The Central African Republic approved Bitcoin as legal tender, the second country to do so after El Salvador. Although the reaction has been mixed, this action puts CAR at the forefront of visionary government. In this thread, our community discusses the potential impacts of this action on CAR.
This Slogging thread by Mónica Freitas, Sara Pinto and Limarc Ambalina occurred in slogging's official #defi channel, and has been edited for readability.
Bitcoin becomes official currency in Central African Republic
"The Central African Republic (CAR) has approved Bitcoin as legal tender - just the second country to do so.
CAR is one of the world's poorest countries, but is rich in diamonds, gold and uranium. It has been wracked by conflict for decades and is a close Russian ally, with mercenaries from the Wagner Group helping fight rebel forces.
Lawmakers voted unanimously to adopt Bitcoin as legal tender, said a statement from the CAR presidency. The move puts CAR "on the map of the world's boldest and most visionary countries", it said."
El Salvador became the first country to adopt Bitcoin as an official currency in September 2021 - a move criticised by many economists, https://www.bbc.co.uk/news/world-latin-america-60135552, which said it increased the risk of financial instability.
Some see the adoption of Bitcoin as an attempt to undermine the CFA, amid a contest for influence over the resource-rich country between Russia and France.
In the capital, Bangui, the response was mixed.
Economist Yann Daworo told BBC Afrique it would make life easier, as transactions can be made with smartphones and it was easy to convert Bitcoin to any other currency.
He also argued that the CFA was not being used "to benefit Africa". There are growing calls in several countries for the currency to be dropped by those who see it as a relic of the colonial era, enabling France to continue to exercise economic control.
However, computer scientist Sydney Tickaya said he thought the adoption of the cryptocurrency was "premature" and "irresponsible".
What impact do you think this action can have on CAR? Is this a good way to help develop struggling economies or just a new opportunity for the wealthy minorities?
Mónica Freitas, we already know about the pros and cons of Bitcoin, but I'm not really sure how it can change when it's used as an official currency. I've read that there was pressure for El Salvador to drop Bitcoin as the official currency because of the financial stability. I wonder how it will work for CAR. I can see how it could work when it comes to financial struggles since Bitcoin can promote financial inclusion.
Sara Pinto, it also takes a lot of effort and resources to learn about crypto and be able to operate in that ecosystem. So maybe this strategy wouldn't work for people struggling financially.
I think this is huge for the crypto world and that depending on the results, can encourage other countries to follow suit.
What I’d hope to see as a result is more crypto and blockchain startups to choose CAR and other countries where crypto is legal tender to run their headquarters there. This would stimulate the startup economy and the economy in general in these countries.
Limarc Ambalina, that's a great point. However, I'm guessing the level at which crypto companies would migrate to CAR would also depend on the country's taxation and regulation for Bitcoin. I'd love this measure to have a meaningful impact on the poorer, but I don't see how that can happen.
Limarc Ambalina, how do you think bitcoin fluctuations can impact the nation's economy?
Mónica Freitas, I understand that for many it can be a strange concept, but everything is digital, so I don't know how much of a stretch it would be.It could take some effort, but I would say it's definitely closer that we might think.
Sara Pinto, I agree that it is closer than we think, but I still think there's a huge education gap to make a difference for the general population. The best case would be attracting crypto companies to CAR, but apart from that... I'm not sure. But hey, I'd love to be convinced otherwise.
Mónica Freitas, That sounds like a great for CAR to make the most out of it! They just have to make sure that there are enough resources for their population to take advantage of the situation as well.