It's Not Just For White "Crypto Bros"
What Black People Need To Know About Cryptocurrency
You’ve heard people talking about cryptocurrency, but you really haven’t paid much attention, right? Cryptocurrency brand names like Bitcoin, Ethereum and Dogecoin have been tossed around, but rather than jumping on the bandwagon, you’ve chosen to play the waiting game.
Perhaps you just don’t understand finance and want to play it safe, keeping your coins in the bank where you can physically access them on demand. Or, perhaps you were waiting to see if these new currencies were legitimate or whether they were going to fade out as a passing fad.
Well, based on the way things are going and the ever-growing acceptance of these forms of currency in the marketplace (by Starbucks, PayPal, AT&T, Overstock, Microsoft, Home Depot, Whole Foods and many others), it looks as if they are here to stay. In light of this, here are some things that Black people need to know.
What Cryptocurrency Is
Cryptocurrency is virtual or digital currency that you can use to make and receive secure online payments. It is real currency in every way; you can buy or sell it, buy with it or sell with it, and trade it, and the IRS treats it as a financial asset or property.
Rather than being based in a bank, these digital assets are decentralized, distributed across a huge network of computers using blockchain technology (which is basically an online ledger with transactions verified by each member of the network, ensuring things remain accurate and secure). Because of this decentralized structure, central authorities and governments have no control over cryptocurrency.
Black People Are Really Getting Into Cryptocurrency
A growing number of people in the Black community are participating in the $2 trillion cryptocurrency industry. Through buying and selling this currency, they are building wealth in nontraditional ways.
This is especially significant in light of the reality that historically, Blacks have been excluded from the traditional banking system and government-supported pathways to wealth through their discriminatory practices. In many ways, the opportunity to become a cryptocurrency user has leveled the financial playing field for people in the Black community.
Dabbling in Cryptocurrency Isn’t Just for White People
According to The Washington Post, a 2021 study by the University of Chicago found that 13 percent of Americans reported either trading or purchasing cryptocurrencies in the past 12 months. Although cryptocurrency is largely considered a playing field for young white boys, surprisingly, 44 percent of these cryptocurrency users were people of color.
Further, these were not a bunch of rich, educated people people: 35% had household incomes under $60k, and the average trader was under 40 years old and did not have a college degree. A Harris Poll conducted in April 2021 reported that 18 percent of Black Americans have gotten in on cryptocurrency. The numbers are growing.
Talking about Cryptocurrency Is Becoming a Big Deal in the Black Community
While you might not be talking about cryptocurrency, many other people in the Black community are. In fact, HBCU Howard University hosted the fourth annual Black Blockchain Summit in October 2021, drawing an estimated 1,500 mostly Black people to talk about crypto. The focus of the conversation: how the use of cryptocurrency can be used to disrupt the oppression of Black people through the traditional financing industry, which has been occurring for hundreds of years.
Additionally, a number of Black crypto organizations have been leading the charge to educate and empower Black people on how to acquire and strategically use cryptocurrency to build wealth.
Black Celebs Are Getting in on the Crypto Craze
The cryptocurrency industry recognizes the value of engaging Black people in the crypto market. In summer 2021, when Cash App launched its new feature that allows users to purchase Bitcoin through the app, it chose Megan Thee Stallion as its spokesperson. In a “Bitcoin for Hotties” ad, she pitched, “With my knowledge and your hustle, you’ll have your own empire in no time.”
Another Black actor Hill Harper of The Good Doctor, serves as the spokesman for Black Wall Street, which was co-founded by Najah Roberts, a Black cryptocurrency expert. The platform is a digital wallet and crypto trading service targeted toward the Black community.
Why People Love Cryptocurrency
- Reason 1: Cryptocurrency allows for faster and cheaper money transfers. They can be executed in seconds, as there are no waiting periods or credit card fees for transactions. Instead of using a third party like a bank or a credit card company to make a secure online payment, people can make digital payments directly to a business. This is especially beneficial when sending money internationally, as sending money through traditional wires can come with costly wire transfer fees that are avoided when using cryptocurrency.
- Reason 2: Exchanges are anonymous. Transactions with another party cannot be policed, and a third party payment processor does not have record of the purchases they make online. Side note: This is one of the primary reasons people engaging in criminal pursuits or engaging in illicit activities love using cryptocurrency.
- Reason 3: Greater stability. Because cryptocurrencies are decentralized, if one point in the system fails, the whole system does not collapse. This is different from a centralized currency system, where if a major banking or financial entity fails, the whole system falls apart.
- Reason 4: They can gain significant value. Cryptocurrencies increase in value based on the scale of community involvement – the buying, selling, usage and acceptance of the form of currency by those in the marketplace. Rather than maintain the same value, what your cryptocurrency is worth day to day may change based on supply and demand. The supply of cryptocurrency is limited. For example, in the case of Bitcoin, which is the leading cryptocurrency, there will only ever be 21 million bitcoins to mine, a number limited by the founder of Bitcoin. As of November 2021, 18.74 million of these bitcoins have been mined, so the supply is dwindling. Currently, because of their popularity and their restricted supply, the value of cryptocurrencies has skyrocketed, because the demand is high.
How to Get Started with Cryptocurrency
You can either mine cryptocurrency (a very rare and resource-intensive means to acquire it) or buy it from a cryptocurrency exchange like Cash App, Coinbase, or brokers. There are literally thousands of cryptocurrencies in the market, but Bitcoin is by far the most valuable one that is exchanged today, followed by Ethereum.
In some low-income Black communities, you can even go to the local corner store and find Bitcoin machines where lottery machines used to be. The currency is more accessible than ever.
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Disclaimer: This content is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this article, this newsletter, on the Texas Black Expo website, or The Black Money Tree website constitutes a solicitation, recommendation, endorsement, or offer by any third party service provider to buy or sell cryptocurrency.