In Spring 2022, the Central African Republic (CAR) became the first African country to adopt Bitcoin (BTC) as legal tender.
As the second country in the world to approve Bitcoin in this way, CAR has followed in El Salvador’s footsteps. Since then, El Salvador has boasted skyrocketing tourist numbers, a resilient economy, and a healthy dose of free PR since allowing its citizens to make everyday purchases with its ingenious cryptocurrency.
CAR, which is effectively a less developed economy than Central America, hopes to follow El Salvador’s success. Despite the country’s vast natural resource wealth, the Central African Republic is plagued by economic mismanagement, poor private and foreign investment, and systemic government problems.
It is one of the poorest countries in the world’s poorest continent and ranks last in the World Bank’s Human Development Index. Worse still, 85% Part of the country’s exports are held in the French treasury, and the currency of choice, the CFA franc, is heavily biased towards French economic development. As a result, utilizing a neutral, open-source and censorship-resistant monetary system like Bitcoin could not only benefit the country, but liberate it.
Similar to El Salvador, CAR law Make Bitcoin “Official Money”. Unsurprisingly, the decision was applauded by Bitcoin supporters around the world. Additionally, his CAR Faustin Arshange, a mathematician and Bitcoin advocate on his social media, appears to have tended to favor the adoption of his own cryptocurrency. ProBitcoin’s tweet resembles El Salvador’s keen-eyed President Naive Bukele.
mathematics is #language of the universe.#bitcoin universal money.
— Faustin-Archchange Touadera (@FA_Touadera) April 27, 2022
However, celebrations and support for the country among the Bitcoin community were short-lived, as the country launched its own token projects despite formal visits by Bitcoin-only supporters, including Galoy Money.Just days after bitcoin law came into force, the country surprised the crypto community Presentation Creation of a cryptographic token called Sango. A population of 5 million will also benefit from a “cryptocurrency hub” in the capital, Bangui.
In Senegal, West Africa, Cointelegraph asked Mamadou Mustafa Lee, the Central African engineer who oversaw the development of Coral Coin, about the development of the project. A payments expert, his Ly also runs a fintech startup, Kete Cash. Ly shed light on creating what he called “a token, not a currency”, labeled Sango. Coral is a token that accompanies the country’s plans to adopt Bitcoin as its legal tender.
First, Ly emphasized that the Bitcoin as Legal Tender Act clearly states that the country will adopt Bitcoin. No other cryptocurrencies or he Sango Coin was mentioned either. He makes a clear distinction between Sango and Bitcoin.
“The law stipulates that the legal tender digital currency is Bitcoin. We recognize it as the official currency. […] Coral Coin is a Central African Republic project. “
Sango Coin offers attractive incentives to foreign investors. This includes citizenship through investment, and ultimately his CAR passport, and governance benefits. In a way, buying Sango is a way to buy a right to reside in a country without touching government-issued fiat currency.
But why was this necessary? El Salvador did not create a new token to support Bitcoin adoption efforts. So why create CAR?
To compare the bitcoin adoption strategies of the two countries, both countries announced bitcoin as legal tender. From that point on they diverge. El Salvador initially allowed a foreigner to buy a residence right with his 3 BTC investment, but it has since been revoked. In CAR, you can get an e-residency. […] By locking a fixed collateral of $6000 SANGO coins for 3 years. In addition, foreign investors can use crypto tokens to directly access the country’s strategic resources, Ly explained.
To keep track of El Salvador’s rapid development without touching Bitcoin, the Central American country has issued Volcano Bonds. A volcano or bitcoin bond helped create a “bitcoin city” and is backed by a government. .
The now-defunct Luna Classic (LUNC) token was the last token to use Bitcoin as its treasury. The token meltdown has wiped billions of dollars out of the total cryptocurrency market cap and eroded confidence in the industry. So why create a token? Why build a system that is vulnerable to hacking and attack from malicious actors? , why would you do that?
Ly explained that Sango is a “government project.” The funds obtained from the sale of Sango Coin can be used to purchase Bitcoin, acquire materials needed for development projects, or be used for labor costs and other expenses.
It is important to note the dire financial situation of the country. While the country is classified as a “repressed” economy, according to the Heritage Foundation’s 2022 Economic Freedom Index, there continue to be reports that civil servants and government salaries are paid by the former colony, France. I’m here.
Bitcoin advocates hail Bitcoin adoption as a panacea for most modern problems, but in the Central African Republic, the priorities are clean water, security, education, and perhaps internet connectivity. With these motivations, the country needs investment — quickly.
At this point, Ly noted that the Central African Republic’s high level of external debt has made it difficult for the country to access traditional forms of financing. Sango Coin could be an alternative funding source. In fact, one can speculate that the quick liquidity provided by Sango is a way to revitalize much-needed foreign direct investment (FDI) into the country.
Related: ‘We don’t like money’: The story of CFA and Bitcoin in Africa
In addition, he commented that using crypto tokens would provide more flexibility and speed when making financial transactions, and reduce the risk of fraud. In a way, the use of Sango can circumvent the bureaucracy and slow administrative practices that Central African governments are known for. In addition, it has the potential to enable domestic investment flows without touching the dollar or local currency.
When asked why the Central African Republic did not simply use Bitcoin or the ultra-fast Lightning Network for these purposes, Ly said that Sango Coin was intended to serve as a token associated with government projects. I repeated that “It’s not a universal currency.”
Sango has more control over the flow of funds, thus reducing the risk of capital flight. Moreover, the World Bank notes that a country cannot develop its human capital without a sustained increase in domestic revenue mobilization. Sango could be the shortest path to a more solid return.
Bitcoin on the ground
Paco De La India, known as ‘Run with Bitcoin’ recently traveled CAR for two weeks in hopes of using Bitcoin to interact with Bitcoin people. He told Cointelegraph:
“None of the businesses accepted bitcoin. I tipped my guide in bitcoin. I paid my host in bitcoin.”
Aside from these small successes, Paco told Cointelegraph that Bitcoin adoption in the field has been minimal. In a country where less than 1/4 he of the country has internet access (a basic requirement for using “magic internet money”), it’s no surprise.
Regarding the creation of Sango Coin, Paco suggested that outside forces may be at work. CAR is very resourceful, so why couldn’t the French state project intervene in token creation? In fact, the token was created shortly after the country’s visit to Dubai, his one of the world’s cryptocurrency hubs.
Lee explained that foreign influences influenced the decision-making process.
“The idea for Sango Coin came from discussions between our Dubai-based private partner and the head of state.”
Also, while a deal was struck with a foreign investor, there was no indication that the former colonial rulers may be using Sango Coin to manage their resources. This is simply the easiest way to raise capital, and as Ly suggested, this capital can be used to buy bitcoin and build the country’s infrastructure.
Ultimately, the adoption of Bitcoin and the creation of Coral appears to be a ruse to inject much-needed FDI into the country and boost the country’s global standing. However, the creation of this token could alienate interest from the wider Bitcoin community, who are front-line investors in the places and jurisdictions where Bitcoin plans are announced.