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The Central African Republic (CAR) has announced that it will adopt Bitcoin as a legal currency. But it is doubtful that the move will help the nation, or the coin.
The CAR is the second country to adopt a cryptocurrency as a legal tender; El Salvador did so in September 2021. (Both countries opted for Bitcoin as their cryptocurrency.) Half a year later it seems that crypto adoption was a failure for El Salvador. Usage and understanding appear low and would-be users have met several technological problems (for instance, the scarcity of Bitcoin ATMs). President Nayib Bukele is suspected of being motivated by attention more than economics and the consensus is that the project was ill-advised and poorly executed.
The CAR’s infrastructure appears to be inadequate for widespread crypto use
Infrastructure in the Central African Republic is very poor. Less than 2% of the roads are paved and there are no rail lines. In 2018, less than 15% of the population had access to electricity. In 2016, less than 5% of the population had access to the internet.
Crypto requires fairly sophisticated infrastructure—or at any rate, far more sophisticated infrastructure than that of the current Central African Republic. Electricity and the internet are the two most essential factors, and mobile phones with internet access are a close second.
Unless Bitcoin’s adoption is accompanied by an impossibly large infrastructure expansion package, widespread use will not occur.
The CAR’s poor reputation for corruption will reflect unfavorably on Bitcoin
Crypto has struggled for some time to escape its reputation as an enabler of corrupt and illegal activity. The Central African Republic’s government is considered significantly corrupt. Corrupt nations’ adoption of Bitcoin will harm the coin’s efforts to shake its reputation and legitimize itself.
In El Salvador, the reputation of Bukele for populism and PR stunts reflected on crypto in a comparably poor way. The CAR’s adoption may intensify this harm. Chief of Staff to President Faustin-Archange Touadéra said, “This move places the Central African Republic on the map of the world’s boldest and most visionary countries.”
Ultimately, the scheme will likely fail
A successful adoption of Bitcoin does not seem possible for the Central African Republic. El Salvador failed, and the CAR appears far more poorly equipped in comparison. Crypto’s reputation will continue to suffer in the light of such moves.