Bitcoin and cryptocurrency are now officially legalized in the Central African Republic (CAR) as legal tender. This makes CAR the second country to do so, following El Salvador's cryptocurrency adaptation last year.
Members of parliament in the CAR voted unanimously to pass a bill legalizing bitcoin and other cryptocurrencies.
Bitcoin will be recognized as legal tender in the same way that the regional Central African CFA franc will be recognized as a currency.
The president of the Central African Republic, Faustin-Archange Touadera, stated that the action would "improve the conditions of Central African citizens" and differentiate the country as one of the world's boldest and most visionary nations.
CAR's Bitcoin and Cryptocurrency Adaptation
The Central African Republic is one of the world's poorest countries, although rich in natural resources such as diamonds, gold, and uranium.
It has been devastated by turmoil for decades and is a close Russian partner, with soldiers from the Wagner Group assisting in the fight against insurgent forces in the country.
Although lawmakers unanimously opted to recognize Bitcoin as legal tender, only 11% of the population have access to the internet.
As reported by BBC "The internet is needed to use any cryptocurrency but in 2019, just 4% of people in CAR had access to the web, according to the WorldData website."
The CFA franc, which France backs, is the currency in use in the country, as is the case with most other former French colonies in Africa.
Critics believe that the adoption of Bitcoin is an attempt to destabilize the CFA as part of a competition between Russia and France for control over the resource-rich country.
Instability of the Cryptocurrency Adaptation
The cryptocurrency adaptation comes with its plethora of advantages and disadvantages.
Numerous experts, market analysts, and public officials question the legalization based on the country's capabilities.
The Central African Republic (CAR) is a landlocked country rich in natural resources such as gold and uranium, but it remains one of the world's poorest countries.
According to The Verge, as a result of the civil strife that has engulfed the country since 2012, only 11 percent of the 4.8 million of their population has access to the internet. It is one of just six African countries that uses the Central African CFA franc as its official currency.
It has been speculated that the Central African Republic's adoption of Bitcoin is an attempt to weaken the CFA franc and send a message to the country's former colonial power, France.
In the crypto community, the decision to deem bitcoin legal tender was hailed as a significant step forward in the movement toward widespread adoption of cryptocurrencies in the real world. However, CRA's adaptation has potential risks.
According to CNBC, during 2020, the World Bank estimates that 71% of the CAR's 5.4 million residents is living below the international poverty line.
Furthermore, aside from CAR, El Salvador was the first country to legalize Bitcoin as their legal tender and adopt cryptocurrency. However, El Salvador also received the same criticism.
Many economists, including the International Monetary Fund, have expressed concern about the country's decision to accept Bitcoin as an official currency in September 2021. The IMF has stated that the measure increases the danger of financial instability.
Due to Bitcoin's reputation as a highly volatile asset, there are concerns regarding its suitability as a regular mode of payment.
