A who’s who behind El Salvador’s Chivo bitcoin wallet project

The decision by the tiny Central American country of El Salvador to make Bitcoin legal tender has helped put it in the global spotlight. However, understanding which companies are involved in the project — and how their efforts fit together behind the scenes — has been far from straightforward. 

The public has largely been left to cobble together information about the bitcoin rollout from disparate company press releases, government presentations, tweets from the country’s populist president Nayib Bukele, news reports and first-hand accounts. This has resulted in confusion about which companies are doing what, exactly.

What we know for sure is that El Salvador has launched a bitcoin wallet, called Chivo, and that it has launched a number of Chivo-branded ATMs. We know certain things about the capabilities of those tools. We know that El Salvador has also now purchased 700 bitcoins.

We also know that several commercial entities are involved: U.S.-based Silvergate Bank, Mexican exchange Bitso, California-based BitGo, and Koibanx, a fintech company with offices in Mexico, Argentina, Colombia, and Uruguay. Chicago-based Bitcoin ATM company Athena Bitcoin is also reported to be playing a role.

Here’s what we understand so far about all the pieces — and how they fit together.

El Salvador’s government

In June, on stage at a Bitcoin conference in Miami, President Nayib Bukele announced the plan to institute a law in El Salvador that would make Bitcoin legal tender. That law took effect on Sept. 7. The country says it’s optional for individuals to use the currency, but the law says that all companies must accept Bitcoin as long as they have the technology to do so.

September 7 was also the launch date for Chivo, El Salvador’s state-run crypto wallet system. Salvadorans can register for Chivo (which is local slang for “cool”) using their national ID number, which then allows them to do things like convert U.S. dollars loaded into the app into Bitcoin without a commission, withdraw money from Bitcoin ATMs, send remittances to other Chivo users and pay for goods and services at stores just using a smartphone. 

Anyone with a Chivo wallet can send money for free to other accounts, and people can use the wallet to quickly pay digitally for goods and services. In addition, businesses can use Chivo to accept payments and automatically liquidate Bitcoin transactions into U.S. dollars if they wish. The wallet is also compatible with Bitcoin’s Lightning Network.

To encourage bitcoin usage, the nation airdrops $30 worth to citizens who sign up for the wallet. The finance commission of El Salvador’s Legislative Assembly also approved a $150 million trust fund to support converting between U.S. dollars and bitcoin.

Bitso

Meanwhile, the “core crypto-service provider” for Chivo will be Mexican exchange Bitso, according to the company. The Bitso team told The Block that “Bitso's role is custody services providing storage and security services for the Chivo wallet, as well as exchange services."

According to Bitso, Chivo users can convert dollars to bitcoin and send remittances with no commission fees via the app.

“These conversions are backed and made possible by the fund that the government has put in place to guarantee USD to BTC convertibility,” the team added. “When users convert USD to BTC, they are doing so with the BTC that the government has purchased from additional liquidity providers such as Bitso.”

Silvergate Bank

Bitso's announcement  also mentioned that the exchange would work with California-based Silvergate Bank to “facilitate U.S. dollar transactions in the Chivo wallet."

When asked for more details, a Silvergate spokesperson only noted that Bitso is a "Silvergate customer and a SEN participant,” referring to the Silvergate Exchange Network (SEN), the bank's real-time, 24/7 payment network.

Athena Bitcoin

In addition to the wallet, the El Salvador government has also set up hundreds of commission-free Chivo-branded ATMs around the country, as well as in several U.S. cities. According to the website Coin ATM Radar, there are 205 Bitcoin ATMs in El Salvador itself, and Bukele has mentioned 50 in the U.S. 

Bitcoin ATM provider Athena Bitcoin appears to have a role in the Chivo ATMs, although confirming specific details has proven difficult. Two weeks before the Chivo ATMs rolled out, author David Gerard posted a diagram supposedly showing Athena running the back end of Chivo, which Salvadoran political satire outlet El Tapudo originally posted as a leak on Twitter. But according to one news report from Cointelegraph, Athena "will provide some front-end services and Chivo’s ATM-related operations." The Block was unable to confirm these reports with Athena.

Athena has confirmed it is rolling out ATMs in El Salvador, but the extent to which those machines have to do with Chivo is unclear. Athena does mention on its website that it "supports El Salvador’s mission to use Bitcoin as legal tender alongside the dollar and has installed 200 ATMs countrywide for easy access." That number would match up with the 200 Chivo ATMs the government has said it will provide. In addition to that, several outlets reported in late June that Athena planned to install 1,500 ATMs in El Salvador, without mentioning Chivo specifically. 

When reached via a Twitter direct message to confirm Athena's involvement in Chivo, CEO Eric Gravengaard declined an interview request, saying he is only doing interviews in El Salvador.

BitGo

Forbes reported on the day that Chivo launched that Palo Alto-based crypto custody provider BitGo is involved with Chivo as its hot wallet provider. The company confirmed that it is responsible for the app’s wallet infrastructure and security platform. BitGo has revealed very few additional details of its involvement publicly, however. 

Koibanx

Koibanx, which bills itself as a “leading Latin American asset tokenization and Blockchain financial infrastructure company,” is mainly responsible for Chivo wallet’s Lightning Network implementation and running its Lightning Network node, according to CEO Leo Elduayen.

This integration makes Chivo work with other lightning network-compatible bitcoin wallets in the country including Strike and Bitcoin Beach. 

Koibanx is also working on crypto projects in El Salvador that go beyond Chivo. “I would define Chivo as the initial spark that lights the flame,” Elduayen said, noting that Koibanx is expecting to announce some implementations in the financial sector and starting to hire a local team in El Salvador.

The company also recently announced it would be working with blockchain platform Algorand in El Salvador, saying that it had signed a “cooperation agreement” with the government to “develop its blockchain infrastructure on top of Algorand’s technology."

Elduayen clarified that Algorand is not involved with the Chivo project. He said Koibanx is working with Algorand’s protocol in El Salvador to create solutions outside the Chivo wallet itself, mainly aimed at financial institutions like banks. This involves both using Algorand’s stablecoins for remittances and payments, but also using its ledger to keep tabs on balances, he said.

“There are a lot of private companies in El Salvador that want to accept bitcoin because it’s a regulatory requirement, but they don’t want to handle bitcoin,” Elduayen said.