Bitcoin Experiment Fails in Central African Republic
BANGUI, CAR – In April 2022, the Central African Republic (CAR) made headlines when it became the second nation to adopt bitcoin as a legal tender, behind El Salvador. However, a year later, the nation halted its bitcoin experiment, leaving many to wonder what went wrong.
CAR’s bitcoin experiment
The CAR is one of the world’s most mineral-rich countries, yet one of the poorest economically. It has endured a nearly decade-long civil war that has devastated much of the country. Adopting a decentralized currency that a central authority cannot manipulate appeared to be an excellent alternative to any fiat currency because of ongoing power struggles.
The CAR’s adoption of bitcoin was announced on April 27, 2022, without much explanation other than it would create new opportunities for the country. To rally support, President Faustin-Archange Touadéra campaigned for the adoption. He tweeted “Vires In Numeris,” Latin for “Strength in Numbers,” to brand the experiment as having great potential for the population, but the economic benefits never materialized, dampening enthusiasm for the bitcoin experiment.
Why the bitcoin experiment failed
The CAR has an unreliable electricity supply, and only 10% of its population has access to the internet. While the government asked the public to be patient as it boosted the infrastructure needed for mass adoption, the lack of these basic amenities greatly hindered the spread and usability of bitcoin in the CAR.
However, economic conditions in the CAR are not the only factors leading to the failed bitcoin experiment. The world’s largest cryptocurrency has not yet proven itself ready to be adopted en masse as a plausible alternative to fiat currencies.
Global hesitation
The introduction of bitcoin as legal tender in the CAR was met with skepticism surrounding the government’s motives. This was partly due to the country’s close ties with Russia, raising suspicions that it may be turning to cryptocurrencies to bypass sanctions imposed on its ally.
The United Nations also warned that developing countries like the CAR could face high risks and costs associated with adopting bitcoin. Bitcoin transactions will cause significant disruptions in nationwide financial processes, such as tax levies and international trade.
Problems with mass adoption
While emerging markets such as the CAR are the best candidates for adopting bitcoin as legal tender, many countries lack the necessary infrastructure – such as internet access, bitcoin-compatible ATMs, and a robust electricity supply – which abrogates execution from the beginning. However, once these emerging markets develop their infrastructure, a move toward decentralized currency will be possible.
While infrastructure is certainly necessary to enlist bitcoin as legal tender, bitcoin itself is suffering from a lack of education – a side effect of its decentralization. It is good that bitcoin is not a centralized entity. Still, organizations and consultants must organize to promote education, value-added services, and infrastructure investments before they can be truly adopted as legal tender in any country.
