Across the world’s troubled spots, resource wars and economic crises are being fuelled by a new kind of high-tech “blood diamond” – cryptocurrencies. Pete Howson, senior lecturer in Northumbria University’s geography and environmental sciences department, Newcastle, shares this view.
The Central African Republic (CAR) has become the latest country to adopt bitcoin as a national currency. The move follows last year’s adoption by El Salvador. But CAR’s sudden embrace of crypto is confusing. After all, El Salvador’s bitcoin adoption isn’t going well. A survey has revealed that 86% Salvadoran companies have never done a bitcoin transaction despite warnings from International Monetary Fund.
CAR, the world’s second-poorest country, is nowhere near ready for payments via cryptocurrencies. Yet CAR’s authorities threaten significant fines and other penalties on vendors who refuse to accept bitcoin for payments.
Analysts believe that the adoption of crypto-currency in CAR is intended to please the IMF and foreign money transmitters. But unlike El Salvador, CAR doesn’t have a large pool of diaspora working overseas getting stung with remittance fees when sending money home.
Is CAR trying to attract crypto rich investors? Unlikely, as land-locked CAR lacks the beautiful beaches and other trappings of crypto hotspots elsewhere. CAR is also among the world’s worst countries for internet access. What about the possibility of bitcoin mining using cheap renewables? Only 14% of CAR’s population has some access to electricity. Over 90% rely on foraged wood and charcoal for cooking and heating.
Cryptocurrencies are used to fund covert operations
While Salvadoran President Nayib Bukele makes his crypto proclamations with fanfare and fireworks, CAR President Faustin-Archange Touadera’s announcement last month featured a scanned copy of a press release, teeming with typos and posted on his Facebook page.
Touadera claimed it was necessary to “improve the conditions of Central African citizens” and make CAR “one of the world’s boldest and most visionary countries.” CAR’s former Prime Minister said the country’s crypto law was a rushed “proclamation”.
CAR has serious human rights problems. Human Rights Watch and United Nations experts recently said that since 2019, Russian fighters have been torturing, raping, and executing civilians across CAR with complete impunity.
CAR’s government relies on foreign military assistance to keep control, including through the Wagner Group, a private military security contractor with apparent links to the Russian government, and with a presence in other African countries, as well.
Russia has been able to use Bitcoin to finance covert operations in Africa, despite international sanctions. Bitcoin enables clandestine funding for activists to expand Russia’s influence in sub-Saharan Africa.
Cryptocurrencies are also putting the brakes on decolonization in Africa’s last colony,The disputed territory of Western Sahara where Soluna, an American bitcoin company, was recently given the go-ahead by Morocco to build a huge 900-Megawatt mining facility in the Saharawi region. According to Western Sahara Resource Watch, by setting up shop in the region, Bitcoiners are “strengthening Morocco’s belief that it can violate international law and human rights”.
Elsewhere on the continent, despite reported crimes against humanity by paramilitaries in Ethiopia, developers of the Cardano cryptocurrency are working with Ethiopian authorities to build digital-surveillance systems, including a digital ID and records system. Cardano wants to create a network of crypto-payments across Ethiopia, which will eventually connect the whole continent.
Many parts of Africa are rich in valuable resources. The colonial era saw European powers and their private corporations profiting from conflict to make a profit. The term “blood diamond” became well-known, defined as any diamond sold to fund military action in diamond-rich areas of Africa. Our research shows that across the world’s troubled spots, resource wars and economic crises are the ideal conditions for globally trading a new kind of high-tech blood diamond – cryptocurrency.