Bitcoin is a volatile asset, and has been known to swing more than 10% up or down in a single day.
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The Central African Republic has become the second country in the world to adopt bitcoin as its official currency, after El Salvador which did the same last year.
Lawmakers in the Central African parliament voted unanimously to pass a bill legalizing bitcoin and other cryptocurrencies, according to a statement from the presidency.
Bitcoin will be considered legal tender alongside the regional Central African CFA franc.
Obed Namsio, chief of staff to President Faustin-Archange Touadera, called the decision “a decisive step towards opening up new opportunities for our country”, according to Reuters.
The CAR is rich in diamonds, gold and other precious minerals, but ranks among the poorest and least developed countries in the world.
According to the World Bank, about 71% of CAR’s 5.4 million people lived below the international poverty line in 2020. And only 11% of the Central African population has access to the internet.
The country, landlocked in the heart of Africa, has been plagued by political instability and violence for years.
The decision to consider bitcoin legal tender has received praise from the crypto community and has been hailed as another step towards the widespread adoption of cryptocurrencies.
But it can also be seen as controversial. There were protests in El Salvador after the country introduced the Bitcoin Law, and the country was criticized by the International Monetary Fund.
The IMF has urged El Salvador to drop bitcoin as legal tender, raising concerns about the risks it poses to financial stability and consumer protection.
Bitcoin is a notoriously volatile asset, which raises questions about its role as a standard payment method. It last traded at around $39,686 on Thursday, down 6% in the past 24 hours. The cryptocurrency has lost around 42% of its value since an all-time high above $68,000 in November.
Many Western governments have sounded the alarm about Russia’s potential use of cryptocurrencies to evade sanctions amid the country’s invasion of Ukraine.
The CAR is a close ally of Russia, with Russian mercenaries providing direct assistance to the government, according to the UN.
Experts have suggested the move could help smaller countries like the CAR reduce their dependence on the US dollar for global trade.
Ransu Salovaara, CEO of crypto platform Likvidi, noted that the dollar has been the global oil currency since the 1950s.
“Oil addiction is a big issue now, because of Ukraine and the SWIFT banking ban, so global, unstoppable cryptocurrencies like bitcoin can really shine,” he added.