Last year, El Salvador set a precedent by making Bitcoin official a legal tender in the country. With this, they made it clear that if there is an intention, a cryptocurrency can be used to pay for purchases, to the State or any commercial transaction, and that it is supported. There have been attempts to make it official in other countries as well, and the first to follow it officially is the Central African Republic.
Economically, the Central African Republic is one of the poorest countries in the world, but it is rich in diamonds, gold and uranium. Legislators unanimously voted adoption of Bitcoin as legal tender, according to a statement from the presidency of the Central African Republic. This measure places the country "on the map of the most daring and visionary countries in the world"the statement said.
Another country adopts Bitcoin as legal currency
El Salvador became the first country to adopt Bitcoin as its official currency in September 2021. It was a move criticized by many economists, including the International Monetary Fundl, who said that the risk of financial instability increased due to the volatility that Bitcoin has always presented. Other agents have raised the possibility that cryptocurrencies in general can make it easier for criminals to launder money, and that they are harmful to the environment due to their high electricity consumption, which is generated by the two most popular. This is because Bitcoin and Ethereum still use proof of work algorithms, although at least Ethereum plans to go to proof of stake to use less electricity sometime this year.
There has been criticism of the adoption of cryptocurrencies as legal tender. First of all, you need the internet to use any cryptocurrency, but in 2019, only 4% of the inhabitants of the Central African Republic had access to the network, according to the WorldData website. That is that only one in twenty-five inhabitants of the Central African Republic even has the possibility of operating with Bitcoin.
Some see the adoption of Bitcoin as an attempt to undermine their national currency, the CFA Franc, backed by France and other French colonies, amid a competition for influence over the country between Russia and France. Several analysts believe that there are many stakeholders interested in Bitcoin prospering as a currency behind this decision.
Economist Yann Daworo stated that with this decision Bitcoin will facilitate the international economy, since transactions can be done with smartphones and it is easy to convert Bitcoin into any other currency. Regarding the latter, he comments that businessmen will no longer have to carry suitcases of CFA francs that they will have to convert into dollars or any other currency to make purchases abroad. He also argued that the CFA franc is not used for the benefit of Africa, and that calls are being made in several countries to abandon the currency by those who consider it a relic of colonial times.
Source: BBC
