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The US economic embargo against Cuba has been in place for more than sixty years and has affected Cuban entrepreneurs especially in the currency exchange.
This has been intensified during the Trump administration by the closure of Western Union’s financial services in 2020, after operating in the country since 1999 allowing the sending of family remittances. Also the US Treasury Department has made impossible for Cubans to operate with modern financial services.
Due to all this, Cubans entrepreneurs cannot operate with services such as AmericanExpress, Mastercard, PayPal, Skrill, Stripe, Visa or other international electronic payment gateways.
On the other hand, it is also necessary to take into account the own shortcomings of the Cuban financial system. With an unstable economy hit by the pandemic, the disappearance of the CUC as the second currency linked to the dollar and the changes caused by the “Monetary Ordering”, the use of cryptocurrencies began to emerge a few years ago as a viable alternative.
Cryptocurrencies as an alternative
Still for many Cubans concepts such as online payment, mobile bank transfers, payment gateways or even magnetic cards are quite new. They have been introduced in the island during the last decade. But nowadays, surprisingly, it cannot be said that cryptocurrencies are unknown by the ordinary Cuban.
In this situation, the use of a decentralized currency, not backed by any government and not dependent on a central issuer has undeniable advantages. The financial gap in Cuba with respect to the rest of the world is something that could be translated into an opportunity to assimilate cutting-edge technologies, but is also viewed with suspicion from those who still do not know about it.
This also applies to the use of cryptocurrencies by the Cuban people: it is still very difficult to use them for buying products or services on the island. In addition, there are several stories of dupes being scammed with the lure of cryptocurrencies, either by defaults or scams based on the Ponzi scheme.
However, given the accelerated development of communications in the country, some hope is beginning to emerge about the possibility of using cryptocurrencies to make payments or transfers. This will be a way to overcome the financial limitations imposed by the US embargo. Such an alternative is already being applied in countries like Venezuela and the cryptocurrencies users in Cuba are growing on a weekly basis.
Bitcoin as a guarantee of money
The main difficulty for the use of cryptocurrencies in a country surrounded by financial prohibitions is the way to transform them into cash.
According to the Coinmap page, only 28 merchants on the island accept Bitcoin or other digital currencies. Most are tourist hostels and small businesses dedicated to repairing electronic equipment, concentrated in the country’s capital.
However, decentralized and P2P exchanges that allow to buy and sell bitcoins and other cryptocurrencies do operate in Cuba, a couple of examples are Qbita.org or Cubaxchange.com. There are also stores and payment gateways for bitcoin, such as BitRemesas, QvaPay, QvaShop and Bitrefill.
As the Cuban people begin to understand the potential of cryptocurrencies, they will surely find fertile ground.