Ahead of the September 7 bitcoin law implementation date, El Salvador President Nayib Bukele has unveiled a new government crypto app. The government-issued app, which is known as Chivo, will be used to distribute the bitcoins to citizens.
According to reports, every citizen that downloads and registers for the app are automatically eligible for the $30 bitcoin airdrop. The president has said that the move is in an effort to bolster the adoption of bitcoin across the country.
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El Salvador became the first country to adopt bitcoin as legal tender when it announced it was doing so back in June. The announcement took place at the Bitcoin Conference held earlier in the year in Miami. Further, the president stated that it would be granting citizenships to individuals who invest 3 bitcoins into the country’s economy.
The plan was made public during a public address by the president last night.
Why A Government-Issued Wallet?
A simple answer to this question is logistics. The anonymity of bitcoin makes it so that people can create multiple wallets from other wallet providers. This would be a nightmare for the government to try to discern who was real or not, and who had already received their airdrops and was applying again. The government-issued wallet would ensure that the government can confirm that the users were actual citizens. And it will help to mitigate the likely issue of people trying to receive more than one airdrop.
It would also mean the adoption of a government crypto wallet. This could act as a central database for people using the coins.
Just because it’s government-issued does not mean people have to leave their coins in the wallet. Once they get their $30, they can simply transfer it out to any wallet of their choice. But there will at least be a record that they had already received their airdrop.
The airdrop is estimated to take around $117 million. This is accounting for the country’s population and then for the population for the eligible ages for the airdrop.
El Salvador has a population of 6.5 million. With estimates that about 60% of that number is above the age of 14. This means that about 3.9 million people would be eligible for the airdrop. This brings the monetary estimate out to $117 million. This translates to around 3,440 bitcoins.
Adoption In El Salvador
President Bukele took his time in the address to explain why they were doing this. He brought up that they wanted to encourage the use of bitcoin by citizens. And what better way to do that than to give people some free bitcoin to spend?
According to the president, “What we are doing is encouraging the use of bitcoin and encouraging the use of the system. Which is going to generate the multiplication of money in the economy.”
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The argument for the adoption of bitcoin by the president has always been to protect the unbanked. About 70% of the citizens of El Salvador are reportedly unbanked. This means that over half of the population has no access to a proper bank account.
In response to the rising rumors that wages and pensions will be paid in bitcoin, President Bukele assured the nation that no such thing was going to happen. Wages and pensions will continue to be paid in U.S. dollars.
During the address, President Bukele also did a preview of the Chivo app. He showed the graphics and how easy it will be to use them.
The app Chivo is not yet released for use. But it will be available for android and iOS devices. And it will be compatible with other cryptocurrency wallets.
Featured image from The Independent, chart from TradingView.com