Bitcoin becomes official currency in Central African Republic

The Central African Republic (CAR) has allowed Bitcoin as legal tender – only the second country to do so.

The Central African Republic is one of the poorest countries in the world, but rich in diamonds, gold and uranium.

It has been plagued by conflict for decades and is a close ally of Russia, with mercenaries helping the Wagner Group fight rebel forces.

Lawmakers voted unanimously to make bitcoin legal tender, the CAR presidency said in a statement.

The move puts CAR “on the map of the boldest and most visionary countries in the world,” it said.

El Salvador became the first country to adopt Bitcoin as its official currency in September 2021 – a move criticized by many economists, including the International Monetary Fund, which said it increased the risk of financial instability.

Others have expressed concerns that cryptocurrencies like bitcoin could make it easier for criminals to launder money and that they are bad for the environment because they use so much electricity to generate.

Internet is required to use any cryptocurrency, but in 2019 only 4% of people in Central African Republic had access to the internet, according to the WorldData website.

The country currently uses the French-backed CFA franc as its currency, along with most other former French colonies in Africa.

Some see Bitcoin’s launch as an attempt to undermine the CFA amid a contest for influence over the resource-rich country between Russia and France.

“The context, given systemic corruption and a Russian partner facing international sanctions, encourages suspicion,” French analyst Thierry Vircoulon told AFP.

In the capital, Bangui, the response was mixed.

Economist Yann Daworo told BBC Afrique it would make life easier as transactions can be made using smartphones and it’s easy to convert bitcoin to any other currency.

“Business people no longer have to carry suitcases full of CFA francs that need to be exchanged for dollars or another currency to make purchases abroad,” he said.

He also argued that the CFA is not being used “for the good of Africa”. In several countries, there is increasing pressure from those who see it as a colonial relic to drop the currency so that France can continue to exercise economic control.

However, computer scientist Sydney Tickaya said he believes the cryptocurrency’s adoption is “premature” and “irresponsible.”

“Internet access is still underdeveloped in the country, while bitcoin is completely dependent on the internet,” he said, adding that the CAR has more pressing issues such as security, education and access to clean water.

The Central African Republic has suffered from ongoing conflicts since gaining independence in 1960.

In 2013, mainly Muslim rebels took control of the largely Christian country. Self-defense militias were formed to fight back, leading to widespread massacres along religious lines.

After President Faustin-Archange Touadéra took office in 2016, the country began shifting its strategic alliance from France to Russia.