Cuba has financial problems due to strict international sanctions. The Communist government announced on national TV that it would consider using crypto to boost the economy.
“Good government is one of the most important factors in economic growth and social well-being.” Joe Lonsdale
Cuba – the forgotten land
Cuba isn’t known as an innovative country. Until very recently, you could only see cars from 50-ties and 60-ties on the streets of Havana. For decades, the Latin American country did not allow any new companies to enter its territory.
Everything changed several years ago. The government opened the borders for tourists from all around the world. A few big companies have entered the country. It seemed like everything is heading to some normality. But then, Trump came.
Has Venezuela paved the way?
Trump built his political career on social exclusion, tough immigrant laws, and saying: “Make America Great Again”. Do his policies are great for American people or not, the history will decide. What we know right now is the fact that Trump’s harsh approach has influenced many other countries. One of them is Venezuela, the second is Cuba.
Last year, Venezuela’s president Nicolas Maduro introduced a cryptocurrency called Petro. It was supposed to be a stablecoin backed by oil, which Venezuela should have plenty of. El Presidente was convinced that Petro would prevent hyperinflation and avoid US sanctions.
As time has shown, Petro has not fulfilled its destiny so far. Critics of the stablecoin have suggested that it is poorly made and the creation of a cryptocurrency cannot resolve any problems just like that. There has to be done much more than just launching a coin.
Is a cryptocurrency the solution?
Now Cuba is heading into the same direction. The country’s state-run economy has been in crisis because of lower export and harder trade US embargo under President Trump.
Miguel Diaz-Canel declared on national television that changes are coming. The goal is to raise citizens income and domestic production. The Cuban government is also trying to figure out how to attract more tourists and foreign investors.
A cryptocurrency implementation should be a part of a package aimed to boost the economy. Still, there isn’t any news about the shape of it. Is it going to be another stablecoin pegged by gold or any other commodity? We don’t know and it seems as nobody knows.
To raise awareness
I’m not convinced that Cuba will draw conclusions and will learn from the mistakes of its ally from the south. If somebody told me that new digital currency created by the Cuban government will fail, I would probably agree. Right now, it smells like desperation. ‘We don’t know what to do, let’s try with crypto. What the hell.’
However, I’m of the mindset that it can help the cryptocurrency industry. Awareness of virtual coins in Latin countries is still at a low level. So, any advertisement at the beginning can be a good thing. On the other hand, if the new currency fails, people can have the same opinion about cryptocurrencies as Venezuelans have. According to the TIE report, the citizens of Venezuela are the most discouraged society to crypto.
So, it all depends on the Cuban government. If they do due diligence, it can open a new gate for the cryptocurrency industry. If not, it can follow the fate of Petro. Knowing not so innovative approach of Cuban authorities, the second option seems so much more probable.
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