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You Would Understand Bitcoin if You Were Under Cuba’s Embargo
More than 60 banks and fintechs rejected me just for my nationality. Bitcoin fixes that.By Erich García CruzCoinDesk Insights
Mar 8, 2022 at 12:34 p.m. CSTUpdated Mar 8, 2022 at 1:09 p.m. CST
Havana, Cuba (Spencer Everett/Unsplash)
My name is Erich Garcia Cruz and I am a 35-year-old programmer. I don't have a bank account or PayPal, and I don't use a Mastercard or Visa credit or debit card. More than 60 banks and payment platforms have rejected me.
Why? Because I was born and currently live in Cuba, a country that since 1962 has been under an economic embargo imposed by the United States, which prevents American businesses, or those structured under U.S. law, from doing business with Cuba.
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You are probably reading these lines in a country that has all kinds of financial solutions to send or receive payments. Banks, maybe, offer you discounts or better interest rates to attract your money. And you may even enjoy the luxury of opening accounts offered by global financial services such as PayPal or Wise.
Cubans do not have that privilege. Fintech companies like Venmo, Wise, Stripe and Revolut instantly block any Cuban startup or person from using them.
Making matters worse, Western Union, the last service available for Cubans living abroad to send money to their families, suspended U.S. dollar transfers to Cuba in November 2020 after sanctions by then-President Donald Trump’s administration.
Cuban businesses are also seriously affected by the embargo because they cannot receive payments through global platforms such as PayPal, Mastercard or Visa.
All these restrictions, however, have become a fertile ground for cryptocurrency in Cuba. Before crypto, no tool had been as effective in breaking through an embargo that predates the internet itself.
Cubans may not have Visa or Mastercard, but they have PayWithMoon, which allows us to fund a prepaid virtual card with bitcoin (BTC). They can't use banks, but found in bitcoin a public peer-to-peer bank. They are not accepted by Stripe, the ubiquitous internet payment network, but can make transfers in seconds through Bitcoin’s Lightning Network.
Crypto, the only optionThere are no crypto exchanges in Cuba that allow buying crypto with Cuban pesos. The only way to achieve this is through WhatsApp or Telegram groups.
In general, sellers and buyers coordinate an amount and price through messages and then must rely on pure trust. The crypto buyer will deposit Cuban pesos in a bank account and wait for sellers to keep their word and deposit bitcoin in the indicated wallet. Sadly, scams through these platforms are common, and buyers often receive nothing.
People have to do it that way because crypto exchanges like Coinbase, Binance and OpenNode instantly block crypto users because they need to comply with the embargo.
For businesses, it is impossible to use payment gateways to automate the sale of a book or a simple delivery service in Cuba over the internet, unless a business owner has a relative, friend or business partner abroad who can do that with a non-Cuban identity.
Bitcoin fixes this.
As of now, Cuban stores must have a personal wallet to accept bitcoin payments because they provide customers with a QR code to receive transactions. If bitcoin payment automation platforms such as OpenNode were available in this country, local businesses could automate payments both online and in person. But, due to the embargo, that has not happened so far.
In 2019, I jumped into bitcoin and created QvaPay, a company that allows Cubans to receive and send remittance payments through the Bitcoin network at high speeds and with low fees. As of today, the service has more than 48,000 users who find crypto the only way to move money.
I spend my days trying to promote bitcoin across the island. With a few friends, I created Cuba es Bitcoin, the first meeting of crypto entrepreneurs, artists and enthusiasts on the island. Our first event took place in February in Havana.
Here is a prediction: I believe Cuba will experience a kind of hyperbitcoinization in the private sector, a phenomenon that has already been happening organically and simply through the acceptance of bitcoin in businesses, such as restaurants, cellphone repair stores and delivery merchants.
Businesses that receive crypto as a form of payment often save in crypto or pay for supplies to another business with crypto. Also, they buy things in the U.S. through platforms such as Bitrefill or PayWithMoon. They can also convert crypto to Cuban pesos to buy supplies within the country.
Although there is no official data on crypto adoption in Cuba, I estimate there are now more than 20,000 Cubans using crypto on a daily basis. As many as 200,000 people have owned a wallet or used crypto at some point. QvaPay and Bitremesas, two companies I created, have sent crypto to more than 150,000 wallets so far. The numbers might seem tiny (up to 40 million American adults have invested or traded crypto), but given our financial obstacles, there is great potential for growth.
Crypto has also gotten onto the radar of the Cuban government. In August, the Central Bank of Cuba authorized the use of certain virtual assets for commercial transactions and the granting of licenses to virtual asset service providers, for the purpose of carrying out certain financial activities, such as the collection of payments.
It’s understandable that companies must obey local laws – in this case, the embargo imposed by the U.S. – and exclude Cubans from using their services. But this also prevents these companies from offering payment systems that empower their users economically.
The good news is that bitcoin is not subject to these same laws or geographical restrictions; it doesn’t care about embargoes.
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