Due to the constraints imposed by US sanctions on the country’s traditional payment rails, many Cubans are now using bitcoins as an alternative means of transaction. Over 100,000 Cubans are said to be exploiting digital assets, thanks to the arrival of mobile internet barely three years ago.
On New Year’s Eve 2018, Alex Sobrino founded the island’s first cryptocurrency group, the Telegram channel CubaCripto, with fewer than 50 people using cryptocurrencies, according to him. He admitted, “We didn’t even know each other.”
With over 5 million Cubans using mobile internet, informal estimates place the number of Cubans using digital currencies such as bitcoin, ethereum, and avalanche at 100,000 to 200,000. The use of cryptocurrencies by 1 to 2% of the island’s population is significantly lower than the 16 percent of Americans who have done so, or the more than half of Salvadorans who already apparently have cryptocurrency apps (El Salvador last year became the first country to adopt bitcoin as legal tender). Even so, for a “fixed in time” island, adoption has been rapid.
The advent of mobile internet on the island three years ago, as well as tougher US sanctions, have fueled the rise. The turning point occurred in 2020, when the Trump administration prohibited Americans from sending remittances to their family via Western Union, which was the primary means of communication for many Cuban Americans.
A billion-dollar cash source was slashed in one fell swoop. There were no planes into the nation due to the pandemic, so there was no way to bring money in. People looked for new ways to transmit money because their families were struggling. “When Western Union went out of business, remittances via cryptocurrencies skyrocketed,” said Erich Garca, founder of BitRemesas.com, a company that currently handles crypto remittances. “Telegram groups were one of the options,” Sobrino stated. “People formed groups solely to discuss cryptocurrency exchange rates: ‘I have a relative in Chile; I can give you crypto in return for pesos, OK?’
People receiving bitcoin from other countries used to meet up with people who needed cash in person and hand them dollars, euros, or Cuban pesos. This is still the case today, but the crypto remittance system has matured: companies like BitRemesas.com now pay local money directly into people’s bank accounts.
Cryptocurrencies are currently being used by Cubans for a variety of purposes. Some people use them to protect their investments because inflation was well over 100% last year. Others have quit their low-paying day jobs to pursue trading as a career. The government issued a warning last year, saying it was looking into alleged bitcoin frauds that had affected thousands of Cubans. Bitcoin can now be used to purchase coffee or beer at a number of locations, although uptake is still in its infancy.