We often speak about cryptocurrency as a means of getting around government restrictions imposed by regulators who do not think certain kinds of activity should be allowed among consumers. Can we apply the same principle to countries? Absolutely. Cuba and North Korea are two examples.

Cuba is a country whose citizens are turning to cryptocurrency more frequently in order to bypass U.S. sanctions. And while the government is not necessarily endorsing such activities, Cubans are embracing cryptocurrency with open arms. In North Korea, it is not citizens. It is the government. Pyongyang appears to be doing everything within its power to prepare the country for a national cryptocurrency in the very near future.

Yes, these two countries take a quite different approach to the cryptocurrency equation. But both are pursuing crypto strategies to get around sanctions that are having a crippling effect on their economies. The two countries are embracing cryptocurrency as a way to participate in global economics.

Cryptocurrency in Cuba

As things currently stand in Cuba, there are absolutely no regulations addressing how cryptocurrencies can be used. Anyone is free to buy and sell crypto at will. Anyone with an entrepreneurial mindset can open a crypto-based business or launch an exchange. This is good on the one hand, but bad on the other.

It is good in the sense that Havana is not interfering with cryptocurrency at this point. Average citizens can buy, sell, and trade without worrying about any sort of restrictions. However, it is bad in the sense that there are no regulations reining in companies or individuals that might seek to abuse day-to-day users.

For example, there is at least one Cuban-based enterprise operating as a broker looking to connect Cubans who want to buy crypto with overseas sellers looking for a fast and easy way to dispose of their coins. This operation exists, in part, because many of the world's legitimate crypto exchanges block Cuban users. More on that later.

What is concerning is that brokers, being unregulated, are free to charge whatever rates they want to set. The one broker in question is already charging a fee of up to 10%. Even if the fee is paid directly by sellers, they build it into the cost of their coins. Thus it is ultimately borne by buyers.

Cubans using cryptocurrency

So, how popular is cryptocurrency in Cuba? It is not clear just how many Cubans own cryptocurrency at this time. According to CoinTelegraph however, there are an estimated 10,000 cryptocurrency owners who use their coins for day-to-day transactions. There are plenty of reports of merchants more than happy to accept crypto payments.

CoinTelegraph mentions a Havana cell phone shop the purchases hardware from China using Bitcoin. The site also reports consumers turning to crypto to shop online, purchase cell phone credits, pay for hotel reservations, and more. There are even some Cubans putting their money into cryptocurrency as an investment.

The number one reason for using crypto is to get around U.S. sanctions that prevent citizens and businesses alike from shopping online. Cryptocurrency's decentralized and largely unregulated nature makes it fairly easy to shop online without engaging bank activity that could otherwise get a person in trouble.

Trouble with exchanges

Perhaps the biggest hurdle Cuban cryptocurrency users face is accessibility. Among 44 exchanges checked by CoinTelegraph, 19 actively block Cuban users by checking IP addresses. That puts Cuba sixth on the list of most blocked nations behind the U.S., Iran, North Korea, Syria, and Sudan.

Cuban buyers can get around the issue by using friendly exchanges or relying on a VPN connection that masks their IP addresses. They can also use the brokers mentioned earlier in this post. In either case, Cubans are likely to pay higher rates. That's the way it goes. When you have a captive audience with fewer options, you can charge higher prices.

Higher rates notwithstanding, they do not seem to be keeping Cubans out of the cryptocurrency market. Having access to online shopping is enough to prompt them to pay higher fees in order to get around sanctions they believe are inhibiting their ability to economically prosper.

Cryptocurrency in North Korea

Cryptocurrency is a virtual unknown among North Korean citizens. Due to the closed nature of their country, the average North Korean knows nothing but a national economic system that relies exclusively on fiat. However, that does not mean crypto is nonexistent in North Korea. Nothing could be further from the truth.

Pyongyang actually loves cryptocurrency for its own purposes. It is common knowledge around the world that North Korea's government already utilizes crypto for its own cross-border transactions whenever possible. They do so in order to get around sanctions. They are not shy about it either. Government officials routinely boast of the country's cryptocurrency capabilities - at least from a technological standpoint.

What has caught the rest of the world's attention are rumors that Pyongyang is preparing to roll out a national cryptocurrency in the near future. Rumors suggest that the best technological minds in North Korea are on the verge of launching something that would enable the country to completely extricate itself from the world financial system by converting its entire economy to crypto.

Details are lacking due to North Korea's penchant for doing things in total secrecy. But no one will be surprised if the rumors prove true, given what we already know about North Korean technology. Likewise, there will be very little surprise if North Korea used its cryptocurrency to do things the rest of the world frowns on.

Fears of North Korean crypto

There is some measure of fear every time North Korea does something that leads the rest of the world to believe they have the ability to compete. Rumors of a national cryptocurrency have certainly stoked such fears. At the top of the list are fears that North Korea will use its new cryptocurrency to purchase weapons and additional materials to boost its military capabilities.

Others fear that criminals will latch on to a North Korean crypto in order to launder proceeds from criminal activity. Some of the same people fear that North Korea could become the money laundering capital of the world. On its face, it makes sense. But when you dig a little deeper, it is equally possible that many of the world's fears are unfounded.

Crypto has to have value

In order for North Korea to use its national cryptocurrency in ways the rest of the world deems dangerous, the crypto has to have some sort of value above and beyond Pyongyang's full faith and credit. The state of the country's economy is a perfect illustration of why this is so.

If you were going to launder money through North Korea, you would need access to a digital asset with a value equal to the amount of money you are trying to launder. Otherwise, it is not going to be worth your while. But what would make a North Korean cryptocurrency inherently valuable? Is there anything in the North Korean economy that could promise even a one-to-one ratio against national fiats? No.

The same problem holds true should North Korea decide to use its cryptocurrency to buy weapons and weapon-building materials. It is assumed that China would sell them what they wanted, but would Beijing be willing to accept a North Korean crypto without any inherent value? Probably not.

The Venezuelan example

Any plans by North Korea to extricate itself from world financial systems by developing its own crypto should be tempered by lessons learned from Venezuela. Bear in mind that Venezuela issued its own cryptocurrency in 2018 in hopes of boosting its economy and getting around sanctions. The idea has not worked.

Venezuela's leaders hoped to give their cryptocurrency value by backing it with the country's petroleum resources. Yet those resources have very little value on the world market thanks to nearly universal isolation. No one wants to do business with Venezuela and, as such, its oil resources are worthless. That makes the cryptocurrency based on those resources equally worthless.

Today, you cannot find Petro for sale on any exchange with a decent reputation. Venezuelan consumers are not buying petros as their government has implored them to do, and merchants don't accept the coins for day-to-day transactions. Yes, Venezuela has its own national cryptocurrency. No, it hasn't helped them prosper by getting around sanctions.

Cuba is in a better position because it is the country's citizens that are using cryptocurrency to get around sanctions. Citizens are buying coins; citizens are shopping online; citizens are investing in cryptocurrency as a store of value. Meanwhile, Cuba's government remains part of the worldwide financial system despite ongoing sanctions.

North Korea is just the opposite. Citizens there are not encouraged to participate in the economy in any way. North Koreans, by and large, do not even know cryptocurrency exists. If nothing changes, Pyongyang will be the only entity in North Korea with access to its national crypto. That is not going to help them get around sanctions or get the economy moving.

In the end, countries can look to cryptocurrency to get around restrictions. But such activities do not necessarily guarantee success. It is all about how a country utilizes cryptocurrency in the broader economic scheme of things.