Bitcoin as a means of payment in the Central African Republic
Although the Central African Republic’s GDP has grown steadily since its inception, the country still has a long way to go to reach the standard of living found in other Central or North African countries. Back in the 1960s, the country was ruled by a dictator who proclaimed himself emperor. After his overthrow, however, things were not much better. The country continued to face political problems.
Since 2004. The Central African Republic has been plagued by civil war – with only minor interruptions. Half the country has no access to electricity, despite its abundance of hydroelectricity. The infrastructure is dire, there is a growing smuggling problem, and the economy is based primarily on mining and agriculture. Obviously outdated, inefficient and environmentally unsound.
The National Assembly – the parliament there – decided to create a project to help make the national plan to fix the economy and move toward peace a reality. One aspect of this program is the acceptance of Bitcoin as an official means of payment. It would allow citizens of the Central African Republic to buy and sell with Bitcoin and even settle their taxes.
This makes the Central African Republic the 1st African country to take such a step. The National Assembly voted the law unanimously. However, it is difficult to assess for now what the impact of this decision will be. Interestingly – cryptocurrencies are more popular in Africa than it may seem. And this is despite problems with internet access or even electricity.
Africans want to pay with cryptocurrencies
As Mastercard’s report indicates: “New Paymenst Index” – Africans are very positive about fintech and cryptocurrencies. A total of 95% of South African respondents are thinking about using payment methods such as biometrics, cryptocurrencies, QR codes or contactless payments.
Cryptocurrencies alone are of interest to 41% of South African respondents. What’s more – 60% of respondents indicated that they are looking at cryptocurrencies more favorably than last year. The willingness to use cryptocurrencies is even more popular in Kenya (43%) and Nigeria (65%). As 81% of Kenyans indicated – digital payment methods help them save money.
What’s more – as many as 7 out of 9 unicorns in Africa are startups… fintech! For example, Wave, founded by two American serial entrepreneurs and based in Senegal. Why are fintechs and cryptocurrencies so popular in Africa? Among other reasons, because of the remittance market. I.e. expatriates who go “for bread” to Europe, Arab countries or the United States – often support their families, clans and even entire tribes by sending part of the money earned in exile.
However, international transfers from Europe or the United States to Africa are usually very expensive and take a long time. Paradoxically, converting earned dollars or euros to Bitcoins or Ethereum is faster and cheaper. Latin American countries such as El Salvador often have the same “problem”. Hence the popularization in these regions of cryptocurrencies and other fintech solutions that speed up operations and make them cheaper.
In El Salvador, Honduras SEZ and Lugano you can also pay with Bitcoin
The 1st country in the world to recognize Bitcoin as an official means of payment and recognize it as the 2nd valid currency was El Salvador. The president there, Nayib Bukele, is a well-known cryptocurrency enthusiast. Bukele even wants to establish a Bitcoin City in El Salvador to attract foreign investors. While not everyone in the state liked the president’s idea (as it sparked few protests), it’s fair to say that adoption of the new currency is lightning fast there.
The problem, however, is the US Congress, which wants to somehow influence Bukele’s decision. A bill that would look at El Salvador’s legislation to recognize Bitcoin as a means of payment has been introduced there by Congresswoman Norma Torres. The parliamentarian believes that El Salvador’s decision is a reckless gamble that could destabilize the country.
Moreover, it undermines the position of the dollar as an international currency and could weaken the sanctions policy imposed on countries such as China and Russia. For now, however, Bitcoin’s position in El Salvador is unthreatened.
Another country that considered the digital asset as an official means of payment is Honduras. This country ultimately decided not to take the same step as El Salvador – with one exception. Bitcoins can be officially paid in the Special Economic Zone of Honduras, but not throughout the country.
A similar decision was made by the Swiss city of Lugano, where Bitcoin was also recognized as an official means of payment. Ukraine has also decided to accept cryptocurrencies and has even set up its own state-owned cryptocurrency wallets (BTC, ETH and USDT). These are used to transfer aid to the eastern European country.
The adoption of cryptocurrencies is increasing every year and they are increasingly becoming our reality. The emergence of digital means of payment is already rather hard to stop. Moreover – many countries in the world are now working on their own version of digital currency.