CAR Accepts Bitcoin

The Central African Republic (CAR) has officially become the first African Country to approve Bitcoin as legal tender and only the second in the world after El-Salvador led the way when it officially adopted  Bitcoin as legal tender back in September last year.

Despite being blessed with mineral riches such as Uranium, gold, and diamonds, CAR still languishes among the world’s poorest nations. 

The country has been wracked by conflict for decades and is struggling to maintain stability with the leadership employing various failed monetary policy controls to keep the ship afloat. The country is in close ties with the current Russian regime, and the Kremlin government has supported the struggling central African nation with mercenaries to help enforce stability but without much success. 

CAR President Faustin-Archange Touadera’s office released a statement reporting that lawmakers unanimously voted to adopt Bitcoin as legal tender. The statement further stated that the move puts CAR “on the map of the world’s boldest and most visionary countries”.

It has to be noted that it hasn’t been all gloss and bloom for Bitcoin adoption pioneers; in El Salvador, where the nation’s population has not really taken to the idea and the desired effects are still far away from being achieved. It has to be recalled that El Salvador’s Bitcoin adoption was hugely criticized by many economists, most notably the International Monetary Fund, which insisted that Bitcoin adoption would only increase financial instability. 

Major concerns have also been raised, with critics pointing out that cryptocurrencies like Bitcoin are not environmentally friendly due to their massive power consumption, and could contribute to a global rise in money laundering. 

For CAR, one of the major challenges is the need for access to the internet for any cryptocurrency transactions. In 2019, World Data reported that a measly 4% of people in the country had access to the world wide web – a big necessity for blockchain transactions.

Just like most former French colonies, CAR’s legal tender is currently the French-backed CFA franc. The country is reportedly being contested between Russia and their former colonial masters France.

Although some consider the CAR’s move to adopt Bitcoin as legal tender as an attempt to undermine France-backed CFA francs, it cannot go without saying that this is bullish news for the ever-growing cryptocurrency community.

The news was received amidst mixed reactions In the capital, Bangui. 

Economist Yann Daworo opined that Bitcoin would make life easier, pointing to the fact that Bitcoin transactions can easily be made with smartphones and the coins are easily converted to any other currency. He also noted that businessmen would no longer have to move around with large sums of money when going to make purchases.

He further argued that the CFA was not being used “to benefit Africa”. With calls growing calls from franc-related currency users like Cameroon, Chad, and DRC to drop the currencies due to their relationship with the colonial times and the ever-falling value of fiat, and the continued colonial control they come with.

Sydney Tickaya, a Computer Scientist, contended that the adoption of Bitcoin as legal tender is “premature” and “irresponsible”.

He further pointed out the lack of internet access in the country – a major necessity for Bitcoin adoption would be a major hindrance and that country had more pressing issues to attend to such as education and access to clean water.

For a country pledged by conflict since its independence in 1960, the government is struggling to find tools that can both support the people and give a glimmer of hope for some much-needed financial stability, and trying the internet’s popular “magic money” could just do the trick.

Although CAR is considered by political analysts as a failed state, the crypto world will be watching to see what direction this love will lead the country and whether other African countries will follow CAR’s lead.

Most of Africa’s central banks have strict policies, prohibiting banks from crypto-related transactions. However, this has only pushed cryptocurrency transactions belowground, with peer-to-peer trading platforms servicing this ever-growing need safely away from the prying eyes of the government regulators. Services such as LocalBitcoins are thriving in countries like Kenya and Zimbabwe whereas Binance’s p2p service is excelling in Uganda, Tanzania, and Kenya.

In terms of adoption in Africa, only South Africa comes close to CAR. The country actually has in place policies to regulate and tax cryptocurrency operations and actually operates a few Bitcoin ATMs. We await to see whether they too will take the bold move to adopt Bitcoin or one of the altcoins as legal tender.

Countries like Ghana have taken a different approach, with the inclination towards the adoption of digital currencies managed by their own central banks. Nigeria led the way with the creation of the eNaira in 2021, and Ghana is closely following in its footsteps.

With smartphone and internet adoption on a fast rise, we are bound to see more countries adopt their own digital currencies, or will officially adopt Bitcoin or other cryptocurrencies as legal tender.

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