By Landon Manning
Following the decision from the Central African Republic (CAR) to begin using bitcoin (BTC) as legal tender in late April 2022, Marathon Digital Holdings (MARA) will begin advising the government to ensure a smooth transition.
Following in the wake of El Salvador in the late months of 2021, a second country has recently taken the radical new step of accepting bitcoin as a legally recognized currency: the Central African Republic. One of the world’s poorest countries, the CAR sits at the western edge of France’s former colonial territories, bordering several other French-speaking countries as well as Anglophone ones. Although rich in natural resources like gold, uranium and diamonds, political strife and economic instability have resulted from these resources, far more than any long-term economic development. As a possible solution to long-standing economic woes, the CAR has turned to the radically decentralized economic future of Bitcoin.
This decision was announced on April 27, 2022, with the president’s office releasing a statement claiming that lawmakers supported this decision unanimously. As for the main reason that the government is pursuing this highly unorthodox new plan, it seems fairly straightforward: an escape from the CFA franc. Just like El Salvador had previously used only the U.S. dollar as its legal tender, with any native currency snuffed out, the CAR and several of its Francophone neighbors share a currency they do not control: the CFA (Coopération financière en Afrique) franc.
Since its introduction at the time of nominal independence from France, the former colonies using the CFA franc are bound by several restrictions: Its value is entirely pegged to terms set by the French government, a substantial amount of all cash reserves have to be physically stored in France, substantial trade agreements ensure that it’s much easier to import French goods than export them in turn, as well as many other restrictions. Moves like this severely hamper any CAR government’s ability to carry out economic policy, actively discourage the development of any industry to actually process the nation’s substantial resources, not to mention the powerful “kill switch” that the French government holds by literally owning the government’s cash reserves. Is it any wonder, then, that for a new economic future, the CAR’s leaders are looking to a currency that is beholden to no government, that can spell a real vision of economic independence?
However, although the plan has been passed and the goal of achieving prosperity through bitcoin has clearly been determined, the actual rollout of this program is still in its infancy, with little clear knowledge yet of when and how the government will begin rolling out bitcoin to everyday use by its citizens. One piece of news on the rollout has been revealed: On May 11, 2022, Marathon Digital Holdings was contracted to help out the rollout in an advisory role, becoming “the official crypto partner of the Central African Republic and an adviser to the president on crypto strategy and planning.” They hope to increase internet access and national IDs in the coming months, and attract investment into the booming Bitcoin economy to help jump-start significant change.
There’s a world of possibility that can come for the Central African Republic as it embarks on this new national project. With all the opportunity that comes with embracing the dynamic and growing world of the global Bitcoin industry, the CAR seems poised to follow the radically decentralized economic vision of Bitcoin into a new future. Success in this country could show all the other CFA franc users, and indeed smaller nations worldwide, how they can take their economic future into their own hands when they bet on bitcoin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.