Bitcoin is a variable asset and is known to swing more than 10% higher or lower in one day.
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The Central African Republic became the second country in the world to adopt bitcoin as its official currency after El Salvador took the same step last year.
Deputies in the CAR parliament voted unanimously to pass a bill to legalize bitcoin and other cryptocurrencies, according to a presidential statement.
Bitcoin will be considered legal tender along with the regional Central African CFA franc.
Lunch Namcio, head of President Faustin-Archang Tuadera’s cabinet, called the move “a decisive step towards opening up new opportunities for our country”, according to Reuters.
The CAR is rich in diamonds, gold and other valuable minerals, but ranks as one of the poorest and least developed countries in the world.
Approximately 71% of the 5.4 million people in the CAR lived below the international poverty line in 2020, according to the World Bank. And only 11% of the CAR population has access to the Internet.
The landlocked country in the heart of Africa has been gripped by political instability and violence for years.
The move to consider bitcoin a legal tender was praised by the crypto community and was hailed as another step towards the widespread adoption of cryptocurrencies.
But it can also be seen as contradictory. There were protests in El Salvador after the country introduced the bitcoin law, and the country faced criticism from the International Monetary Fund.
The IMF has called on El Salvador to abandon bitcoin as a legal tender, raising concerns about the risks it poses to financial stability and consumer protection.
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Bitcoin is a well-known volatile asset that raises questions about its role as a standard payment method. It last traded at around $ 39,686 on Thursday, down 6% in the last 24 hours. The cryptocurrency lost about 42% of its value after an all-time peak of more than $ 68,000 in November.
Many Western governments have raised concerns 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 United Nations.
Experts suggest that the move could help small countries like the CAR reduce their dependence on the US dollar for world trade.
Ransu Salovaara, CEO of the crypto platform Likvidi, noted that the dollar has been a global oil currency since the 1950s.
“Oil dependence is a major problem now, due to Ukraine and the ban on SWIFT banking, so global, irresistible cryptocurrencies like bitcoin can really shine,” he added.
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