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Central African Republic use of Bitcoin as legal tender raises environmental concerns

The adoption of a cryptocurrency is unusual for a country where only 4% of citizens have access to the internet

The adoption of Bitcoin as legal tender by the Central African Republic (CAR) has been met with sustainability concerns from experts, with the expectation that other countries will soon follow.

Announcing the news on Wednesday, the CAR will adopt Bitcoin as an accepted alternative currency, alongside the country’s Central African Franc (CFA), thanks to a new law approved by president Faustin Archange Touadera.

CAR becomes only the second country to adopt a cryptocurrency as nationally accepted currency, behind El Salvador, which formally adopted Bitcoin last year.

The CAR “is the first country in Africa to adopt bitcoin as legal tender," said Obed Namsio, Touadera’s chief of staff, in a statement issued to media.

"This move places the Central African Republic on the map of the world's boldest and most visionary countries,” he added.

Technology and fintech experts have raised the issue that Bitcoin requires a large amount of energy in order mine new currency and its proof-of-work blockchain is not an environmentally-friendly operational model.

“The news that the Central African Republic (CAR) has become the second country to accept Bitcoin as legal tender is a worrying one for the environment,” said Joe Baguley, VP & CTO EMEA at VMware.

“It is a timely reminder of the fundamental mistake the founders of bitcoin made by building the cryptocurrency on a proof-of-work blockchain, which consumes an incredible amount of energy.”

The United Nations (UN) categorises CAR as one of the least developed countries in the world and has assembled the Minusca peacekeeping operation to help aid the humanitarian crisis that has been unfolding in the region for many years.

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Access to cryptocurrency, including Bitcoin, requires access to the internet and a device capable of handling a cryptocurrency wallet, such as a computer or smartphone. With just 4% of people in CAR having internet access, the situation has raised questions about the long-term viability of the cryptocurrency alongside the CFA.

Wider commentary has also focused on the potential of cryptocurrency-related crime, but one expert told IT Pro that CAR is unlikely to be the last country to adopt Bitcoin as legal tender.

“We can expect an increasing number of countries to follow the example of El Salvador and now the Central African Republic and adopt Bitcoin as legal tender,” said Nigel Green, CEO at deVere Group.

“I expect Bitcoin will be adopted as legal tender in at least one more African and one Central or Latin American country before the end of the year.

“In Africa, we believe Tanzania could be one of those countries. Its central bank said last year it was working on a presidential directive to prepare for cryptocurrencies. In Latin and Central America, it could potentially be Paraguay or Mexico next.”

El Slavador leads the way

El Salvador became the first country in the world to adopt Bitcoin as legal tender in September 2021, with president Nayib Bukele being well-known for his bullish stance on the cryptocurrency.

However, the move was met with a mixed response. Just days after the adoption became official, thousands of Salvadorans marched the streets protesting the move, setting fire to Bitcoin ATMs.

Many Salvadoran citizens thought the move to adopt Bitcoin was a political ploy to divert attention from Bukele’s scrutinised policies and research showed fewer than 5% of citizens fully understood the technology.

Critics at the time also drew attention to the official cryptocurrency wallet’s app permissions requesting access to a user’s microphone and contacts, permissions not typically required by such an app.

Addressing environmental concerns, Bukele announced plans to build a ‘Bitcoin City’ at the foot of a volcano in November 2021, saying energy harvested by the rapture in land could power the nation’s use of the technology, and the proposed city itself.

The International Monetary Fund (IMF) also urged the country to remove Bitcoin’s legal status at the start of 2022, citing risks to market integrity and financial stability. 

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