THE COLOR OF CRYPTO
Crypto, that digital or virtual form of currency secured by cryptography, is relatively hot amongst Black folk, especially those under the age of, say, 40. If you don’t think so, then you clearly haven’t been in any discussions with Black millennials about money— nor have you, for instance, engaged Black folk’s thoughts more generally on existing mechanisms and institutions for the production of wealth and what they perceive as the urgent need for a more democratic and inclusive pathway toward wealth generation.
For that matter, you could just goggle, say, “Blacks and Bitcoin,” and you’d get hit by a deluge of articles on the promises and perils confronting Black participation in the world of cryptocurrency. Stuff like:
Young Black Americans Weary of the Stock Market Are Turning To Crypto
Crypto can be a driver for racial equity
Bitcoin’s Risk and Reward for Black Investors
And:
Locked out of traditional financial industry, more people of color are turning to Crypto.
What’s more, a number of high profile celebs—with gazillions of followers— are hyping the wonders of crypto to Black consumers. The highly celebrated and followed Jay-Z, for instance, has now changed his twitter profile to that of a CryptoPunk and, more recently, has hooked up with Twitter co-founder Jack Dorsey to launch the Bitcoin Academy at Marcy House, the public housing project in Brooklyn, New York, where Jay-Z grew up.
But it’s not just celebrities like Jay-Z that’s contributing to the crypto craze amongst Black consumers. A number of impressive and incredibly productive Black organizations are in the trenches popularizing the Black crave for crypto—including, for instance, Black Bitcoin Billionaires and the Black Women Block Chain Council.
Interest in, and support of, cryptocurrency can also be found in the academic community. Tonya M. Evans, for instance, a Professor of Law at Penn State Dickinson Law, has emerged as a leading figure whose expertise is at the intersection of digital technologies, cryptocurrency, law, and bitcoin. Professor Evans has created online classes on the world of cryptocurrency and, in addition, has organized and participated in major conferences on cryptocurrency, law, and blockchain. She is among a number of Black women imploring Black folk to critically engage the possibilities of crypto as a path toward wealth accumulation and economic independence.
In effect, there’s an influential and growing Black crypto ecosystem— a network of organizations, celebrities, athletes, and academics— that’s undoubtedly contributing to Black participation in digital currency.
COLORING CRYPTO
If its goal is to shore up participation in crypto, then the data clearly indicate that the Black crypto ecosystem is having an appreciable impact. A recent study by the Federal Reserve Bank of Kansas City, for instance, demonstrates that Black are more likely than White consumers to own crypto currencies. The study’s lead author, Terri Bradford, writes that “18 percent of Black adults had invested in, traded, or used cryptocurrency compared with 13 percent of white adults.”
What’s more, that same Fed study reports that Blacks are more likely to own crypto than stocks: 18% versus 7%. In other words, Blacks are 2.6 times as likely to be into crypto than stocks.
For Whites, it’s the exact opposite; they’re more likely to own stock than one of the cryptocurrencies: 19% of White adults own crypto, compared to 13% for stocks. Whites, then, are 1.5 times as likely to own stocks than crypto.
These findings are generally consistent with the results generated by other studies. Take, for instance, the widely referenced Ariel-Schwab 2022 Black Investor Survey. Here’s some of what jumps out from this survey:
Twenty five percent of Black Americans own cryptocurrency, and that number jumps to almost 40 percent for Black folk under the age of 40. In contrast, just 15% of Whites are into crypto, with the number climbing to 29% for those White investors under 40.
Black are twice as likely as White Americans to rank cryptocurrency as “the best overall” investment choice.
Almost a quarter (23%) of Black investors cited excitement about crypto as the reason they started investing in general; in contrast, 10% of White investors indicated that being hyped about crypto ushered them into investing in general.
Black investors are less likely than their White counterparts to see crypto investing as risky (68% versus 73%) and almost twice as likely to believe that such investing is safe (33% versus 18%).
Likewise, a Pew study shows that Hispanic, Asian, and Black adults are more likely than their White counterparts to have invested in, used, or traded a cryptocurrency.
Finally, a Morning Consult poll finds that Black adults are more likely than all adults to invest in crypto on the basis of advice from a celebrity or influencer (33 versus 21%), and that they—Black adults— are generally more open than all adults to consider crypto as an investment option when recommended by friends and financial advisors.
All of this is consistent with the view of a Black crypto ecosystem whose growing vibrancy and influence is cranking up Black interest and participation in crypto.
It’s just straight up hard to imagine that this ecosystem is not adding color to crypto.
WHAT’S BEHIND THE GROWING FAITH IN CRYPTO
Yet, the fact of the matter is this: Some pretty prominent economists have been warning the broader public about the dangers of cryptocurrency, particularly when being used as a mechanism for the accumulation of wealth. Nobel Prize-winning economist, Paul Krugman, has long been a critic of cryptocurrency and, most recently, has analogized crypto proponents to a cult that, in all likelihood, will be with us for a minute. For Krugman, all the crypto craze amounts to nothing more than “libertarian derp plus technobabble.”
And, testifying before U.S. Senate Committee on Banking, Housing, and Community Affairs, another well-known economist— Nouriel Roubini, Professor at New York University (NYU)— pulled no punches when he called crypto the “mother or father of all scams and bubbles.” According to Roubini, the crypto-universe reeked from the smell of charlatans, swindlers, carnival barkers who were essentially running a pump and dump scam that seduced the least financially literate and folks looking to hit a quick lick.
Both Krugman and Roubini warned of coming crashes that would wipe out the wealth of millions who were still around and hadn’t made their exit before the storm hit.
Perhaps here is where I need to make a confession: I’m partial to the analyses of people like Krugman and Roubini, and I’ll unpack their arguments in subsequent posts. At the same time, though, neither Krugman’s nor Roubini’s arguments are particularly helpful in specifically understanding why a Black crypto ecosystem flourishes and nurtures the heightened willingness of Black consumers and investors to participation in the world of crypto.
As I’ll suggest in a subsequent post, the vibrancy of the Black crypto ecosystem and the concomitant willingness of Blacks to provide color to crypto is best explained via reference to the untold ways in which the financial system dismisses the dignity of Black people, and to the desire on the part of Blacks to forge a world in which they are economically secure and in which the racial wealth divide has been decisively closed.
Catch you on the flip side,
Doc Greene
