Arley Lozano: “It Might Be Time to Shut Down the Chivo Wallet”

Arley Lozano, a notable figure in Latin America's Bitcoin industry, recently voiced strong opinions about El Salvador's Chivo Wallet. "The most sensible move would be to turn off the Chivo Wallet due to the controversy it has sparked since its launch," Lozano said. He cited numerous user issues, including account lockouts and instances of fraud, as key reasons for his stance. Lozano speculated that these challenges may have influenced the International Monetary Fund's call for El Salvador to distance itself from the platform.

Lozano, who led the programming team that developed the government app in 2021 to promote Bitcoin adoption, criticized the Salvadoran government’s decision to privatize the Chivo Wallet while maintaining uninterrupted service during the transition. "This decision is a mistake," he said, pointing out that better and more efficient technologies are now widely available. "This move only benefits competing companies offering Bitcoin wallet services, which will now attract Salvadoran users."

A Project Built in Record Time

The Chivo Wallet was developed in an unprecedentedly short timeframe of just 45 days, Lozano explained in an interview with BitcoinDynamic. Other companies had requested at least a year for a similar undertaking. However, the rushed launch on September 7, 2021, was met with widespread complaints about registration issues and payment processing errors.

Reflecting on the project's difficulties, Lozano revealed that the Salvadoran government had hired Athena, a U.S.-based Bitcoin ATM company, to spearhead the wallet's development. Athena, in turn, enlisted a network of developers, including Lozano’s team, to execute the project. By December 2021, however, Lozano’s team had been sidelined.

“The government marginalized us because Athena proved unreliable,” Lozano said. He added that economic constraints further complicated matters. His team, composed mainly of Venezuelans and Colombians, was deemed too expensive, prompting the government to outsource the project to Alphapoint, an American company that offered to continue the work at a lower cost.

Lozano believes that if his team had remained, the wallet’s functionality would have been more stable. "By December 2021, we had resolved many initial issues. However, the project was inherently complex, with multiple disconnected teams handling different components like KYC (Know Your Customer) and over 250 microservices," he said. Lozano now thinks the best course of action at the time would have been to halt the project and rebuild it from scratch with a cohesive team.

The Future of Bitcoin Wallets in El Salvador

Despite his frustrations, Lozano remains open to developing a government Bitcoin wallet in the future, now armed with greater experience. He is, however, disheartened by reports of users having funds locked on the Chivo Wallet as privatization looms.

Lozano views the wallet’s privatization as an opportunity for Salvadorans to explore superior alternatives. He predicts that global companies like Binance and Bitfinex, already popular in other countries, will gain traction in El Salvador. "The disappearance of Chivo Wallet opens the door for other cryptocurrency services, especially as Salvadorans look for solutions that suit their needs better," he said.

At the same time, Lozano warned of potential consequences for the existing infrastructure tied to the Chivo Wallet. "We don’t know if Bitcoin ATMs, service points, or the entire system will vanish alongside Chivo," he remarked. Lozano noted that while Bitcoin ATMs may already be outdated, many traditional ATMs now support cryptocurrencies, reflecting the evolution of global financial technology.

A Shifting Global Focus

Looking ahead, Lozano expressed hope for El Salvador’s continued role in Bitcoin adoption but acknowledged the shifting global narrative. "By 2025, many large nations will adopt Bitcoin policies that could overshadow El Salvador," he predicted.

Although El Salvador’s pioneering move to adopt Bitcoin as legal tender was historic, Lozano believes the global stage is evolving quickly. "El Salvador doesn’t hold much relevance globally—it’s become a boring country," he concluded, hinting at the rise of other nations poised to take bolder steps in the cryptocurrency space.