La bienvenida a Cuba, Bitcoin! Una transacción bitcoin ha ocurrido.
Directly translated, this means: Welcome to Cuba, bitcoin! A bitcoin transaction has occurred. While this historic move isn't quite as historic as the overturn of the more than 50-year trade embargo between the U.S. and Cuba, this is a big move for the country. And for bitcoin.
In a region where Wi-Fi is a perk, and not expected, and the average salary in the country is 471 pesos ($20 a month), you may be asking yourself: Why would the average Cuban care about bitcoin?
But that's not the point.
The point is that the relations between the U.S. and Cuba are smoothing, not without tension, of course — but they're moving in a way that stands to benefit both sides of the deal. And now that transactions are moving ahead between the two nations, that leaves room for the FinTech industry to break barriers in the country like never before.
And that happened this week when the first reported bitcoin transaction between the U.S. and Cuba happened. It was also fitting that it was carried out by a Cuban-American man, Fernando Villar, who runs a group called BitcoinCuba. He reported that he had conducted a bitcoin transaction via public Wi-Fi. And the trend may continue now that Cuba's government has started bringing Internet access to public parks.
And here's where bitcoin comes into the picture.
“The future for bitcoin in Cuba is promising, but it’s going to take some time and effort,” Villar told CryptoCoinsNews. “Cubans are only now being connected through public Wi-Fi, which is somewhat cost prohibitive at $2 an hour, with the average Cuban salary about $20 a month. … [but] it’s only a matter of time before they also start receiving money through those networks.”
[bctt tweet="The future for bitcoin in Cuba is promising"]
Sure, it's probably a long way off before bitcoin is a concept that people actually reference in Cuba. As MPD CEO Karen Webster mused in a recent commentary, it's not a technology most in the U.S. even embrace. But in a land like Cuba, financial freedom and FinTech innovations mean more. It means allowing their people a new way to send money across borders, and a new way to think about money.
“Cubans bring their smartphones, laptops and tablets to these parks to get connected to friends and family, as well as to learn about the world outside the island,” Villar said in the interview. “It’s only a matter of time before they also start receiving money through those networks.”
Cuba's financial currencies are already unique, as it has a dual-currency system. As explained in a recent Quartz article, there's the peso (the everyday currency), and the CUC ("kook"). That's the currency that's got more value and is more convertible. Where a peso is about one peso for $26, the CUC is nearly one-to-one in trading.
But of course, in Cuba the government gets a take of that as part of its capital controls, taking a 10 cent "dollar penalty," along with a 3-cent conversion fee. And that's where bitcoin could actually make a difference.
“Right now Cubans deal with a dual currency system that makes it prohibitive for Cubans to compete in a global market. There aren’t many currency exchanges in which people are buying up Cuban pesos or convertible pesos, so their currency is essentially worthless outside of the island," Villar said.
“We strongly feel that even a minimal adoption to bitcoin will start to help Cuban entrepreneurs sell their goods or service globally in a simple and efficient way. These entrepreneurs are going to be the ones that are going to elevate the economy in the near future.”
[bctt tweet="We strongly feel that even a minimal adoption to bitcoin will start to help Cuban entrepreneurs"]
By avoiding those capital controls, bitcoin would allow people to move money around without the extra fees, making it a worthwhile option for those who can afford it. That doesn't mean everyone is rushing to switch their pesos into bitcoin, of course, but it means bitcoin could bridge the gap to help people avoid burdensome capital controls when exchanging cross-border.
That gives Cubans the ability to move money out of Cuba, and move that money without government interference. The dual-currency system has reportedly been coming to a close, but those talks haven't progressed. It's not like Cuba to want to loosen up its control over currency and the economy.
The question is: Does bitcoin have the power to change that all?
"For once we have a currency that knows no boundaries and it turns the borders we draw between countries from imaginary to non-existent," Villar told CCN.
“This will hopefully open everyone’s eyes on the possibilities and finally put Cuba on the bitcoin map."
Bitcoin Tracker Week 88
The Good, The Bad — The Top Bitcoin Stories Of The Week
'Black Monday' Hits Bitcoin
It shouldn't be that unexpected for this volatile currency, but bitcoin took a pretty big hit this week (along with the stock market). While bitcoin's price is on the mead, on Thursday afternoon (Aug. 27), bitcoin's price was only just above $229.
While the Greek Debt Crisis caused bitcoin to gain interest, pushing it over the $300 mark, it seems China's economic toil didn't do the same. Bitcoin was down to $213 on Aug. 23. That's still above the all-time low of the year in January when prices hit $173, but it's a far jump from a year ago when bitcoin's price was above $500.
What a difference a year can make in the digital currency world.
Bitcoin Exchange Opens In Iran
Speaking of nations that the U.S. has a complicated relationship with...Iran showed up in this week's roundup of bitcoin news. Yes, even Iran is getting into bitcoin.
Iran's first bitcoin exchange opened, with the help of BTXCapital and Draglet's exchange program, which will offer instant deposits and options to buy and sell bitcoin orders in real-time. While there are reportedly still some regulatory hurdles to clear, there's some hope that bitcoin can change financial controls in the region.
"It's really hard to get hold of bitcoin in Iran," Ganesh Jung, CEO of Draglet, told IBTimes UK. "There were ways to buy bitcoin but the process was very difficult and the amounts it was possible to buy were small.
"The market is massive. A large population with a high proportion connected to the Internet means there is a lot of completely untapped market potential. Our platform makes trading really easy. All you need to do is deposit some local currency and then you can trade."
The Case For Bitcoin Regulation
During a conference in London this week, a recommendation was made by the Commonwealth's Virtual Currencies Working Group to regulate bitcoin in order to mitigate risk.
Citing cases from banking sector, academia, virtual currency operators, users and law enforcement agencies, the group concluded that governments should regulate bitcoin — but not at the expense of FinTech innovation.
"Member states should consider the applicability of their existing legal frameworks to virtual currencies and where appropriate they should consider adapting them or enacting new legislation to regulate virtual currencies," the group wrote.
Bitcoin Hardware Wallet Shipping Soon
When people think bitcoin, they don't think wallet and they surely don't think physical wallet. But that's exactly what Case will soon be shipping out. The bitcoin wallet manufacturer announced that its bitcoin hardware wallets will ship Sept. 21.
Everyone at Case is eager to get our device in the hands of our customers who have patiently waited for their bitcoin wallets,” Case announced on its website. “Providing a secure, easy-to-use bitcoin experience around the world has been our mission from the beginning and we’re excited to finally deliver on that.”
“As more important assets move to the blockchain (contracts, property and identity), having a completely secure way to store and transfer those assets becomes even more paramount,” Case CEO Melanie Shapiro told Bitcoin Magazine. “We’re interested in not only servicing the consumer holding bitcoin, but also providing the banks using blockchain technology the power to manage who has the authority to execute transactions.”
Bitcoin, India And Cross-Border Payments
The bitcoin ecosystem in India is heating up. With the help from tech giants Microsoft and IBM, the interest for cross-border bitcoin payments in growing. Now, India is seeing more developers and freelancers invest more in the bitcoin industry in the region.
“There is lot of interest from freelancers in India who suddenly are now getting bitcoins from U.S.-based companies, and then they scramble to understand 'what is bitcoin?'” Indian Bitcoin startup Blockonomics founder Shiva Sitamraju told Bitcoin Magazine.
“Indians are slow technology adopters, and we are far behind China/U.S. in bitcoin adoption. … Once the early adopters/risk [takers] adopt it and enough user-centric applications sprout… this stuff really explodes in India. Indians are second-biggest users of blockchain.info, and today, we are seeing growing merchant adoption,” Sitamraju said in the interview.
Mark Karpeles Pulls The 'Victim' Card
Mark Karpeles, the CEO of bankrupt bitcoin exchange Mt. Gox, has denied the allegations against him that he knowingly contributed to the demise of the exchange, or that he manipulated account balances.
In fact, he told the Japanese police (who are currently holding him in custody) that he was unaware of the bitcoin disappearance, saying he "was just a victim." He was arrested last week in Tokyo on accusations of embezzlement charges related to the case. He went as far in a local media interview to say that Mt. Gox was "a normal business operation."
We'll leave it up to the courts to decide.
Buying Bitcoin With Visa, MasterCard
Thanks to the help of 3D Secure, which was developed by Visa, Coinbase now enables U.K. and Spain users to buy bitcoin via 3D-enabled credit and debit cards.
"Since credit and debit cards will not require a customer to pre-fund their Coinbase account with a bank transfer, customers in the U.K. and Spain can now receive bitcoin instantly," the company wrote in a post. It also recently applied for a BitLicense in California, and accepts Visa, MasterCard and Maestro cards with 3D Secure authentication.