rufuspollock
commented
2 years ago @stevesong great update and this seems a good candidate for an entry into the "wiki" under /notes/ (directory). Would you be up for converting this into note there e.g. at /notes/central-african-republic-adopts-bitcoin-may-2022?
I feel like there is a missing piece to the cryptocurrency puzzle and this is how it is playing out in the global south. It is easy to dismiss moves like the Central African Republic's decision to make bitcoin legal tender as a cynical decision to further empower a kleptocracy and no doubt that is partially true. However, this ignores the ignominious history of the CFA and the manner in which France has used the CFA to influence/control African economies. Sham of WhatHappenedLastWeek has a good take on this:
The Central African Republic (CAR) adopted Bitcoin as an official currency.
Why this matters: CAR is one of the world's poorest countries, but is rich in diamonds, gold and uranium. CAR is also the second country to adopt the cryptocurrency after El Salvador in 2021. Some 5 million people live here.
Why? The country's President Faustin-Archange Touadéra claimed the move would "improve the conditions of Central African citizens” and distinguish CAR as “of the world’s boldest and most visionary countries." The two former Prime Minister disagree. However, in general, both – Bitcoin and the decision to make it an official currency – have a lot of critics. For example, the International Monetary Fund (basically) says, 'it just makes things so financially unstable.' Others are like, 'criminals love Bitcoin. They can launder money much more easily,' and 'Bitcoin is super bad for the environment because it needs a lot of electricity.'
So... why did the government do this? It probably (but few people say this out loud) has a lot to do with France, and the CFA currency. The government is, again, probably trying to undermine it. France backs this currency; a lot of its former colonies – Cameroon, Chad, Republic of Congo, Gabon, and Equatorial Guinea – also use it. The story of the CFA currency is actually one of the most racist and colonialist stories that we don't talk about often enough. In short, France has total control over this currency that circulates in 14 African countries. It has many critics. For Review of African Political Economy, economist and author Ndongo Samba Sylla wrote about why the CFA franc no longer has a future.
Ah, this is payback then. Yes, and no. Others say, this has got more to do with Russia. CAR is on Russia's at the moment; it said 'no comment' on the United Nations vote condemning Russia's invasion of Ukraine – even though, one year ago, rumour had it that Russia had sent mercenaries (people that kill for money) to CAR, committing human rights abuses while fighting alongside the country's military.
Could there be another reason? Yes. Money. A lot of it. A recent report by Chainalysis (a blockchain data platform) found that between July 2020 and June 2021, Africans received US$105.6 billion worth of cryptocurrency payments (+1200% from the year before). This is also the reason why there are so, so many fintech startups on the African continent like Empowa (financing residential real estate development in Mozambique) or Pezesha (finding more lenders to invest directly in enterprises in Kenya). In short: Adopting Bitcoin could be a 'big middle finger to France', about Russia or about better access to (global) money.
What do people in CAR say? There are at least two sides: