The global cryptocurrency market is projected to reach $1.6 trillion by 2030, signaling advancements in virtual banking systems and potential gains for investors. The market has expanded to thousands of cryptocurrencies since their introduction in the early 2000s. As alternatives to physical cash, they have shifted the value of products. Yet, their legitimacy as a viable path to wealth generation has been in question for a long time.
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“They’re really a bad type of investment in that, generally speaking, there’s no real product or service behind it,” says Algernon Austin, director for race and economic justice at the Center for Economic and Policy Research. “When you buy crypto, you’re really just betting that other people are going to buy crypto. The hype has brought in a lot of people who don’t fully understand it.”
An Unregulated Banking Alternative
A 2022 survey found that 11% of Black Americans said they first started investing through cryptocurrencies. That’s compared to 31% of survey respondents who said they began investing through 401k plans. Those entering the cryptocurrency market tended to be younger and open to more volatile investments, which is typical among other kinds of investments.
In the United States, the concept of a virtual currency has been marketed as an unregulated alternative to the traditional banking system. It is different from the “unbanked” economy in that there are structures that support currency creation, conversion, and trading.
Within the Black community, virtual currencies have symbolized, to some degree, freedom — even, autonomy — from a central banking system that, for centuries, has been subject to political decision-making.
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Analyses find that Black investors say cryptocurrencies help them join a larger market with more diverse investors. Cryptocurrencies have also been marketed through a historical lens as a means of protecting Black investments from racially motivated attacks on wealth generation and preservation. Virtual banking anonymously presents a shield in some instances. Yet, these very systems also create easy pathways toward scams among currency developers and investors (race-aside).
According to a report last year from the Pew Research Center, 75% of Americans who have heard of cryptocurrencies are unsure about their safety and reliability. Here and in other countries, cryptocurrency regulation is on the rise. Last year, the European Union approved the Markets in Crypto Assets Regulation, which provides a set of rules to protect trades. The United States is still developing rules around the currencies on a state and federal level.
On social media platforms, a hashtag search generates thousands of people — from novice investors to finance leaders — discussing their approaches to cryptocurrencies. Some voices caution against the currencies for those looking to make money immediately. More than anything, they’re a way to start conversations about traditional investment techniques, such as stock trading, and simple routines for saving money.
Cryptocurrencies and Wealth Inequality
Austin says there are other ways to make money, such as having access to a steady job, and that ending poverty among Black Americans requires conscious, collective actions.
“Public policy has created and maintained racial wealth inequality, and we need public policy to reduce racial wealth inequality.”
Crypto conferences in major cities bring together hundreds — sometimes thousands — of people who have the power to shift perspectives about wealth and monetary policy. Events hosted for and by Black investors provide opportunities to discuss the opportunities and challenges of wealth building in and outside of the virtual world.
Take the Black Blockchain Summit at Howard University. Each year, it features professors, politicians, high-profile musicians, and students from diverse Black life. At the 2023 summit, Jared Ball, a professor at Morgan State University and author of “The Myth and Propaganda of Black Buying Power” told attendees “to reject the bootstrap narrative that Black people can achieve the American dream by buying their way into it.”
There’s evidence that bitcoin and other cryptocurrencies actually maintain wealth inequality in virtual banking. A 2021 study by the National Bureau of Economic Research (NBER) found that the top 1,000 bitcoin investors owned 3 million bitcoins, or roughly $200 billion and that 10,000 bitcoin investors owned a combined 5 million bitcoins, or roughly $334 billion (in today’s figures). This is equivalent to the generational wealth of the nation’s oldest industrial families.
As of now, the top bitcoin holder is purported to be the anonymous Satoshi Nakamoto (who is Black, in some circles). Nakamoto and the nine other bitcoin investors are said to hold 5.5% of bitcoin supply.