The Central African Republic Adopts Bitcoin As Legal Tender
The poor African country becomes the second country to adopt Bitcoin as legal tender after El Salvador
Bitcoin is now legal tender in the Central African Republic. The poor African country becomes the second nation to adopt the top cryptocurrency as legal tender after El Salvador’s move in 2021. Here is a look at why the Central African Republic is making a move with one of the most innovative as well as controversial forms of digital currency on the planet.
Why Is The Central African Republic Adopting Bitcoin?
Like many other smaller and poorer nations, the Central African Republic does not have its currency. Instead, the country has been using the French Franc as its currency. Today, the Franc is pegged with the Euro and enjoys a high level of stability. However, the Central African Republic would like to move away from its Colonial roots and establish a stronger form of independence.
Also, the majority of citizens in the Central African Republic are unbanked. That means that citizens are dependent on expensive transfer and remittance fees anytime they want to send or receive over long distances. Bitcoin allows anyone without a bank account to move as much money as they please without high fees or third-party interference.
Finally, the Central African Republic has aligned itself with Russia in recent years. They were one of the few United Nations members to abstain from voting to sanction Russia in a recent UN vote. Moving away from a European-based currency can help further its relationship with Russia.
The World Bank Warns Country About Adopting Bitcoin
While the Central African Republic hopes that the adoption of Bitcoin can help alleviate some of their country’s problems, they may start to see a big headache come in the form of the World Bank. The official stance of the World Bank is that Bitcoin should not be legal tender in any country. The World Bank warned against the Central African Republic’s move.
However, the Central African Republic is not expected to reconsider its recent decision. The country’s vote to adopt Bitcoin was passed unanimously by their Parliament. Therefore, Bitcoin is likely to be the country’s legal trend for a long time.
Challenges For Bitcoin As Legal Tender In the Central African Republic
The biggest challenge facing Bitcoin as legal tender in the Central African Republic has to do with access. Right now, only about 14% of the country has internet access. This will make it difficult for the everyday citizen to adapt to Bitcoin. However, the country is likely to set up public kiosks to make Bitcoin transfers more accessible.
Additionally, Bitcoin has come under heavy pressure since the cryptocurrency has been adopted by the Central African Republic. In fact, the value of the crypto has fallen over 25% since Parliament passed the Bitcoin legal tender proclamation on April 28, 2022. Which means a $1,000 investment is now worth less than $800. GDP per capita in the Central African Republic was last recorded at 928.59 US dollars in 2020, when adjusted by purchasing power parity (PPP). That means an excited CAR citizen who decided to invest lost what accounts to about 3 months worth of salary with no recourse to recoup those funds.
The Future of Bitcoin In The Central African Republic
Bitcoin has transformed the way people store and transfer wealth. Therefore, the top cryptocurrency may have transformative effects on the Central African Republic. That will depend on several factors including the adoption rate of Bitcoin among everyday citizens.
REFERENCE:
https://tradingeconomics.com/central-african-republic/internet-users-per-100-people-wb-data.html
