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Chivo Wallet, El American

El Salvador’s Bitcoin Revolution: Interview with Chivo Wallet Developers

For the developers of this project—which has attracted worldwide attention—Bukele is a visionary that other leaders will begin to imitate

  [Leer en español]

Franco Niebles and Juan Guillermo Sánchez are two Colombian entrepreneurs who have ventured into the blockchain world. Their experience in Colombia led Athena Bitcoin to contact them to participate in the development of Chivo Wallet, El Salvador’s digital wallet.

In September, the Salvadoran Congress passed the law that would make Bitcoin legal tender. A number of companies, including Athena Bitcoin came to the country seeking new horizons in a crypto-friendly country.

For the new ecosystem required to make a cryptocurrency economy feasible, the government needed the creation of a digital wallet—which would later become Chivo Wallet—for Salvadoran citizens to store their Bitcoin.

Although there were options for developers in the United States or Europe, El Salvador required experts in Latin American crypto developments, familiar with the needs and idiosyncrasies of Hispanics. That is where Juan Guillermo Sanchez and Franco Niebles, who already had experience in the world of financial technology and cryptocurrencies, came in.

The path that led Juan Guillermo Sanchez and Franco Niebles to develop Chivo Wallet

“In Colombia, specifically in Barranquilla, we had a development house and we had already been working on financial solutions, mainly for clients and third parties. After being in this world for four years, we saw the opportunity to create our own product and we knew there was a space, and that is where Cobru was born,” says Sánchez.

Cobru is a Colombian payment channel, where users in the South American country can make transfers to other users, buy streaming services, renew car insurance, and even use the application as a Wallet to store Bitcoin.

“We have a very important background in Bitcoin, we were part of the development of one of the most popular Bitcoin fundamentals, back in 2017, which is called Bitcoin Gold. So we already had experience in Fintech and Bitcoin. That helped us develop a product that had the best of both,” comments Niebles about the development of Cobru Wallet.

This experience in the world of financial technology and cryptocurrencies was what led the largest Bitcoin ATM company, Athena Bitcoin, to invite them to participate in a project in El Salvador, the creation of the first public Bitcoin Wallet: Chivo Wallet.

“We had previously worked with a crypto provider in Colombia, Polar, we started working on this product with them. At Polar, we had met someone who had experience in El Salvador placing ATMs with Athena,” says Franco.

In addition, Salvadorans are still highly dependent on the use of cash, so the Colombian team of developers had to work on a system that would integrate the functions of the Wallet and ATMs in El Salvador.

Sanchez and Niebles after their success with Cobru were contacted by Athena Bitcoin to work on a new project in El Salvador, Chivo Wallet (EFE).

Athena came to the Central American country, first, with the intention of placing its ATMs, but also saw the opportunity to create the digital wallet that the Government would surely need to encourage the use of cryptocurrency.

With this opportunity in its sights, Athena focused its sights on the two Latin entrepreneurs who already had a viable product operating in Colombia, to start working in El Salvador.

“When they saw the opportunity that a wallet needed to be developed, we got these three companies together to develop this project […] we showed it to the government, they liked it, because it was aligned with the solution they wanted to create an entire ecosystem,” explains Niebles.

“Basically we did a feed because we had a product that was very similar to the government’s needs,” added Sánchez.

In El Salvador, Niebles and Sanchez arrived with a complex task: to create an entire payments’ ecosystem around Bitcoin.

Before President Nayib Bukele decreed Bitcoin as legal tender, few Salvadorans knew about the cryptocurrency. During the debate in the Colombian Congress on its adoption, the streets were filled with thousands of citizens opposing the project.

Colombians seem convinced about the convenience of the introduction of Bitcoin for El Salvador’s economy: “All those who were reluctant then realized that it is really something that will boost the economy, that more money is moving, that there will be more investors. They will come in with more money to do a lot, to invest,” Sanchez added.

“There could have been friction, but the indicators already show it, El Salvador is projected to have a growth [of GDP] above 10%, the metrics speak for themselves,” says one of the developers of the Wallet about El Salvador’s economic prospects.

chivo wallet - el salvador - el american
Bitcoin still faces opposition and skepticism in El Salvador. (EFE)

One of the main needs of the new wallet was to adapt to the requirements of Salvadorans, who live in a country that is one of the largest recipients of remittances from the United States. Up to a quarter of its GDP depends on the arrival of these resources that pass through payment companies such as Western Union, which until now have charged hefty fees as guarantors of the transaction.

“On the part of the Government that was one of its main banners. It is already being seen. More than a million and a half (dollars) a day in remittance value is being processed,” Sanchez says of the wallet’s function. “The Chivo Wallet product does not have any commissions; the traditional payment companies were keeping 10% to 15% on the remittance issue. Now those percentages stay in the pockets of Salvadorans.”

For the time being, Chivo Wallet will remain a Bitcoin-only wallet, at least in the short term. “I don’t see it as something feasible in the short term (allowing other cryptocurrencies), because they are just beginning to educate people on the subject,” Niebles explains.

Chivo Wallet developers’ perspectives on the future Bitcoin city in El Salvador

Although Niebles explains that the cryptocurrency is still in adoption, President Nayib Bukele is taking giant steps and recently announced a Bitcoin city.

The city planned by Bukele will have all the typical services of a city, such as shopping malls, schools and hospitals, but will be aimed at creating an innovation cluster around cryptocurrencies. In addition, it will only have one tax: the value added tax.

The Bitcoin city will be located in the southeast of the country, near the Conchagua volcano. In this area, the crypto-metropolis plans to build a geothermal power plant that will take advantage of the volcano’s vapors to mine Bitcoin.

Despite Bukele’s expectations, for Sanchez, the project is still “a vision rather than a reality, but he already dared to take the first step which is quite important. Let’s hope it becomes a reality, because we believe it is something good not only for El Salvador, but for the whole world”.

In the middle of a euphoric audience the president of El Salvador Nayib Bukele announces the creation of a Bitcoin City. (EFE)

The cryptocurrency would be financed with Bitcoin-backed bonds. Although there is skepticism about the Government’s ability to meet its obligations, Sanchez seems convinced about the feasibility of financing the megaproject: “Although the Bitcoin is volatile, in the long term it is a currency that has a growth between 70 % to 100 % annually; the issue of bonds is for 10 years, so it is very possible that they will be met, since it is the trend that the Bitcoin has had since it was born.”

The DEFI vision and metaverse for entrepreneurs

One of the concepts that invaded the cryptocurrency world is that of decentralized finance, or DeFi. Chivo Wallet developers see a prominent future for this new technology that will not only have application in the world of finance, but even in new virtual reality developments, such as Meta.

“For us, it is clear that DeFi is the future of the financial system, as it removes the middleman in the value chain and transfers the benefit to the client and the consumer,” says Sanchez, who also believes that this financial innovation will lower transaction costs in the financial system.

For his part, Niebles, his partner, explains that they have plans to adapt the Cobru ecosystem to the needs of decentralized finance.

One of the recent developments in the DeFI world are NFTs, or non-fungible tokens, which, as Sanchez explains, “are basically what gives you ownership over a non-tangible product.”

For the Colombian entrepreneur, NFTs have great potential in the future metaverses that companies such as Meta (the former Facebook) are developing. “The value of NFTs will be seen in these elements because it is the way in which in this virtual universe you will have ownership over the things you are going to buy,” said Niebles.

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