El Salvador Using Crypto Software Firm AlphaPoint to Fix Chivo Wallet Problems

El Salvador has been using technology from crypto software firm AlphaPoint to fix a series of problems that have plagued its state-run bitcoin wallet Chivo, the government and the company announced on Tuesday.

AlphaPoint started shoring up Chivo’s problematic front- and back-end infrastructure for its app and payment processing capabilities in December after striking an agreement with the administration of El Salvador President Nayib Bukele, AlphaPoint co-founder and CEO Igor Telyatnikov told CoinDesk. But the parties didn't disclose the arrangement until Tuesday.

The change of supplier comes after hundreds of Salvadorans complained that hackers had illegally activated wallets associated with the nine-digit numbers on their identity cards and dozens reported on social media that money had disappeared from their Chivo wallets.

AlphaPoint is now providing the technology behind Chivo’s mobile application, mobile point-of-sale processing, merchant website portal, call-center support software and administrative console, it said in a statement. Telyatnikov said that “the majority of complaints” about the Chivo Wallet were prior to AlphaPoint's entry.

Before AlphaPoint, the operator of bitcoin automated teller machines, Athena Bitcoin, provided the technology infrastructure for the Chivo wallet, Athena Bitcoin told CoinDesk. The company did not specify the reasons for the contract's termination.

AlphaPoint has been in operation for nine years and currently has more than 50 clients, although the agreement with El Salvador is its first with a government.

According to Telyatnikov, AlphaPoint had unsuccessfully applied to be the software provider for the Chivo wallet before its launch in September.

AlphaPoint software aims to improve Lightning Network integration, accelerating transaction speed and reducing the cost of bitcoin transactions via QR codes and Lightning addresses. The Chivo wallet uses machine-learning facial recognition and authentication technology provided by digital identity startup Netki.

According to a tweet published by Bukele on Jan. 19, the Chivo wallet already has 4 million user, in a country with 6.5 million inhabitants.

CORRECTION (Feb. 2, 2022, 20:07 UTC): Notes that the facial recognition and authentication technology is from Netki.