El Salvador will no longer freeze the price of Bitcoin (BTC) in the Chivo Wallet to fight against speculation

The Chivo Wallet suspends the option that freezes the price of Bitcoin (BTC) for 1 minute

On October 18, 2021, the Chivo Wallet, the official digital wallet offered by the state of El Salvador, announced the deactivation of the option that frees the Bitcoin exchange rate (BTC). This option blocked the digital currency price while the user completed the switch from dollar to Bitcoin. A similar mechanism can be found on cryptocurrency exchanges like Binance.

Hemos tenido that temporally deshabilitar the option of ver el precio del Bitcoin congelado lasting a minuto.

Lamentably, muchos de nuestros usuarios lo utilizaban para hacer “scalping”, que es legal, pero sin tener the opción de una tasa congelada.

🧵 Hilo:

– chivo (@chivowallet) October 18, 2021

“We had to temporarily disable the option to see the price of Bitcoin frozen for one minute. Unfortunately, a lot of our users have used it for scalping, ”explains the Chivo Wallet.

The official Chivo Wallet account ensures that speculators who exploit the option that blocks the price of Bitcoin are guilty of a form of “fraud”. During the minute the digital wallet locked in the cryptocurrency’s exchange rate, speculators were rushing to “compare the rate with other exchanges to see if the price of Bitcoin has gone down or up.”

“If Bitcoin rose, they bought, taking advantage of the fact that Chivo did not update its price; but if it fell, they sold, before Chivo is updated, ”continues the Twitter account.

By exploiting this flaw in the digital wallet, some Salvadorans have obviously managed to generate “an endless source of money” whose only limit is the number of transactions carried out.

👉 Also read: El Salvador concretizes its idea of ​​mining Bitcoin (BTC) with the energy of volcanoes

The Chivo Wallet attacks speculators

Scalping is a popular method among cryptocurrency traders. This practice involves taking advantage of market volatility by buying and selling assets over a short period of time. Usually, speculators complete several trades in the space of a day.

As the thread published by the Chivo Wallet points out, scalping is legal. However, some exchange platforms, including eToro, prohibit scalping. El Salvador’s government says speculation is considered legal only if traders do not profit from a frozen exchange rate.

As a result, the Chivo Wallet will go from the frozen exchange rate to “instant convertibility”. The government application will instantly adapt the exchange rate according to the price of Bitcoin. De facto, scalping enthusiasts will no longer benefit from a price freeze period. Users “can make the transactions they want, but with the actual rate updated instantly,” Chivo points out.

“We will allow the display of the price of Bitcoin for those who want to trade and even scalp, but it will be in real time and not frozen,” promises the Chivo Wallet.

After a chaotic start, the government’s digital wallet finally managed to win over Salvadorans. 1.1 million residents of El Salvador are reportedly currently using Chivo on their smartphones. According to President Nayib Bukele, the inhabitants of the country also deposit more money on the Chivo Wallet than they withdraw through vending machines.

👉 On the same topic – El Salvador’s largest bank now accepts bitcoin (BTC) payments

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About the author: Florian Bayard

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