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The digital currency is soon to become an official means of payment in the African country. Experts are skeptical.
The Central African Republic is the second country in the world after El Salvador to allow the cryptocurrency Bitcoin as legal tender. In theory, it sounds simple: consumers don’t need coins, banknotes or bank accounts. Just a cell phone with access to the internet. Everyone can trade, pay or shop with Bitcoin – without transaction fees.
The government of the Central African Republic sees this as an advantage for its people. Many are poor, the country is considered underdeveloped and unstable. Bitcoin as the official means of payment is intended to make life easier for many.
But experts doubt. Fabian Schär, Bitcoin expert and professor at the University of Basel says: “The country has an internet throughput rate of 10 to 15 percent. That’s not a good premise.” Because without internet access there is no bitcoin in everyday life. “It’s also difficult when people don’t have any experience with the Internet and then something comes up that builds on that. Certainly a difficult step when dealing with this technology.”
Bitcoin already in El Salvador
This is also evident in El Salvador. The small country in Central America was the first to introduce Bitcoin as an official means of payment a few months ago. Bitcoin payments are no longer voluntary, as in Switzerland, for example, but companies and the state must accept Bitcoin.
Or would have to, because in practice some shops and restaurants accept Bitcoin. “But you have to assume that there are also a lot of places where it’s not accepted,” says Schär. But because the technical possibilities are lacking, many pay in dollars. However, according to experts, it is still too early to declare the Bitcoin experiment in El Salvador a failure. Because building the infrastructure takes time.
In Africa, too, bitcoin is unlikely to become a reality just because it has been declared legal tender. “It’s primarily about trying out alternatives. At the same time, it is also a marketing aspect if you want to establish yourself as a digital pioneer in the region,” says Schär.
Another, a third country, namely Panama, would like to allow Bitcoin as a currency. Nevertheless, many experts are very critical. For example, Christian Ambrosius from the Freie Universität Berlin, who, as a Latin America expert, deals with the introduction of Bitcoin in El Salvador.
Circumvention of international regulations
Ambrosius doubts that the well-being of the population is at stake: “The only plausible reason I can see is the attempt to attract parts of this capital from the shadowy realm of global capitalism.” It may be about circumventing international regulations in the financial system and feeding cryptocurrencies into the economic cycle.
“For example, the money from sanctioned Russian oligarchs, who of course have to see how they get the money, what niches or loopholes there are in the global financial market. And I suspect that the strategy of such countries speculate on something like that, »says Ambrosius.
The well-being of the population is an advanced argument, he suspects. If it were really about that, there would be more effective means than the introduction of a digital currency, especially since the price of bitcoin fluctuates greatly. This means that the population not only has a lot to gain, but also a lot to lose.