Central African Republic

After Initial Confusion, The Central African Republic Makes Bitcoin Legal Tender

Central African Republic Makes Bitcoin Legal Tender

The second country to make Bitcoin legal tender

Earlier this week, Forbes and other news sites reported that the Central African Republic (CAR) had made Bitcoin legal tender. However, it was later suggested the next day that the law featured regulation for all crypto and not necessarily legal tender for Bitcoin. But, after further confusion, more documents were released/analyzed, and Bitcoin was confirmed as the only cryptocurrency considered legal tender by the CAR government. As a French-speaking country, CAR previously only had the CFA franc as legal tender. 

The CAR unfortunately has a scarred past. There was slavery up until the end of the 1800s and a French occupation of the country through the early-mid 20th century. After winning independence from France in 1960, CAR became a republic but was plagued by civil wars until 2016 when a new government put at end to the fighting and division. As a result of the instability of the country, the amount of people with internet is a very low number: 4%. The government obviously believes that Bitcoin will be a valuable tool to bring internet to the remaining 96%.

The CAR is the second country in history to make Bitcoin legal tender, after the first country, which was El Salvador. El Salvador utilizes the lightning network for its transactions, and CAR will likely do the same thing.

Possible challenges

Since Bitcoin has been legal tender in El Salvador for over a year now, we can already grasp a decent picture of how successful it is so far. El Salvador, like CAR, has very low internet and banking rates, so Bitcoin was an attempt to bring these tools to the masses.

After some initial trouble with the national wallet, El Salvador hired some more companies for development like Alphapoint, and the Government's Chivo Bitcoin Wallet now serves over 4 million users. Outside technical problems with wallet software, the other biggest issue in El Salvador was a lack of understanding of the technology among citizens, which led to distrust. This is now being solved through free classes and other education tools. Through wide scale learning initiatives and analyzing how El Salvador fixed their technical problems, the CAR can largely avoid these issues in the first place.

The future of CAR

The Central African Republic is a small country, with only 8% of El Salvador's GDP. Their government is also young and hasn't had any experience dealing in blockchain or much of the tech industry at all. While these challenges will likely be difficult to overcome, the good news is there will be companies like Strike and Blockstream to speed up the process and ensure stability. Both these companies are integral to the Bitcoin work in El Salvador. The Lightning network is a secure, fast and cheap way to conduct daily transactions on the Bitcoin network, which will keep CAR's economy robust and efficient.

Since there are now two sovereign countries and a few territories that have made Bitcoin legal tender, more countries are taking notice and as a result, there will likely be more in the near-term future.

Cryptohopper