Black Americans are buying cryptocurrency in record numbers. According to a 2021 Harris Poll, only 11 percent of White Americans report owning cryptocurrency, while 23 percent of Black Americans and 17 percent of Hispanic Americans own the decentralized asset.
Many Blacks see cryptocurrency as an opportunity to build wealth outside of the traditional banking system with its built-in barriers for Blacks and other people of color. Others caution that while some barriers are eliminated, the underlying racism still needs to be addressed.
Broadly defined, cryptocurrency is virtual or digital money that can be exchanged without the use of a bank or other financial institution. There are over 18,000 types of cryptocurrency with varying uses such as transferring money, gaming and as an alternative way to store wealth.
Bitcoin, created in 2009 by an unknown person using the alias Satoshi Nakamoto, was the first and is arguably the most well-known cryptocurrency. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees.
One of the major benefits of cryptocurrency is its decentralization. Cryptocurrency is purchased and traded through an exchange and can be stored on a digital “wallet.” Because cryptocurrency is not stored in a centralized location like a bank, exchanges and transfers are less expensive and much more fluid. Transactions are verified through a network of computers and happen in seconds.
The complex technology used to purchase, verify and record cryptocurrency, and store transactions is called blockchain. The process is similar to a bank verifying funds, however, blockchain technology uses thousands of computers all over the world to authenticate transactions. Once a transaction is verified, it is recorded on a virtual ledger and stored on a worldwide network of computers and cannot be changed. The blockchain decentralized verification system was designed to make cryptocurrencies secure and difficult to duplicate.
Individual cryptocurrencies may have their own blockchain technology or operate on an existing blockchain. Cryptocurrencies that have their own blockchains are called coins. Cryptocurrencies that operate on existing blockchains are called tokens. Bitcoin’s position as the first crypto coin on the market has led to other coins being referred to as alternative coins or “altcoins.”
A hedge against inflation
Vantage Market Research’s recent analysis of the global cryptocurrency market forecasts the industry to be worth over $2.3 trillion by 2028. North America is projected to dominate the worldwide cryptocurrency market.
Blacks of all ages and socioeconomic backgrounds see cryptocurrency as a way to secure their financial future and a long term hedge against the fluctuating economy.
Marketing consultant Mariko Pitts, 32, lives in Arizona. A self-described “techie,” she became involved with cryptocurrency in February 2021 after a friend recommended the XRP, a cryptocurrency developed by Ripple Labs whose products are used for payment settlement, asset exchange, and remittance systems. XRP is primarily used as a way to facilitate quick exchange between different currencies.
Pitts had been looking into the cryptocurrency market because she could see that financial technology was moving into a digital space.
“The bigger picture of what’s happening with inflation and everything that’s going on in global economy, it made sense to me,” said Pitts.
Pitts was also concerned about the environmental impact of blockchain technology. Bitcoin uses a massive amount of energy to verify transactions and purchases. US bitcoin transactions alone emit 85 pounds of carbon dioxide per kilowatt hour, resulting in nearly 40 billion tons of carbon dioxide annually. A report from the Cambridge Center stated that Bitcoin’s annual electricity consumption exceeds that of the individual countries of Argentina, the United Arab Emirates and Norway.
According to Ripple, XRP’s impact on the environment is negligible due to its unique Ledger Consensus Mechanism, a blockchain technology that uses minimal energy compared to Bitcoin and other cryptocurrencies.
“It makes sense for sustainability,” Pitts said. “And looking at the dollar losing its value . . . especially since the pandemic, it makes sense to me to start looking at other outside external ways to invest money outside of the system.”
Pitts is determined not to lose money during what she referred to as the “insane market transformation that is happening right now.” She has also invested in physical assets such as gold and silver.
A Long-term investment
Last week, many investors had their patience tested as the price of many cryptocurrencies plummeted. The price of bitcoins fell 26 percent and altcoins fell as much as 46 percent. However, a few days later, prices started to rebound.
Inglewood resident Anitra Bradley, 60, an independent industrial design consultant, said patience is key when dealing with any kind of investment, especially cryptocurrency. Bradley owns several types of cryptocurrencies, including Bitcoin and continues to purchase various altcoins.
“I really believe that cryptocurrency is going to be part of our future,” Bradley said. “Crypto, in my opinion, is a long-term investment. I have coins now that I’ve purchased that I think at some point in the future, they’re going to do really, really well. But you have to have a lot of patience.”
Bradley said she became involved with investing in cryptocurrency in 2020 after the hype about bitcoin made her want to know more. After some initial research, she invested in Shiba Inu, a popular cryptocurrency token that operates on a blockchain technology called Ethereum.
Shiba Inu is a cryptocurrency that supports smart contracts with terms that are stored on a blockchain and automatically kick-in when predetermined conditions are met. Participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. Shiba Inu allows users to earn passive income without needing to sell them, also called staking.
Bradley cautions other “newbies” to invest with caution. “Do your homework and only invest what you can afford to lose,” she said.
Cryptocurrency vs. systemic racism
Olayinka Odeniran, founder and chairwoman of the Black Women Blockchain Council said that the anonymity of blockchain technology can work to level the playing field for communities of color to get their fair share of the trillion dollar cryptocurrency industry.
“This particular space that we’re creating affords us to enter it without our identity,” Odeniran said. “So we’re stripping away the fact that we’re Black,” Odeniran said. “We’re stripping all that away, and we’re minimizing it to a series of numbers.”
“Shark Tank” star and founder of hip-hop apparel brand FUBU Damon John pushed back on any notion that crypto is a remedy for systemic societal racism.
“I wouldn’t call it a great equalizer,” John said. “Until people acknowledge a problem about systemic issues that have been created a long time ago, then you can’t change and come up with a solution, right? You can’t come up with a pill and then not know the diagnosis.”
Najah Roberts, a Bitcoin, cryptocurrency and non-fungible tokens (NFT) expert, will kick-off “The Second Annual Digital Financial Revolution Tour” on Saturday, May 28 at 3 p.m. at Leimert Park Plaza, 4395 Leimert Blvd., Los Angeles. The free event is open to the public and features a guest appearance by Hill Harper, actor and best-selling author (“Letters to a Young Brother,” “Letters to a Young Sister”).
The event includes free bitcoin and merchandise giveaways. For more information, visit www.thedfrtour.com.