Young Americans — especially young Black and Latino professionals — are redefining money and wealth, fueling a relatively new $3 trillion market and creating a new financial system.
Cryptocurrencies cut out the massive institutions that control traditional finance. So when the first bitcoin was created in 2009, communities of color jumped in to explore a new class of financial assets without systemic barriers.
Just over a decade later, Black and Latino investors are more active than White people in the cryptocurrency world, according to the National Opinion Research Center. As many as 25% of Black Americans with a household income over $50,000 own cryptocurrency, according to an April 2022 survey from Ariel Investments and Charles Schwab, compared to just 15% of White Americans with a similar income. Younger people are more involved, with 38% of Black people under 40 owning cryptocurrency, compared to 29% of White people under 40.
A cryptocurrency is like digital money based on cryptography, which is really just complicated math. It doesn’t have a physical existence, and isn’t issued by a government, though you can buy them outright with U.S. dollars or other national currencies.
For those locked out of the mainstream financial system, cryptocurrencies offer a new opportunity to build wealth and fully participate in the American economy. While it’s clear they are driving mainstream adoption, there is a lot of speculation about why Black and Latino people are so interested and involved in the crypto industry, which includes bitcoin, the first cryptocurrency, and thousands of others.
Working outside ‘the system’
Many of those who are most involved are millennials, small-business owners, and even Black professionals like me with advanced academic degrees and six-digit incomes. We have been excluded from the loans and investment opportunities — including mortgages and high-growth assets — our White contemporaries use to build wealth.
Many others have been excluded, too – including an estimated 55 million Americans who don’t have a bank account or lack ready access to banking services. And millions more — rural White, Black, Latino and Indigenous people — lack the employment records, credit history or official documentation needed to qualify for banking.
The inequities don’t just apply to people. Black churches have for years deposited massive sums of money into banks that have historically denied them loans. Government efforts, like the Paycheck Protection Program during the COVID-19 pandemic, were billed as boosting minority businesses, independent contractors, and the self-employed. Instead, they ended up benefiting hedge funds and large corporations.
In cryptocurrencies, there are significant new opportunities outside this mainstream financial system, without roadblocks like minimum balances and extensive paperwork. They aren’t without risk, of course, but I believe those who dismiss cryptocurrencies as too risky ignore their benefits, and unfairly downplay the risks of their preferred alternative, the stock market.
Meet the people who got results
Using cryptocurrencies, I have found a way to change the world for others, and for myself. In 2013, while serving in the Obama administration promoting economic development, a friend introduced me to bitcoin. I took the leap in 2016, and the return on investment from my early crypto purchases made it possible for me to shift to a full-time career in blockchain in early 2017.
I continue to buy cryptocurrencies and have acquired digital assets that can be used as art, commemorative memorabilia, or other creative purposes, which are collectively called “nonfungible tokens,” also known as NFTs. I focus my investments on works by Black and Latino creators, but NFTs are spurring growth across creative industries in America.
What drives me, though, is the vision outlined in the 2008 bitcoin white paper, of an open financial system tackling deep-rooted problems in centralized finance.
I’m far from the only one seeing promise in this new territory.
Justin Rhedrick is a millennial, father, and formerly incarcerated in North Carolina’s prison system who credits bitcoin with transforming his life. After he left prison, a friend told him about cryptocurrency. Rhedrick found it easy to begin investing on his own, without very much money. At that time, one bitcoin was worth about $600. He began learning about financial principles and practices, and earned returns as the value of a bitcoin rose; now, one is worth about $40,000. In 2021, he published a book, “From Bars to Bitcoin,”and teaches young Black men about how to invest in cryptocurrencies and pursue entrepreneurship.
In 2020, Brenda Gentry, a 46-year-old Black mom in San Antonio, started investing in cryptocurrencies during the COVID-19 lockdown. Gentry had worked as a mortgage underwriter making $75,000 annually — but she now makes $40,000 to $80,000 monthly advising investors in NFTs and the new area of decentralized finance, an alternative method of lending where the funding comes from individuals rather than banks.
Even for those not seeking to invest, cryptocurrencies offer an option for cheaply and safely sending money to family abroad in a matter of minutes. It’s not yet a dominant option, but observers see opportunities for more efficient money transfers, even into places affected by war or natural disasters. There is also potential for workers to be paid in stablecoins, which are cryptocurrencies pegged to the value of a set asset like the U.S. dollar.
Beyond individual benefits, cryptocurrency can help build movement-level power. In 2017, Tavonia Evans, a Black Gen-X entrepreneur and mom of eight kids, decided the Buy Black movement needed its own currency. So she built one — a complex endeavor that requires technological prowess and expertise. Today her digital currency, Guapcoin, has more than 10,000 users, and is helping Black customers and businesses take control of their financial futures with cryptocurrency.
Cleve Mesidor (@cmesi) is a Web3 expert who has been working in the cryptocurrency space for six years. She is an advisor to the Blockchain Association and leads the National Policy Network of Women of Color in Blockchain.