The Cuban Government stated on Thursday September 2 2021 it would recognize cryptocurrency and said the Central bank would being writing legislation for commercial transactions using crypto. In addition to this big step into digital currency, the government will also being licensing service providers such as crypto exchanges and the like.
It is becoming increasingly common to talk about cryptocurrencies in Cuba. Young and old people are placing their trust in digital currencies and investments, despite the known risks.
I can’t imagine today explaining to my grandmother what a bitcoin is. “It’s a digital currency, Grandma, that is, it’s on the internet. I will never hold it in my hand, and it has no definite form or bank backing. But it is worth thousands of dollars, although its price changes from day to day. It is kept in a virtual wallet, which I have never seen either, but which makes it almost impossible for it to be stolen. Anyway, grandma, it’s used to buy toilet combos from A-FUE-RA”.
It happens that it is not easy to understand what cryptocurrencies are about and how they work, even for digital natives. The more I studied the subject, the greater my theoretical void became
Specialists from all corners of the globe are still trying to reach a consensus on their legitimacy, value and influence in today’s market, as well as the dangers. If they haven’t made much progress, let alone me.
Million-dollar investments with even greater rewards and scams that, with their siren songs, have caused more than one person to lose their life savings.
Apart from the detractors, the rise of digital money is now undeniable and the number of followers, addicts and fanatics is growing. So much so that governments have begun to worry about these autonomous and decentralized currencies, and banks have begun to look for ways to curb, or take advantage of, the situation.
In early February, billionaire Elon Musk bought $1.5 billion worth of bitcoin for his electric car company Tesla. A few weeks later he made a profit of $900 million. The entrepreneur’s high profile skyrocketed the value of this cryptocurrency to over $58,000.
In fact, bitcoin’s volatility in the market has given it part of its financial success, but it is also the cause behind the distrust of thousands. Its purely speculative value keeps it in the sights of global banks and large corporations.
When it was created in January 2009, the currency was worth less than a dollar; in 2017 it almost reached 20,000, the following year it plummeted to 3,200, in 2019 it jumped again to 13,800 and at the end of 2020 it was over 30,000. As I write these lines it is at 55,807. Tomorrow it could double or plummet.
But let’s conceptualize a bit.
Cryptocurrency is a digital payment system that does not depend on banks at all. It is a peer-to-peer procedure that allows anyone to send and receive payments to and from anywhere. It employs encryption to protect and authenticate transactions, as well as to regulate the production of new cryptocurrency units. Essentially, they are limited entries in a database that no one can change unless specific conditions are met.
but they ultimately failed. All of these systems were based on trust in intermediaries, which meant that there were companies behind them that verified and facilitated transactions. Because of the failures of these, the creation of a digital cash system was considered a lost cause for a long time.
It was in 2009 that Satoshi Nakamoto introduced bitcoin, a curious fact: to this day no one knows the identity of this programmer or the group of programmers who acted under this alias.
The system and its proposal were captivating. First, because it is completely decentralized, i.e. it has no servers involved and no central control authority. Secondly, because of its transparency, as all transactions are carried out through a system called Blockchain, a public ledger that records the transactions that occur within the network, available to all. Thirdly, because of its method of avoiding devaluation by limiting the possible number of bitcoins to 21 million.
on the international market, and among the best known are, alongside bitcoin, Ethereum, ripple XRP, KBC and Litecoin.
These virtual currencies can be acquired from all corners of the planet by purchasing them on sites that operate similarly to traditional exchanges. This is the case of exchanges such as Coinbase, Binance and Bleutrade to name a few.
Mining, which involves solving mathematical problems to validate and process transactions between users, can also be employed. The “miners” compete against each other, and once one succeeds, he or she will share the solution with the rest of the network so that they can verify it and confirm the addition of the block.
ATMs to withdraw your bitcoin earnings in cash already exist in countries such as Canada, the United Kingdom, China, Austria, Switzerland, Poland and Spain, and the list is topped by the United States with almost 13,000 machines.
Cryptocurrencies can now be used in online shops as a form of payment almost everywhere in the world. In addition, income can be generated through trading and holding strategies, just as with shares on the traditional stock market.
Cubans do not believe in technological disadvantages. In 2015, when cryptocurrency traffic around the world was already commonplace, the internet in Cuba was in its infancy. This did not prevent the first bitcoin transfer on the island from taking place in July of that year from the Wi-Fi of a Havana park.
The outlook for 2021 looks much better for those who are adept at digital technologies and investments. As access to the network of networks has increased, new alternatives have opened up to deal with financial limitations.
Right now, cryptocurrencies can be used to buy virtual Visa and Mastercard credit cards to access online shops abroad, top up mobile phones, send remittances, and even pay at some local businesses.
The risk is too great because of the lack of full access to the major platforms. The route to bring them here is too long and tedious.
Cubans entered the world of cryptocurrencies when internet data connection was still a summer night’s dream.
Through sites such as Money Paid, Publipaid, Mirror Trading and others like them, university students traded bitcoin, doge, litecoin, as well as the internal currencies of each platform. Many eventually quit, mainly because of the obstacles to making a profit.
the lack of knowledge on the subject and, to a large extent, the “bad reputation” that this type of business has gained.
The outlook is now looking more favorable. With the growth of accessibility to technologies and digital entrepreneurship, a series of exchanges “made in Cuba” have emerged, more focused on the reality of the nation and the palpable needs of those of us who live in it.
This is the case of Qbita, CubaXchange, QvaPay and Fusyona, which, through the peer-to-peer mechanism, allow transactions to be carried out quickly and securely inside and outside the island. The services of these platforms have expanded and users can now also use them for other useful services in addition to depositing and selling crypto assets.
which, in addition to its objectives, promotes crypto-finance among Cubans, as well as a financial culture away from scams and swindles. A space that, through social networks, shares knowledge and provides advice.
Similarly, Karatbars Cuba, another of these communities focused on KBC trading, constitutes “a family of very diverse individuals, whose objective is personal and collective development, while demonstrating to the world the possibility of belonging to the Karatbars International project, without losing our identity as a nation,” said its founder, Rubén de Jesús Moraga Ramírez, in an interview published in Cubadebate.
Damián Benítez is in his fourth year of Economics at the UCLV. Since 2017 he has delved into the world of cryptocurrencies through different platforms. Although he recognizes the dangers of investing in such a volatile and changing market, he is committed to risk. “The first benefit is the entry of foreign currency into the country. With digital currencies, Cubans can generate profits on the international stock exchange, circumventing the blockade,” he says.
In fact, since former President Donald Trump shut down Western Union services last November, a large part of the remittances sent to Cuba from the North American nation have been through cryptocurrencies. This has been an excellent option for thousands of families, although it removes the flow of money from state control.
On the negative side, there have been cases of fraud as an alternative payment method with no legal validity, as well as account hacking and the use of these currencies for money laundering.
Little by little, cryptocurrencies are gaining more followers – and investors – among Cubans. The hard months of the pandemic have become a catalyst in the imminent search for new forms of financing. Hence, even the most skeptical have bet on this means of income.