The Central African Republic’s crypto experiment is reckless

I am not quite sure what is going on in the Central African Republic (CAR). And more importantly, the country’s citizens don’t know either.

What is the Central African Republic?

Despite possessing vast natural resources – gold, oil, diamonds, uranium – the African nation is one of the poorest countries in the world. This is due to a number of different factors, most of which stem from the country’s colonial history. Since independence from France in 1960, there has been extreme instability between different religious, social and ethnic groups, which combined with different political ideologies has led to much violence, displacement and minimal opportunities for growth.

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The last outbreak of violence occurred in 2013. Malaria, HIV and malnutrition are also rife, and the life expectancy of 53 years is one of the lowest in the world. The maternal mortality rate is 8.9 per 1000 births and literacy is one of the worst in the world at 37%.

Bitcoin is legal tender in the Central African Republic

Of course, this is a country with many problems. Against this background, however, President Faustin-Archange Touadéra introduced Bitcoin as legal tender. By all accounts, this came as a surprise when the president announced in a series of cryptic tweets that the country was headed for such a move.

Insufficient resources

The move, while ideologically laudable, seems premature at best. Bitcoin is dependent on the internet and only 10% of the population has regular internet access.

Not to mention security, education and access to drinking water – since 2013 the country has been in constant conflict with numerous massacres along religious lines. The country has recruited the Russian mercenary group Wagner to fight the rebels in an increasingly bloody civil war and is now seen as an ally of Russia.

Tokenization of resources

Last week, the nation went a step further. Moving beyond Bitcoin and deeper into the cryptocurrency realm, the president announced that they would be launching their own cryptocurrency called Sango Coin. The “national digital currency” will go on sale on July 21 with a minimum investment of $500 and the amount to be paid in other cryptocurrencies.

The website says it will “facilitate the tokenization of CAR’s resources for global investors,” though I’m not sure how that’s supposed to work — for the average CAR citizen who doesn’t have internet access, let alone a career in the cryptocurrency space, it’s all a complete mystery.

“Sango Coin will be the new generation currency in the Central African Republic,” Touadera said, again without going into detail.

Conclusion

This is an extremely irresponsible and dangerous economic move by the government of the Central African Republic. There are all sorts of theories floating around as to “why” since it’s such a strange decision. Some even believe that there is Russian involvement, as the country wants to turn away from France and take a more favorable position towards Russia. Others say this will give the establishment an opportunity to engage in corruption and other illegal financial activities.

But whatever the reason, this is extremely reckless and unfortunate. The Central African Republic has huge problems – it doesn’t need a state-sponsored cryptocurrency with minimal explanations and details to “tokenize” its natural resources. What fundamentals, tokenomics, details will people know when this “Sango” coin is ready for sale? And how will the natural resources relate to that?

It also seems rushed and spontaneous rather than thought out and planned. Extreme experiments like tokenization of own resources with new types of cryptocurrencies are not the right thing to do if one’s own country has problems in almost every other area.

Honestly, I’m not sure what most of the information about Sango Coin even means. Even more troubling, I wonder if the president knows this.

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