Developing a country with cryptocurrency? The Central African Republic, ranked 165th in GDP, issues its own currency, Sango, to exchange with you.

Following El Salvador's announcement of Bitcoin as a legal tender in Central America, the Central African Republic (CAR) has also taken similar action in April 2022. This Central African landlocked country, ranked 165th in GDP, has introduced the digital currency Sango Coin project, set to launch in the third quarter. Sango Coin is currently in a public fundraising phase, with a model that resembles an Initial Coin Offering (ICO). However, what is the vision behind purchasing such a digital currency? It seems like it aims to involve the cryptocurrency community in a country's development.

What is the purpose of the Central African Republic's launch of Sango Coin?

In early July, President Faustin-Archange Touadera of the Central African Republic stated in a report that "Sango Coin will be the currency of the next generation." It is said to be part of the country's financial development plan to make fund transfers for citizens more convenient. However, with an internet adoption rate of only 7.1% as shown in the figure below, one of the lowest globally, out of its nearly five million population, only 350,000 people have internet access. If digital currency applications are introduced for financial inclusion, there is still significant room for growth in telecommunications infrastructure. Data shows a similar situation in El Salvador. However, the Central African Republic is not the first country to propose a digital currency; in 2021, Ghana also announced a trial plan for e-cedi, a legal digital currency.

However, Sango Coin is not a central bank digital currency (CBDC) backed by fiat currency but a newly introduced digital currency that claims to be partially backed by Bitcoin. The details are not clear, only mentioning that the national reserve will have Bitcoin. Their whitepaper states, "If the newly created digital currency is backed by Bitcoin as a store of value, then the Central African Republic and its citizens can have complete democratic control over the digital currency system without interference from banks." The Central African Republic will also implement a new digital currency system entirely built on blockchain through regulatory frameworks, digital infrastructure, and physical infrastructure.

While it is unclear whether this whitepaper represents the views of the Central African Republic government or Bitcoin enthusiasts, their official website does claim support from the Central African Republic.

Sango Coin: Resembling a typical ICO website

The Sango Coin website resembles an ICO project in promotion, with buttons urging to "Join Now!" and early-stage information indicating cheaper investment now:

It also includes a visualized roadmap of development:

Its token distribution includes 20% for public sale, 20% allocated to the Central African Republic Treasury. Like many public chain projects, it has foundations, incentive programs, and other lock-up quota plans based on digital citizenship sales, land sales, etc.

Sango Coin does not specifically disclose its development team, only mentioning support from the Central African Republic and providing project documents and various community platforms:

BNB Chain-friendly?

Interestingly, besides mainstream BTC, ETH, stablecoins USDT/USDC/DAI, Sango Coin's medium of purchase is also BNB Chain-friendly, allowing investment using BNB and supporting the BEP-20 standard of the aforementioned currencies.

Sango Coin adopts Bitcoin sidechains

• The technical infrastructure of Sango Coin adopts Bitcoin sidechains, which can meet the needs of scalability and smart contracts. The whitepaper describes it as a second-layer solution for Bitcoin similar to the Liquid Network developed by Bitcoin technology company Blockstream.
• Its consensus mechanism is based on institution-level validators, official institutions operating on proof of convention. The whitepaper describes this as a proof of authority (PoA) variation for government institution use.

What can Sango Coin do?

The whitepaper claims that Sango Coin is a versatile asset that can be used for value transfer, governing the future of the country, digital identity, and ownership. It can also be used for company registration, tax payment, and developing national mineral resources. In the longer-term vision, staking Sango Coin can provide:

• Digital citizenship – lock-up for three years, engaging in cryptocurrency-related work can provide a tax-free environment for cryptocurrency.
• National citizenship – lock-up for five years, allowing one to obtain a passport and full citizenship rights, tax-free for cryptocurrency.
• Land – lock-up for ten years, enabling one to acquire a certain area of land that is expected to become a cryptocurrency island and city, and even claimed to receive a 1:1 land version in the metaverse.

The Sango Coin team states, "Currency represents a country's economy. Once Sango Coin has more use cases, more economic activities will be generated, which will bring value to this token in the long run." Overall, this project appears to open up to all people worldwide to participate in a country's development and governance and be part of the Bitcoin L2 ecosystem. It is a rather idealistic and experimental project; however, the World Bank and the International Monetary Fund have expressed concerns about the country's Bitcoin route due to the lack of transparency and potential impact on financial inclusion.