The Central African Republic’s (CAR) unexpected decision to adopt bitcoin shows once again that a first-class cryptocurrency can replace fiat money. However, this African country still needs significant investments in its telecommunications infrastructure. The CAR also needs to prioritize education to familiarize its citizens with the basics of cryptocurrencies.
CAR is an expensive internet
{The Central African Republic’s
decision to recognize bitcoin (15} BTC) as legal tender certainly took many by surprise. Few expected that the Central African Republic, one of the poorest countries in Africa with an economy devastated by civil war, would be the first to accept bitcoin.
For critics who are still trying to understand why other countries, following El Salvador, have made bitcoin legal tender, the CAR’s move is perplexing. First of all, they cannot understand how a country with low internet penetration – less than 12% – chose a first-class cryptocurrency as a transaction currency.
The lack of infrastructure in the Central African Republic and the fact that cell phone service is only available to 30% of the population seem to undermine the case for bitcoin adoption. Furthermore, according to the2018 CAR ICT Profile, the country’s then “uncertain institutional situation” allegedly held back investment in broadband networks and access to cross-border submarine cables.
According to the ICT Profile, a number of other factors forced the Central African Republic to rely on expensive satellite connections for much of its international Internet bandwidth, resulting in high Internet prices. Expensive Internet is one of many barriers to adoption.
Despite these seemingly insurmountable difficulties, bitcoin advocates and supporters of alternative financial systems are convinced that the Central African Republic decision proves that digital currencies can play a role. This is especially true for a country cut off from the global financial system.
Private money can become legal tender
forfollowers of Friedrich Hayek, the famous Austrian economist and proponent of private money. The adoption of bitcoin in El Salvador and now in the Central African Republic proves that he was right – there really is a place for private money.
Some believe that more and more countries will make bitcoin legal tender, despite strong opposition from institutions such as the International Monetary Fund (IMF). Indeed, reports that some 44 countries participated in the recent bitcoin expo in El Salvador suggest that more countries may follow suit.
It is natural to assume that the CAR plans to invest heavily in developing its telecommunications infrastructure, but there is no guarantee that more money to do so will change attitudes toward bitcoin.
Therefore, CAR needs to ensure that funds are allocated to efforts to increase public understanding of bitcoin and how to buy bitcoin for the first time. Indeed, education remains the key to eradicating ignorance not only in the Central African Republic, but also in many developing countries.
Learning the basics
Most of the more than 5 million people in the CAR need to learn the basics of bitcoin wallets, recovery phrases, and public wallet addresses. If this is achieved, the chances of the CAR becoming a country where bitcoin functions as legal tender and transactional currency will greatly increase.
In addition to educating the public, CAR needs to work with players in the cryptospace, such as cryptocurrency exchanges, payment processors, and wallet providers. Just as El Salvador was the first to embrace bitcoin and subsequently turned to cryptocurrency exchange services, African countries also need to work with established players in the industry.
If the Central African Republic decides to follow the recommendations suggested in this article, it is possible that bitcoin will reach its goal and become the country’s main currency faster. The same can be said of other countries wishing to make bitcoin an alternative legal tender.
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