Back in September, the government of El Salvador recognized Bitcoin as an official currency. Since then, Bitcoin has carried on strong, and the government has even announced the construction of a Bitcoin City, entirely dedicated to the cryptocurrency. But all is not as rosy as it seems. Recent claims of money vanishing from Salvadorans' crypto wallets are fueling discontent and skepticism around the digital currency.
To make it easy for people in El Salvador to use the cryptocurrency, the government has launched its own digital wallet named Chivo. This wallet allows people to manage their assets and, in a country where Bitcoin is now an official currency, to effectively manage their bank account. For a few weeks now, some Salvadorans have been noticing the mysterious disappearance of funds directly from their wallet. And while Nayib Bukele's government continues to trumpet its "success" on social media, locals complain about the government's lack of assistance with such matters.
Several internet users took to Twitter to complain, providing evidence of the disappearing funds. The amounts range from $100 to $16,000, all in Bitcoin. A thread from a Twitter user named "El Comisionado" with more than 50 tweets complains about a total of $100,000 disappearing from Chivo wallets. Some of the user's evidence has been present on the social network since December 18, yet the government has still not responded to the issue, preferring to promote its monetary system.
Hilo con algunos afectados por la Chivo Gualet.
1- $16,000 pic.twitter.com/EC3hehXKDz
— El Comisionado (@_elcomisionado_) December 18, 2021
Another issue raised by residents of the country sees hundreds of Salvadorans claim that hackers have opened Chivo wallets with their ID numbers. The goal: to claim the $30 bonus in Bitcoin offered by the government. Between October 9 and 14, Cristosal, a human rights organization in El Salvador, received 755 notifications from Salvadorans reporting identity theft with their Chivo wallets, according to Rina Montti, the group's research director.
However, the security system requires a scanned ID, front and back, to verify a person's identity, and then performs facial recognition to match the photo. The problem is that it's seemingly easy to bypass. A Salvadoran YouTuber named Adam Flores did a test with the Chivo account of his grandmother. A simple photocopy of her driver's license was enough, but, more importantly, the video-maker then used a photo of Sarah Connor -- a famous character from the "Terminator" franchise -- to perform the facial recognition step. And it worked. As a result, he was able to receive the $30 Bitcoin bounty linked to the account. If the security system really is this vulnerable, it's easy to see how hackers might have been able to use or access the accounts of other residents.
As the government continues to promote Bitcoin as an effective alternative to regain economic sovereignty, it would do well to start addressing these issues. Indeed, after this experience with the Chivo wallet, it's hard to imagine many Salvadorans rushing to move to the Bitcoin City that the El Salvador president hopes to build.