Just one year after giving bitcoin legal tender, the Central African Republic (CAR) has abandoned its plan to revitalize its country. For what?
This is an opinion editorial by Jonathan Buck, founder of JB & GS Mining GmbH, a German Bitcoin mining hosting company.
In April 2022, the Central African Republic (CAR) adopted bitcoin as legal tender, becoming the second nation in history to do so. However, barely a year later, the nation reversed its decision. But what are the reasons behind this failure in CAR?
Difficult economic conditions
CAR, one of the poorest countries in the world, faces many obstacles, such as political instability, inadequate infrastructure and food shortages.
In the 2018 Human Development Index, CAR ranks second to last, with around 79% of its 4.7 million people living in poverty. More than three million people in the country would need humanitarian aid while more than 85% of the population lacks electricity.
One of the significant obstacles to the success of the Bitcoin project in the CAR was surely the limited internet access in the country. With only about 10% of the population with internet accesswidespread adoption of digital currencies was highly unlikely.
Although Bitcoin has helped bank the unbanked around the world, digital currency alone cannot solve all of a country’s underlying infrastructure problems. And although Bitcoin may be resilient off-grid, the lack of basic amenities such as electricity and internet in CAR has likely hindered the spread and usability of Bitcoin there.
Skepticism and international concern
The introduction of bitcoin as legal tender in the CAR has been met with skepticism, in part due to the country’s close ties to Russia, raising suspicions about its potential plans to use cryptocurrencies to circumvent sanctions.
The United Nations has also warned that developing countries like the CAR could face high risks and costs associated with cryptocurrencies.
And, ultimately, the economic benefits promised by Bitcoin proponents in the CAR never materialized. Ambitious projects, such as the construction of a “Bitcoin City“, either failed or never started, which further dampened enthusiasm for the digital currency experiment.
A larger trend?
Despite the disappointment in CAR, Bitcoin and other cryptocurrencies have been gaining ground in other African countries. For example, countries like Nigeria and South Africa have experienced a significant increases in bitcoin adoption, with millions of users now buying, selling and trading digital assets. In these countries, the growth of the cryptocurrency industry has been driven by factors such as the high inflation rate of local fiat currencies; a growing number of young, tech-savvy individuals; and a growing number of businesses accepting bitcoin as a form of payment.
Ultimately, bitcoin’s failure as legal tender in the CAR can be attributed to the country’s difficult economic conditions, skepticism surrounding its motives, limited access to technology, and unfulfilled peripheral promises.
But despite this setback, other African countries represent some of the world’s most promising and growing epicenters of Bitcoin adoption. On the contrary, this failure in CAR highlights the importance of developed environments and good faith intentions for the successful adoption of Bitcoin, at least for the first handful of countries hoping to succeed.
This is a guest post by Jonathan Buck. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.