Cryptocurrency and the awakening of Black America
When Bitcoin Founder Satoshi Nakamoto released his infamous white paper on October 31, 2009, a fresh new narrative around money was ushered into this world.
Today, as the digital money ecosystem known as cryptocurrency has emerged, growing numbers of Black Americans are flocking to it.
And for good reason. For the first time in our history, “crypto,” as it is affectionately known, provides us with a tool for building financial freedom without having to rely on the government or an outside third-party.
Historically, Black Americans have faced enormous institutional barriers to generational wealth. The banking industry has been particularly unkind, given our limited access to traditional banking. FDIC data, in fact, reveal that less than 46% of Black households were fully banked in 2017, as opposed to 77% of white households.
In 1865, the United States chartered a bank known as the Freedman’s Savings and Trust Co. with the aim of supporting newly emancipated slaves in gaining their financial footing.
But amid the financial panic in 1873, fueled by bad investments and railroad speculation, the bank was forced to shutter its doors. This left more than 60,000 Black depositors out in the cold, many of whom received no financial compensation for their losses.
This is just one of many examples of how financial institutions have fueled an erosion of mistrust among Black Americans. A major element here is redlining, where Blacks were denied loans and financial services due to their race. Due to practices like this, a legacy of disparities in wealth and financial inclusion between Black Americans and their white counterparts remains intact.
According to a report by the Brookings Institution, the average Black American family had total wealth of about one-tenth the wealth of the average white American family, which stands at $171,000. This staggering gap has resulted in a major economic disadvantage for many Black Americans in their efforts to fully participate in the economy.
Jomari Peterson, software architect and founder of The Digital Reserve, a blockchain-centric platform that offers a solution to predatory lending practices, had this to say about the history of exclusionary finance and its impact on Blacks.
“The oppression within the African diaspora has been systemic and brutal. The colonization of Africa and enslavement of men, women, and children has created incredible disparity in economic and social access.
“During the oppression of Black people around the world, the world began to change rapidly and new institutions were created. These institutions were built upon foundations of discrimination and inclusion. From segregation to redlining and underinvestment, Black communities were left to fend for themselves in a way no other group was. This long-term history essentially divorced the Black community from the full benefits of American life.”
Peterson goes on to say that out of the cypherpunk and libertarian movement, Bitcoin and various cryptocurrencies were able to establish themselves. These novel implementations of cryptography and alignment of incentives, he says, provided a new path to the economic and social edification missing from the Black experience.
“Whereas Black Wall Street was ruined in a massacre, civil rights leaders beat on the street and Black communities abandoned, cryptocurrencies opened the potential for a decentralized network to establish value. This network is one built into the modern backbone of the world, internet connectivity.”
An emancipatory moment for Black wealth building?
In his white paper, Bitcoin’s Nakamoto shared his vision for a new form of digital money: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Bitcoin’s appeal is that there is no third-party control over your money. Nor is there a credit check or arduous approval process that requires meeting with a bank officer. Even disclosure of identity documents is not required.
Access to the crypto world is not determined by race. And a crypto wallet is easy to set up in as little as five minutes — akin to creating your very own bank on your digital device.
Crypto is censorship-resistant and cannot be taken or stopped without your permission. And like gold, the fact that it is a scarce commodity positions it for a massive increase in value.
One final point about Bitcoin — because it is deflationary, it encourages saving rather than spending. That’s why we have seen a massive increase in its value over the years. While the volatility frightens some away, it is widely considered the best performing asset of the past decade.
Isaiah Jackson, author of Bitcoin & Black America, says that perception issues around Bitcoin continue to plague Black Americans, many of whom still view it as a scam.
Tavonia Evans, who created GUAP Coin as a way to support Black-owned businesses and philanthropic initiatives, seconds this notion. “A lot of people don’t have the understanding that cryptocurrency is real money. That you can really use it, that you can cash it out.”
GUAP Coin originally began on the Ethereum network until Evans made the switch last October to her own blockchain. Her desire is for GUAP Coin to maintain its independence in order to fuel the primary aims of the coin.
Education and support are key to understanding the crypto landscape, says Las Vegas native Edwardo Jackson, author and startup founder of a movie gaming site called CinemaDraft. He discovered Bitcoin in 2014 and now runs a popular website called Blacks In Bitcoin to foster this educational intent.
Bringing crypto into the Black mainstream
Ansylla Ramsey, founder of CryptoRightQuick, a platform that helps newbies push past their fear of the unknown when it comes to crypto, offers this assessment around the mainstreaming of crypto in Black America:
“Cryptocurrency is certainly one option that can significantly help in changing America’s wealth narrative. It is important to remember, however, that many of us during this pandemic are in survival mode. As of December 2020, according to the U.S. Bureau of Labor Statistics, the national unemployment rate was 6.7%. The rate among Blacks/African Americans was 9.9%. We must also factor in those who are underemployed.”
She reiterates how difficult — if not impossible — it is for many of us to think about financial planning and generational wealth when spending practically all of our time and energy trying to take care of immediate needs. “How can you thrive when you are just trying to survive?” she remarks.
Ramsey sees cryptocurrency as an option for Black Americans in terms of getting additional income now to ease the pressure of not having enough.
“Passive crypto income can be earned without having to exchange hours for dollars. If less energy were required to cover regular expenses, then it is likely that more attention could be given to planning for future generations. I believe that crypto can be whatever we need it to be. Crypto is currency.”
Samson Williams, investment crowdfunding expert, crypto enthusiast, and founder of the digital advisory firm Axes and Eggs, offers a more sobering perspective regarding Black America’s growing fascination with cryptocurrency, noting: “Cryptocurrencies don’t solve, much less address, racial inequality, poverty, unemployment, or the financial injustices of institutional racism. Cryptocurrencies are at best a fresh coat of paint on the traditional barriers to economic empowerment.”
His larger point — whether you’re paid in crypto, fiat, or gummy bears, you’ve still got to be paid to earn a living.
“Here is the thing, ‘money’ and ‘currency’ aren’t broken. Capitalism is. New types of money or currency no more fix capitalism than new types of debt, credit, or bonds.”
He believes that for Black folks and others who are victims of unchecked capitalism, the solution they’re truly seeking is justice.
“Justice doesn’t come in new forms of currency that the poor and disenfranchised don’t have, can’t access, and must earn. Capitalism doesn’t want the poor to have anything. The rich have always needed the poor. The poor have never needed the rich.”
Williams, as a result, believes that crypto is no more revolutionary than credit cards. But when asked about blockchain, the technology that undergirds the crypto constellation, he had this prediction to offer: “Blockchain is the backbone upon which Universal Basic Income will be built on. That, though, isn’t a story traditional banks want to hear, much less tell. Why? Because when living becomes truly equal, what good is ‘money’?”
In the end, Williams believes that the majority of Black Americans see technology as having a positive impact on society. He says at that point the question becomes, “How can crypto correct the inequities of our financial system?”
“Crypto incentivizes people to operate together who normally wouldn’t. For the first time in history, we have a Plan B option to the current financial system, which has seen years of redlining, racial discrimination, and other egregious acts by retail banks to the Black community.”
In a concluding thought, Peterson of The Digital Reserve says that through the medium of cryptocurrency, Black families across the world have the opportunity to engage and create new systems of values that reflect their heritage, interests, and beliefs.
“Cryptocurrencies have opened up the door for people of color to establish the rules separate from the geopolitical boundaries they were born into. These trustless networks are a beacon of a new path to financial freedom, if we are willing to walk forward.”