The Rise of Cryptocurrency in Cuba is likely to lead to bans similar to China’s, it still offers limited economic freedom. You have likely heard about cryptocurrency, especially with it becoming mainstream media over the past couple of years. You might have wondered what cryptocurrency is, how to invest it, and why it has value.
Perhaps you have wondered what cryptocurrency does in countries such as China, Russia, and North Korea. You probably know that all these countries have communist governments which severely restrict their citizens’ ability to engage in capitalist activities.
Continue reading below if you’re curious about cryptocurrency’s current state in Cuba and the rise of its popularity there.
Why is Cryptocurrency Gaining traction in Cuba?
In Cuba, cryptocurrency usage has increased from a few people to hundreds of thousands over the past four years. You may be wondering why the people of Cuba started using cryptocurrency.
Cubans who fled to the U.S. used the Western Union network to send money home. This was crucial for people who received the money from Cuba. They could not get food without the money coming from relatives. The government has repeatedly restricted its citizens’ access to food.
In 2020, however, the Trump administration prohibited Americans from using Western Union to send money to Cuba. Many Cuban Americans were left without an option to send money home to their families. This was when people began to look at cryptocurrency as a way to send remittances to Cuba.
Cubans had unlimited internet access until 2019. They started Telegram groups to discuss cryptocurrency and exchange rates. People could also arrange to exchange crypto for currencies such as U.S. Dollars, Euros, and Cuban Pesos.
When the movement began, people who received Bitcoins from overseas would meet in person with those who wanted cash. Companies that now offer this service online have made it possible to evolve the system. BitRemesas.com accepts cryptocurrency and deposits it directly into Cuban bank accounts.
Cryptocurrency has become an excellent way for Cubans to send money to their relatives abroad. It also allows them to protect their savings from inflation. The inflation rates in Cuba are extremely high, reaching a record high of 77% in 2021.
Cubans can now use cryptocurrency to bypass U.S. sanctions. These sanctions prohibit Cubans from using Amazon, Visa, Visa, and Zelle. Because cryptocurrency has seen a boom, Cubans are finding new ways to circumvent those sanctions. They no longer require services like Zelle because of the crypto boom.
Is Cryptocurrency in Cuba a Good Thing or a Bad Thing?
It might seem like a good thing that cryptocurrency has been growing in Cuba. It depends on who you ask. It isn’t a good thing, according to a Cuban official. They will tell you that it allows people more freedom than they want.
Ask a Cuban who uses cryptocurrency to have some limited amount of economic freedom without the government’s control. They will tell you it is the best thing the country has ever seen. While cryptocurrency can be beneficial for anyone, it is even better for those who live under communism which severely restricts their economic freedom.
The cryptocurrency was able to give the Cuban people help when they were hungry and could not receive any assistance from family members abroad. This was despite the strict controls imposed by the Cuban government as well as the U.S. sanctions.
This will be even more crucial in the future, as communist governments will attempt to ban cryptocurrency in their country. It is very difficult for governments to ban cryptocurrency completely, as there is no central authority to blame or imprison. Cubans would likely continue to trade cryptocurrency online even if the government bans it.
Other Countries where the Rise Of Cryptocurrency In Cuba is Popular
China was another country where cryptocurrency was gaining popularity. Chinese people were using crypto to enjoy greater economic freedom, just like Cubans. The Chinese government has now banned cryptocurrency use in China to stop the capitalist activity.
The Chinese Government claimed that the ban was meant to protect the Chinese economy against instability due to the speculative nature of cryptocurrencies. However, it is more likely that the ban was intended to prevent money from leaving the country. Numerous estimates show that cryptocurrencies were used to transfer billions of dollars out of the country in the past two years.
India is another country where cryptocurrency is growing in popularity. The recent removal of the ban on cryptocurrency by the Indian government has led to a surge in cryptocurrency use in India. From July 2020 to June 2021, cryptocurrency usage in India increased by 640%. The government has imposed a 30% tax for crypto transactions. However, India’s crypto scene continues to grow.
People living in countries that have limited economic freedoms or those who are under communism can benefit significantly from cryptocurrency. Cryptocurrency allows them to regain some control over their economic situation from the government.