“Cripto o Muerte”: The Crypto Currency Revolution in Cuba and Beyond

I am in Miami, only 90 nautical miles from Havana, Cuba.

I don’t have any romanticism about Cuba and no urge to visit.

It is a dirt poor country where a repressive authoritarian regime starves its people from the most basic necessities, a Soviet Caribbean with empty shelves in government stores and day-long queues for a piece of protein, which on most days of the week is not available.

A friend in London recently sent me a pic of his son entering Eton donned in a Che Guevara T-shirt. Why he (Guevara that is) still has a magic spell on teens and the united left shows how once people have built a narrative, few facts can shake them out of it.

The Dollar Store

The thing I most like about Cuba are its cigars but those you pay for in hard dollars when visiting.

Locals don’t have access to these dollars, they get paid in the Cuban Peso or “CUP”, the Cuban national currency, and can only spend in CUP. USD is beyond their reach and whilst the official exchange rate has recently been revised from 24 CUP to 120 CUP to the dollar, as of the time of writing you pay close to 300 CUP per greenback in the black market.

Here in Miami the average monthly salary is USD 5,075. In Cuba, it is USD 20 per month. A Hyundai Accent from 2011 costs around USD 51,500 in Havana, or 214.58 years on an average monthly salary in Cuba.

So you get a sense a sense of how most things can never be bought during an ordinary Cuban’s lifetime, unless of course you’re an Apparatchik in the Cuban Government or its military, for whom everything is available in dollar stores.

Tropical prison

Friends here in the Cuban community tell me the world refuses to see how the Cuban regime is one of Handmaid’s Tale-type grotesqueness, with everything at hand for a small elite recanting Castro-era revolutionary double-speak whilst ordinary Cubans live in fear of being overheard and lifted off their bed at home at night.

Cuba’s bureaucracy is as stultifying as its tropical heat: Everything is controlled, from wages to spending to who can open a food stall or cafe. What is arguably the most splendid of Caribbean islands is a tropical prison with a cynical regime guarding its own population.

Blasé about BTC

Here in Miami I can (still) more or less freely exchange some of my USD into crypto and vice versa (if my bank doesn’t close my account after receiving a transfer in from a crypto currency exchange).

We take this financial freedom for granted and a lot of people including in Tradfin (Jamie Dimon) and Government (Elizabeth Warren) are scathing about it, presuming anybody who uses cryptocurrency is a crook who wants to launder money (though since 2000, JP Morgan has paid close to 39 billion (!) in total fines imposed by US regulators and enforcement agencies, including for alleged money laundering offenses).1

But for Cubans, and citizens of other countries such as Venezuela and Argentina, crypto may be the true revolution overturning decades of financial repression.

Access to crypto gives them sovereign money that protects them from rampant inflation and eroding purchasing power.

Crypto is their way of saving what little they can save, a mathematically protected insurance policy against their government taking away their money.

It is also a way for family far away who made it out to help their relatives who didn’t.

But above all, crypto represents human dignity, a sense of one’s worth that comes from discovering self-reliance. It sets people free from the realm of dependency governments create to neuter their citizens. It is freedom and the pursuit of happiness in its purest, most permissionless form.

Cryptonization vs. Dollarization

Last November, I was in Buenos Aires the weekend before Milei got voted in.

I hoped for the country to leapfrog pegging their peso to the US dollar and instead go straight for a stablecoin or better still Ether, but as of today Argentina hasn’t dollarized yet, let stand cryptonized.

Between reserving my hotel in US dollar three weeks before my trip and paying in Argentine peso at checkout, my room had got almost 30% cheaper, and inflation for the whole of 2023 was 211.4%. How do you live in a country with 211.4% inflation?

Coralling savings

Ordinary Argentines tried to protect against such massive erosion of purchasing power by converting their surplus pesos into BTC.

On Calle Florida in central Bs. As., once home to the only Harrods outside the U.K., vendors scan your Bitcoin wallet and send you BTC whilst taking your physical peso bills, obviously at outrageous spreads.

But people prefer the vendor’ spreads over holding ever depreciating pesos or holding money in Argentine banks, who back in 2001 were made complicit to what Argentines refer to the “Corralito” (the way cattle is herded into a corral), a government-mandated confiscation of people’s pension savings held in national bank accounts.

Since, Argentines have stashed - literally under their mattresses - what is estimated to be the second largest holding of physical US dollar bills in the world, with Bitcoin, especially with the younger crowd, now fulfilling a similar role.

A store of hope

In Cuba, the situation is even more dire. Goods are not only beyond most people’s reach, they are often not even available.

The regime blames the decades-long boycott against exports to Cuba rather than looking its own central control fallacies in the eye, which in a country so rich in fertile land have lead to a collapse of basic food supply for its 11 million people.

A small beacon of hope is a little convenience store in Havana run by some diehard BTC evangelists. It lets people buy gourmet food but also basics such as soap and pay for them in BTC using an app they open their phone.

But the app is ultimately dependent on internet access to sync with the BTC blockchain, and internet access is restricted by the Government.2

Cuba also has island-wide electricity blackouts - sometimes for 8 hours at a stretch - which makes telecom infrastructure unreliable.

Despite all this, young Cubans find a way of accessing crypto using one of a number of apps, including peer-to-peer swapping of CUP into BTC by placing an order via a Telegram bot (@lnp2pBot).

Gravy train vs. blockchain

Instead of keeping the international development aid gravy train on the rails, Western governments should recognize and protect access to the internet and the use of permissionless tools as universal human rights and let human ingenuity do the rest.

Instead, they lock up coders who deploy anonymizing software, chisel away at the use of self-custodied wallets, and force debilitating Know-Your-Customer requirements on peer-to-peer transactions to feed their mass surveillance machines in the interest of National Security.

A crypto coup of Cuba

If I would not be a militant pacifist, I would raise an army for a crypto coup of Cuba!

Just imagine what could happen when Cuba finally comes out from under the yoke of their decades-long failed Marxist experiment.

Where else can one find a greenfield county where practically everything has to be built up from zero?

Cuba represents the chance for the crypto community worldwide to claim the first crypto country of a decent size: a Minimum Viable Nation showing how an economy can leapfrog from quasi-agrarian (there are measurably more donkeys than cars in Cuba) into a cryptonized (vs dollarized) economic system, in which not only BTC and other crypto currencies are legal tender but all financial transactions are onchain, without a central bank controlling the money supply.

Initial working capital for such Minimum Viable Nation could come from remittances from the expat Cubans here in Miami and the wider U.S..

Such capital would go straight in Cubans’ wallets on their phones, connected  peer-to-peer via DePIN. Stores would sell goods priced in crypto, wages would be paid in crypto, the economy would jumpstart from the jolt in pent-up demand for the basic necessities such as washing machine and cars. Taxes could be a smart-contractified multi-sig escrow arrangement between Cuban tax authorities, part of a small Central government in Havana, and its citizens. Cuban limited liability companies would be formed onchain with blockchains acting as their register, leading to a Cambrian explosion of entrepreneurship on the island.

Revolution of a different kind

A revolution of a different kind - a foundational reset by putting an entire economy on blockchain rails - would then become Cuba’s biggest export, rather than sugar and cigars.

Such revolution would engulf the commanding heights of Western economies and their governments, whose blasé attitude towards crypto would soon be exposed for what it is: an effort to tenaciously hold on to the centralized levers of power they’ve commanded for too long.

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