Many countries in Africa are still among the developing countries, and many countries in the southern continent lack a stable financial system and a non-corrupt government. Despite the lack of internet access in many places, people and governments in Africa are looking forward to a “savior” in particular: cryptocurrencies.
After San Salvador in Central America, the Central African Republic aims to become the second nation in the world to adopt Bitcoin as its national currency. In this article we explain the reasons behind African crypto offensives and what effects the Bitcoin revolution may have.
Central African Republic: Bitcoin as a savior from a precarious situation?
The news that the Central African Republic (ZAR) wanted to introduce Bitcoin as a new national currency caused many experts to ponder. After all, according to the United States, the country is one of the least developed nations in the world.
An average annual income of €500, as well as a civil war that has been going on for over nine years, hunger and poverty in every corner. Considering that only 11% of the nearly five million inhabitants have access to the Internet, Bitcoin’s modern plan seems extremely bold.
However, Head of State Faustin Archange Touadéras seems confident that his plan could save CAR. With cryptocurrencies, the country would have an easy way to participate in international trade.
According to the President of the Central African Republic, Faustin-Archange Touadéra, his country’s launch of the “mona Sango” currency, as well as the call for the creation of a common digital currency by the regional central bank, represent two main achievements of his country. pic.twitter.com/L0KuuDHidQ
— Crypto Launch (@cryptolaunch_) August 15, 2022
In addition, Touadéras probably expects the value of Bitcoin to increase in the coming years. Even if the president is playing it big, there is no chance that BTC will at least flush money into the coffers of the Central African Republic.
The head of state also hopes that cryptocurrencies will fill the ZAR’s empty coffers since the introduction of its own state token. The so-called Sango Coin is protected by bitcoin reserves and even offers the possibility of creating smart contracts.
In fact, one can become a citizen of the Central African Republic by investing in Sango. A minimum of USD 60,000 must be maintained in Sango Coins for five years to obtain African citizenship.
The ZAR government wants to raise about a billion USD with its own crypto coin to boost decent infrastructure development. In addition, Touadéras plans to turn an island republic into Africa’s first crypto hub where cryptocurrencies can be traded tax-free.
The interest and influence of African countries on cryptocurrencies is increasing
As market observers from Block Builders suspect, the influence of African countries on the crypto market may increase significantly in the next few years. Because in addition to the ZAR, the governments of Tanzania and Uganda are also discussing the possibilities of profiting from cryptocurrencies – the Bitcoin hype has come to Nigeria especially for a long time.
The Chain-analysis portal recently announced that between July 2020 and June 2021 alone, more than USD 100 billion in cryptocurrencies were transferred from Africans. A 1,200% increase compared to the previous year shows significantly how much interest and demand crypto coins have in African countries.
One country in particular is driving the crypto progress alongside the Central African Republic: Nigeria. In other business areas, funding in Africa increased by just under 150% within a year, with blockchain projects achieving funding growth of 1,660% – with the largest share coming from Nigeria.
More than 39% of blockchain funding comes from Nigeria, followed by Seychelles (26%) and Kenya (15%). In an intercontinental comparison, Nigeria is even in third place in Google’s highest trend score, which shows the amount of searches for the term “Bitcoin” – just behind the Netherlands and El Salvador.
Reasons for the African crypto hype
There are many reasons why a majority of African citizens are looking forward to the crypto revolution. The following features make Bitcoin and Co. particularly interesting as a currency for African nations:
Protection against arbitrary government leadership
In many African countries, corrupt politicians or even military groups are in power, and often make unpredictable decisions. With money in the form of Bitcoin, citizens have a degree of protection from regulations that affect their own assets.
For one, bitcoins are not as easy to steal and confiscate as cash. On the other hand, government measures only affect the main national currency, but not the internationally valid cryptocurrencies.
Protection against inflation
Along with security from domestic arbitrariness comes the protection from inflation that cryptocurrencies can offer to some extent. After all, the total Bitcoin supply cannot be increased simply because the maximum supply is set at 21 million BTC in the whitepaper.
Easy transfers abroad
Many African families have relatives in other countries, but find it difficult to engage in financial exchanges with them. With cryptocurrencies, people have a way to make easy, fast and cheap money transfers all over the globe.
ATMs are not required
Sounds banal, but it’s true: In underdeveloped countries like the Central African Republic, there aren’t many ATMs or cash dispensers, which is why many people have to store all their money at home, without security. However, there is no need to use an ATM with Bitcoin because the assets are stored safely in an online wallet.
Due to the fact that society in African countries is getting younger and younger, more and more people are growing up at least partially with the internet and technical devices. As a result, more Africans are embracing the benefits of blockchain-based currencies instead of the country’s uncertain fiat currency.
Cryptocurrency in cooperation with Russia and circumvention of sanctions?
Some experts believe that African countries and ZAR in particular are adopting Bitcoin as their national currency to kill two birds with one stone.
The Russian mercenary group Wagner has been monitoring mine construction in several African regions for years. It is said that around 2,000 fighters from the mercenary group are in Bangui, the capital of the Central African Republic, to protect President Touadéras.
Resource extraction rewards and exploitation could be paid to Russia through cryptocurrencies in the near future. Thanks to the anonymity of Bitcoin, the dubious cooperation between Russia and African states could continue without ZAR being punished by global Western sanctions.
A few weeks ago, the Managing Director of the International Monetary Fund, Kristalina Georgieva, was asked about this issue. In response, she only stated that there was no solid evidence that the Central African Republic was using cryptocurrencies to circumvent Western sanctions.