At the beginning of 2022 bitcoin should have reached and even surpassed the symbolic figure of $100,000, one more milestone for a cryptocurrency that would be followed by new and higher all-time highs, but when April has just ended bitcoin is far away not only from $100,000, but also from its all-time high, but this does not mean by far that the digital currency par excellence is finished, in fact a new country has just adopted bitcoin as legal tender following in the footsteps of Bukele’s Salvador.
Bitcoin is already legal tender in the Central African Republic
The CFA Franc is the currency of several African countries that were formerly and mostly under the sovereignty of the French Republic, which is precisely the state that is now responsible for maintaining the value of that currency in exchange for the central banks of the African countries that use the CFA Franc as their currency holding half of their reserves in the form of French state debt, thus financing France in exchange for them maintaining the value of their currency. why then does the Central African Republic, which has a currency supported by France, need to admit bitcoin as legal tender? Well, as the Spanish economist Juan Ramón Rallo explains, the Central African Republic has probably adopted bitcoin to achieve financial independence, given that it has strong ties with Russia that it does not seem to want to sever and therefore is currently exposed to sanctions by the EU, which does not make it very advisable to rely solely on a currency that is backed by one of the powers that make up the soul of the European Union.
Although it may seem a minor news, the fact that another country, and on top of a continent that will place several countries among the most powerful economies in the world in the coming decades, has decided to follow the path opened by El Salvador already begins to mark a trend in the adoption of assets, cryptocurrencies, which are just beginning their journey despite the misgivings of very important players in the world of finance.
Buffet doesn’t like bitcoin
Warren Buffet wouldn’t even pay $25 for all the bitcoin in the world, that’s the surprising (and somewhat exaggerated) statement the popular investor made recently, although it’s not a surprise to anyone, given that his aversion to cryptocurrencies is well known to all, something he shares with the also famous John Paulson, investor who predicted the fall of the real estate market before the subprime crisis and acting accordingly bet against that market with great profit for him and his clients.
On the contrary Elon Musk is one of the most popular figures in favor of bitcoin and cryptocurrencies in general, and has already downplayed the investment mogul’s attack, and Tesla, the crown jewel of Musk’s business emporium, with permission from SpaceX, revealed in its latest report that bitcoin has options to become an alternative to fiat money in the future, a view he seems to back up with his actions, given that Tesla has not stopped accumulating bitcoin in recent months.
Investment, store of value and legal tender
In any case, and regardless of what figures like Buffet or Musk think, and of the adoption that different countries are approving, investing in bitcoin has become the gateway for many users in the world of investments, after all you only need to open an account in an exchange or with an online broker and you can start to operate with it, although this simplicity to start investing may mean that in many cases the perspective on the high risk involved in investing with cryptocurrencies is lost due to its high volatility.
If cryptocurrencies such as bitcoin end up becoming legal tender in more and more countries, it is to be expected that their volatility will be attenuated in the medium or long term, which could help them to end up becoming a real store of value such as precious metals, hard currencies and even some sovereign debt bonds such as the German one.
