Insights

Another country adopts Bitcoin as legal tender. What does this mean for investors?

The small country of 5.5 million people recently made headlines for making Bitcoin legal tender.
The post Another country adopts Bitcoin as legal tender. What does this mean for investors? appeared first on The Motley Fool Australia. –

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

On April 27, The Central African Republic’s parliament voted unanimously to make Bitcoin (CRYPTO: BTC) legal tender. Unless you are familiar with your geography or keep up with politics in central Africa, this might be your first time even knowing such a country exists. The Central African Republic is now the second country to do so in the last year. El Salvador was the first country to recognize Bitcoin as legal tender in June 2021. 

Reasoning behind the law

Understanding the Central African Republic’s history helps clear the air on potential motives for this decision. The country is a former colony of France. Many of these former colonies still rely on the governments and financial institutions that once ruled them. 

The Central African Republic uses the CFA franc. This currency is used by six other countries within the region and pegged to the euro. To maintain this peg, the Bank of Central African States (BEAC) who oversees these six countries’ banking and financial policies is required to keep at least 50% of its foreign assets in the French treasury. 

Some believe this has limited economic development in the country. An embrace of Bitcoin will sever dependence on the euro and their former French colonial power. 

Bitcoin offers a way out

Countries that use currencies tied to Western economies have little to no say in economic policy. This is one of the main reasons why El Salvador made a similar move. Policies enacted in the U.S. or France eventually trickle down and negatively impact these countries’ economies. 

International economic policy tends to be decided by countries with the wealthiest economies. Naturally, these policies favor their own domestic interests. Smaller economies are left on the periphery and forced to deal with the hand they are dealt. 

Now there is a way out. Bitcoin levels the playing field. Because Bitcoin cannot be manipulated or controlled by a governing authority, smaller economies can make their own policies without needing consent from other world powers. Governments will no longer be able to control the money supply. Countries that once got the short end of the economic stick can now control their own financial destiny.

Invest in history

Only time will tell how these countries fare. Yet as investors, we should see the bigger picture. The year is 2022. The second country just adopted Bitcoin. Other countries in similar situations like El Salvador and the Central African Republic will notice that Bitcoin is an exit from the status quo.

Critics of Bitcoin will argue only small countries are the ones using the cryptocurrency. And for now they are right. But to even utter those words shows how far Bitcoin has come. The day when a developed economy in Asia, the Middle East, or the West enacts similar Bitcoin laws like El Salvador and the Central African Republic will be the day when Bitcoin undoubtedly cements itself. 

Investors should know that this day is coming sooner than later. You don’t have to look far to find examples of this progress. In Colorado citizens can pay taxes in Bitcoin. In Arizona, legislation was introduced to make Bitcoin legal tender.  Take the opportunity now to gain exposure to Bitcoin. Ignore the short term price fluctuations. 

A quote from a personal favorite book, The Alchemist, seems fitting. “Everything that happens once can never happen again. But everything that happens twice will surely happen a third time.” 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Another country adopts Bitcoin as legal tender. What does this mean for investors? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More reading

Here’s why the Bitcoin price surged 6% overnight ‘Stupid and evil’. Warren Buffett and Charlie Munger unload on Bitcoin Why Bitcoin, Ethereum, and Coinbase Jumped Today The top 2 cryptos of April unmasked What happened with the Bitcoin price in April?

Fool contributor RJ Fulton owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!