El Salvador - Chivo Wallet is broken. This is how it was built.
Algorand and Koibanx were hired to build Chivo. Then they got elbowed off the project in favor of Athena. Now AlphaPoint is fixing it.
When President of El Salvador Nayib Bukele made Bitcoin legal tender, a state-run digital came with it: Chivo. But five months later, it is clear that El Salvador’s Chivo Wallet is a mess. Failure to access the wallet. Changes in the value of users’ accounts. These are some of the issues described in a recent report published in The Block Crypto.
There are several reasons why Chivo is broken, according to multiple sources who were based in El Salvador at the time of the roll-out and involved on the project.
First, Bukele hired approximately twenty sub-contractors to build Chivo Wallet as a neobank that would allow him to hook into the state-run bank Banco Hipotecario. One theory floated by a source was that Bukele wanted to have the ability to print Chivo stablecoins and inflate his way out of a stock of debt he is unlikely to be able to pay off. At one point, Chivo might have been thought of as Bukele’s money printer.
What is key here is that of these contractors, US Algorand and Argentine Koibanx were hired to lead the back-end development of Chivo. But Algorand is not the Bitcoin blockchain. That eventually caused headaches for the Bukele government when it realized how much Bitcoiners wanted Lightning Network integration built into the national wallet. It is understood that Bukele removed Algorand and Koibanx from leading the project and gave them a government blockchain to build instead. Bukele then hired Athena Bitcoin to finish the development of Chivo.
In the final weeks of the launch, one source says that because some key developers did not want to put their names on the flimsy fixes Bukele demanded, the president was forced to hire low-cost Venezuelan developers who promised to patch it together. Bukele got what he wanted: a sudden roll-out of Chivo. But also a dysfunctional piece of software.
AlphaPoint was hired in January to quietly fix the back-end of Chivo Wallet. The government announced it on Tuesday. One of the main complaints among Bitcoiners is that Chivo does not interface well with the Lightning Network wallets currently operating in the country, like Muun and Blue Wallet.
There are two sides to the Chivo dysfunction. The proliferation of well-built, functional lightning wallets like Muun and Blue could benefit if Salvadorans grow frustrated with Chivo. That’s good for Lightning Network adoption. But simultaneously, if Bukele does eventually try to leverage Chivo for purely political purposes, it could damage the reputation of the entire El Salvador Bitcoin experiment.