Starting in 1958, the USA imposed commercial, economic, and financial sanctions against Cuba from time to time. These are clearly a barrier to a nation’s growth and development. Cuba is trying to overcome the situation through various approaches. They are viewing cryptocurrency as a potential means to counter the US trade sanctions and also to increase purchasing power.

According to Reuters, Cuba is crafting plans to fight the embargo using cryptocurrency because the anonymous nature of blockchain transactions will allow unrestricted and smooth international financial operations. Venezuela, the number one ally of Cuba, tries to slip through sanctions and fight its economic crisis by introducing the Petro cryptocurrency.

But the result was not as promising as expected. Cuba will try to learn from the mistakes done by Venezuela, but the approach is almost identical.

Sanctions are getting worse under the Trump administration

Cuba is experiencing new economic embargo from the US particularly after President Trump claimed the throne in early 2017. The US government restricted traveling to the island and put a bar on remittances. US citizens are also prohibited from visiting the country via passenger or recreational vessels. This law, therefore, prevents cruise ships, yachts, or corporate aircraft from entering the island.

The embargo is not only to keep US citizens safe from Cuba but to reduce cash flow from the USA as well. Government and private sectors have been equally affected by the sanctions. The Cuban economy is likely to collapse similar to Venezuela with the new set of policies. The government is finding it difficult to feed its citizens after Venezuela cut nearly two-thirds of subsidized fuel.

Scarcity of hard currency is imminent and maintaining food import and supply chain will be challenging. This may leave the country vulnerable to famine and widespread chaos. The socialist country’s state-run economy is weak, and the government is already experiencing a staple food crisis.

As Venezuela is currently unable to help due to similar sanctions, and Cuban export volume shrank, the country is now in dire need of new ways to raise capital. Cryptocurrency may appear as the rescuer in this situation.

Crypto can find gaps in US sanctions

Everyone in Cuba including President Miguel Diaz-Canel is worried about the potential crisis and looking for a remedy. The top-level officials are viewing digital currency as a possible way of fighting the situation. The assumption is that cryptocurrency might add more money to the country and give the local economy a momentum.

Reuters reported that Cuban high officials may seek help from antivirus pioneer and crypto enthusiast John McAfee. The millionaire revealed that he has already had a chat with the communist government and is willing to work together. He also believes that a tricky system of currency might help Cuba get around the US sanction.

The famous and infamous security pioneer claims that he is one of the very few people on the planet who could develop a sustainable environment for digital currency in Cuba. However, there is no official announcement from the government regarding outside help. Until now, official statements only considered local talents for the creation of cryptocurrency in Cuba.

Cryptocurrency may work as a tonic for the economy

The introduction of a new currency gives a country an opportunity to raise capital and play a role in economic reform. Implementation of the crypto plan in the right way would enable Cuba to ignore the USD to a greater extent. As a result, the effects of sanctions might gradually wane and the government would enjoy more freedom.

In addition, Cuba could import staple foods from the nations that allow crypto transactions. Food is the biggest issue at present because the Caribbean island has to import almost 70% of it. If the citizens can eat well, they will have the patience and stamina to deal with other problems. Digital currency might also give a check to inflation and increase the purchasing power of people.

At present, the high gap between salaries and commodity price is depriving the citizens of living a standard life. Finally, cryptocurrency could help in the government’s effort for decentralization. One of the major principles of digital currency is decentralization and this could bolster the effort, with a stronger local economy as the end-result.