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Innovation Beat

Could crypto help close the racial wealth gap?

Hint: We don’t know yet.

Signage for Bitcoin at a booth at the Hong Kong Fintech Week.Paul Yeung/Bloomberg News

In efforts to address the racial wealth gap, people often turn to a well-worn list of solutions: Make it possible for more Black families to own homes. Encourage them to invest in the stock market. Teach financial literacy.

Now, some financial experts believe an answer may lie in a surprising place: cryptocurrency.

“Bitcoin introduces the opportunity to create generational wealth for the Black community — and not just to create it, but to protect it,” said Isaiah Jackson, the author of “Bitcoin and Black America.”

The chasm between white Americans and their counterparts of color has narrowed over time — though not substantially. The average Black household has a net worth of 12 cents to every dollar of the average white household, according to the Federal Reserve.


But some investors have found a haven in digital means of exchange like Bitcoin and Ethereum, which have minted millionaires in the past half-decade. Somewhere between 8 and 23 percent of current crypto investors are Black, depending on which poll you cite. And Black and Hispanic Americans are more likely to invest in crypto than white people, a Morning Consult study found.

“Black people are already participating in this space to a decent degree,” said Damon Cox, the head of next practice at MassChallenge, at the recent “How to Boston While Black” summit.

Also at the summit, Brandon Tory, an ex-Google engineer, touted the possibilities of web3 — a “transformative” (but speculative) vision of the World Wide Web where crypto, NFTs, and the distributed database technology known as blockchain are the norm.

“This technology has the potential to be an equalizer,” said Tory, who runs Formless, a Boston music technology startup that employs the blockchain. It could topple the corporate structure — think banks and governments — that are the foundation of the Internet today. Instead, communities of color could complete transactions without answering to a higher centralized power, he added.


But there’s a fair share of critics, too.

Trevor Rozier-Byrd, the founder of Stackwell Capital, a Boston fintech startup aimed at Black investors, said the community does not have the financial safety net needed to sustain risk that comes with investing in crypto. (The market is often volatile, investors have increasingly been caught in scams, and legislators have yet to enact extensive regulations.)

“You’re talking about a community that’s largely underinvested and doesn’t have strong asset bases to work with,” Rozier-Byrd said. “Entering the market with crypto is probably not the first place they should go.”

David Dwuman said he trusts the technology behind cryptocurrency but realizes that it’s “tricky and nuanced” in practice. Dwuman runs the OurBanc Corporation, another Boston fintech looking to serve communities of color.

A small number of people “own the vast majority of Bitcoin, which makes you wonder whether it’s actually democratic,” he said. “We have to be careful when it comes to crypto, because it could actually expand the racial wealth gap.”

Regardless, Dwuman and Rozier-Byrd agreed on the potential of decentralized finance, a monetary network that would live on the blockchain and leave banks out of the equation, like crypto. That’s a landscape where Black and brown Americans must stake a claim.

“When you don’t have a space to play in,” Dwuman said, “find a place.”


Diti Kohli can be reached at her @ditikohli_.