Afp, San Salvador

El Salvador on Tuesday became the first country to embrace bitcoin as legal tender, with consumer demand crashing its brand-new cyber “wallet” system even as the currency’s value seesawed against the US dollar.

Under the initiative of President Nayib Bukele, Salvadoran consumers can now legally use bitcoin -- along with the US dollar which has been the official currency for two decades -- to pay for any good or service.

Bitcoin can be bought and spent using a cyber wallet app called Chivo (which translates as “cool” in the local dialect), while cash can be drawn, in dollars, from some 200 bitcoin automated teller machines hastily erected countrywide.

While made possible by a law promulgated in June, in practice few people could make use of the new system on launch day.

Several who had gathered at a Chivo bitcoin ATM in central San Salvador to conduct transactions had to leave disappointed as the app was down. A few meters away, at a fruit and vegetable market, trade continued as usual with clients and vendors exchanging dollars.

“Bitcoin? No,” one vendor cut a customer short.On social media, bitcoin enthusiasts bragged about paying for burgers or pizzas at fast food restaurants, though not using the government app but other third-party platforms already in existence.

“We have disconnected it (the Chivo system) while we boost the capacity of the image capture servers,” Bukele tweeted in the morning, urging “a bit of patience” from those keen to join the experiment. The system was back up a few hours later, though only for users of certain types of cellphones.

Bukele claims the introduction of bitcoin will give many Salvadorans access to bank services for the first time.

and save some $400 million in fees on remittances sent home from abroad every year.

REUTERS