reply \ @2bithits 17 May 2022
Seems very biased
Still may be true
At least in the next bull run Salvadorians will know where to get BTC
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0 sats \ 0 replies \ @cryptocoin OP 17 May 2022
Where do they get BTC? Can they buy bitcoin using Chivo wallet?
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0 sats \ 1 reply \ @cryptocoin OP 17 May 2022
Researchers say that those who continue using the Chivo Wallet are using it to hold and transfer dollars, El Salvador’s official currency, similar to how one uses any digital wallet or bank. Some respondents told the researchers that they use the app as a debit card for dollars, with 20% of Chivo users saying they now spend less cash.
Chivo’s launch was plagued with functionality and security issues. Though around half of the Salvadorans surveyed have downloaded Chivo to date, with 40% of those downloads happening in September 2021, around 61% of those have abandoned it after withdrawing the $30 dollar sign-up incentive.
Only 1.6% of all remittances were received in bitcoins via digital wallets in February 2022.
Many living in tourist hot spots on the Pacific coast, where Bitcoin usage is highest, have transitioned to other crypto wallets, such as the privately developed Bitcoin Beach.
Chivo download numbers have been negligible in 2022, suggesting that the push has run out of steam. Some of those who have stuck with the application are using it for transactions unrelated to Bitcoin.
According to Álvarez, the average user did not see an incentive to keep using Bitcoin rather than dollars.
Chivo is a “very expensive Square or Cash App clone used by an incredibly reduced and niche user base,” he told Rest of World.
Experts told El Faro that it is concerning that Chivo is being used as a large bank without having to comply with the usual financial regulations.
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0 sats \ 0 replies \ @cryptocoin OP 17 May 2022
The research referenced was shared in this paper:
Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador https://bfi.uchicago.edu/wp-content/uploads/2022/04/BFI_WP_2022-54.pdf
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