The Rise of Cryptocurrency in Cuba
With cryptocurrency jumping onto the mainstream media in the last couple of years, you have probably heard something about it. At some point, you might have wondered how you can invest in it, its purpose, why it has value, etc.
You might have even wondered how cryptocurrency works in countries like China, Russia, North Korea, and Cuba. As you probably know, all of these countries have communist governments that severely limit their citizen’s ability to participate in capitalist activities.
If you are curious about the state of cryptocurrency in Cuba and its rise in popularity there, then you should continue reading below to find out more about the waves cryptocurrency is making in Cuba.
Why is Cryptocurrency Gaining Momentum in Cuba?
Over the last four years, cryptocurrency use in Cuba has grown from just a handful of people to now being estimated to be in the hundreds of thousands. If you are unfamiliar with the living and economic situation in Cuba you are probably wondering what caused the people of Cuba to begin using cryptocurrency in the first place.
Up until 2020, Cubans that had fled to other countries, like the U.S, used the Western Union network to send money from the U.S back home to their families. This was vital for people receiving the money in Cuba as they could barely get food if it wasn’t for the money being sent from family members in other countries because of the way the government severally restricts it’s citizens access to food.
However, in 2020 the Trump administration banned Americans from using Western Union to send money to Cuba. This left thousands of Cuban Americans without a way to help their families back home. It was at this point that people started looking at cryptocurrencies as a means to send remittances to Cuba.
Cubans with unrestricted access to the internet, which wasn’t allowed until 2019, began to form Telegram groups to talk about cryptocurrency and its exchange rates and arrange for people to exchange crypto into currencies like U.S Dollars, Euros, and Cuban Pesos.
When this movement first began, people that received Bitcoin from abroad would meet up in person with people that wanted cash. This system has evolved thanks to companies that are now carrying this process out online. Companies like BitRemesas.com receive cryptocurrency and deposit the money directly into people’s bank accounts in Cuba.
On top of being a great way for Cubans to receive money from family members abroad, cryptocurrency has also become a great way to protect their savings from inflation. Inflation rates in Cuba are exorbitantly high reaching an all-time high in 2021 of 77%
Cryptocurrency has become a way for Cubans to get around sanctions imposed by the U.S. For example, U.S sanctions ban Cubans from using things like Amazon, eBay, Visa, and Zelle just to name a few. With the recent boom in crypto, however, people in Cuba are now finding ways to get around those sanctions as they no longer need services like Zelle thanks to cryptocurrency.
Is Cryptocurrency in Cuba a Good Thing?
You might be wondering if it is a good thing that cryptocurrency is growing in Cuba. The answer depends on who you ask. If you ask a Cuban government official they will surely say that it is not a good thing because it gives people more economic freedom than the government wants them to have.
If you ask a Cuban that uses cryptocurrency to have some limited form of economic freedom outside of the scope of government control, they will tell you that it is one of the best things the country has seen in a long time. Cryptocurrency can be good for people all around the world, but even more so for people that live under communism which severely limits their ability to have economic freedom.
When the people of Cuba were starving and had no way of receiving help from their family members abroad, cryptocurrency was able to give them a way around the strict controls set by the Cuban government and the sanctions levied by the U.S.
This will become even more important in the future as these communist governments will sooner or later attempt to ban cryptocurrencies in their countries. The great thing about crypto is that it is really hard for governments to ban it completely since there is no central figure to blame or incarcerate. If the Cuban government decided to ban cryptocurrency Cubans will likely still find ways to trade crypto using the internet.
Other Countries Where Cryptocurrency is Rising in Popularity
Another country where cryptocurrency was rising in popularity was China. People in China were enjoying the use of crypto as a way to have more economic freedom just like people in Cuba. Unfortunately, the Chinese government has banned the use of cryptocurrencies in the country as a way to prevent capitalist activities from taking place in the country.
Although the Chinese Government said that the ban was made as a way to protect the Chinese economy from instability caused by the speculative nature of cryptocurrencies, it is much more likely that the ban was a preventative measure to stop money from exiting the country. Many estimates highlight that billions of dollars had been transferred out of the country using cryptocurrencies in the last couple of years.
Another country where crypto is rising in popularity is India. The Indian government recently got rid of its ban on cryptocurrency which caused a boom in cryptocurrency in the country. It is estimated that cryptocurrency use in India grew 640% from July 2020 to June 2021. Although at this time the government has put a 30% tax on crypto transactions, the crypto scene in India continues to grow.
Cryptocurrency presents a great opportunity for people in developing countries and countries under communism that limit their economic freedoms. Cryptocurrency allows these people to take back some control of their economic situations from the government.
Although the rise of cryptocurrency in Cuba will likely result in bans such as the one in China, it still gives people an opportunity to experience limited forms of economic freedom.