SYLVIE DOUGLIS, BYLINE: NPR.
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ADRIAN MA, HOST:
Back in 2014, Samson Williams got some advice from a co-worker that would change the trajectory of his life.
SAMSON WILLIAMS: He was like, Samson, here’s three things to improve your life – get on LinkedIn, wear better socks, and buy some bitcoin. So I got on LinkedIn, bought myself some Hello Kitty socks and bought some bitcoin in 2014.
MA: And it was that last thing – buying $200 worth of bitcoin – that sent Samson down a rabbit hole. A few years later, by 2017, he saw hundreds of other new cryptocurrencies being created. He saw the world’s first bitcoin billionaire get minted, and it felt like it was becoming a mainstream thing. Samson became a true believer in the coming cryptocurrency revolution. Samson is Black, by the way, and he says one thing he was particularly excited about was this growing idea in some parts of the crypto community that crypto could be a driver for racial equity.
WILLIAMS: We’re going to change the world here.
MA: That was a few years ago, and since then, Samson’s view of crypto has changed a lot. And that was even before the massive crypto crash this year.
WILLIAMS: Retail investors, particularly in Black and brown communities, they’ve been sold the sizzle, but there ain’t no stake there. And we’re the first group who loses out.
MA: This is THE INDICATOR FROM PLANET MONEY. I’m Adrian Ma. We’ve been digging into crypto this past week, and today we’re going to focus on Black investors. In a recent survey by Ariel Investments and Charles Schwab, 25% of Black investors reported owning crypto, compared with just 15% of white investors, and other surveys tell a similar story. So today on the show – what’s driving that adoption, and what does the current crash mean for this idea that crypto could be a building block for Black wealth and help close the country’s long-standing racial wealth gap?
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MA: When Terri Bradford saw the surveys showing Black consumers embracing crypto way more than white consumers, she was a little surprised.
TERRI BRADFORD: It didn’t intuitively make sense to me that that was actually happening. And I was like, no way, that can’t – you know, that can’t be true.
MA: Terri studies payment systems at the Federal Reserve Bank of Kansas City. She says part of the reason she was surprised is that Black consumers are a lot less likely than their white counterparts to invest in the stock market or retirement funds. For a lot of reasons, which all lead back to systemic racism, African Americans in general have less wealth to invest.
BRADFORD: Whether it’s income, homeownership, home equity, investments, Black consumers are almost always at the very bottom of all of those measurements.
MA: Terri wondered why an outsized proportion of Black consumers seemed to be drawn to this relatively new, relatively risky digital asset. In her research, a few themes emerged. For one thing, she says, a lot of Black consumers are distrustful of traditional financial institutions, and you don’t have to look too hard into history to find examples of why. She said take, for example, the Freedman’s Savings Bank. Congress chartered the Freedman’s Bank in 1865 after the Civil War. Tens of thousands of formerly enslaved people deposited their money there, but those in charge of the bank were white.
BRADFORD: The folks that were responsible for running the bank got into some pretty risky, perhaps shady transactions and, in the end, basically lost all of that money.
MA: The bank collapsed. Many depositors lost all their savings. And Terri says this is just one early example of how financial institutions have failed or mistreated or discriminated against Black consumers. In the middle of the 20th century, you had decades of lending discrimination, aka redlining. Then in the early 2000s, you had predatory lending in Black neighborhoods, which helped lead to the Great Recession, which wiped out a huge chunk of the country’s Black wealth. And to top it all off, add the microaggressions, or in some cases the uber-aggressions, a lot of Black customers have faced while banking.
BRADFORD: That type of thing lingers, but it does generationally have an impact. And this distrust is there. Some folks feel the financial system just is not working.
MA: A recent estimate of the per-capita wealth of white and Black Americans pegs the wealth gap at 6-to-1, and those researchers say the gap is getting wider. Terri says crypto might seem to some folks like an opportunity to catch up – an alternative path to financial freedom without banks or government control, where the barriers to entry are low. And crypto marketing has helped carry this message.
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SPIKE LEE: The digital rebellion is here. Old money is out. New money is in.
MA: Celebrities like Spike Lee, Megan Thee Stallion, LeBron James and a whole lot of others have appeared in ads championing the virtues of crypto.
BRADFORD: It’s been hyped pretty well by athletes, entertainers – you know, so folks that look like us – right? – that do things that we do, that talk the language that we talk, that share some of our common struggle.
MA: And while Terri is not completely anti-crypto, this hype does worry her.
BRADFORD: The folks that can stand to lose the least are the ones that are going to get hurt the most. And there are no guardrails around this right now.
MA: The value of cryptocurrencies worldwide has plunged about 56% in the past three months. That’s according to coinmarketcap.com. Even so, some people believe that cryptocurrency can still be a building block for Black wealth. Tonya Evans is one of them.
TONYA EVANS: Here comes this new asset class, and it doesn’t require permission to participate.
MA: Tonya is a professor at Penn State Law, and she teaches classes on cryptocurrency and blockchain technology.
EVANS: So many people talk about the risk of getting into crypto. I am one of the people who talk about the risk of not being in it. Even as a Black queer woman in this space, what opportunities can we have if we lean into the language of the future of money? And that’s what I think this space presents the opportunity for us to do as Black Americans who are going to move the needle and hopefully stay ahead of the curve.
MA: Now, in recent months, lots of people have lost money. She doesn’t want to diminish that. But Tonya still believes it is relatively early days and that cryptocurrencies and the technology behind them, blockchain – they’re not going away. In the meantime, Tonya says she wants to see more consumer education around cryptocurrency and more consumer protections. And on that point, Samson Williams agrees. You remember Samson from the top – early bitcoin adopter, Hello Kitty socks. But he’s coming from a very different angle.
WILLIAMS: You’re seeing that people are spending their hard-earned money, their paychecks, their rent on these digital, quote-unquote, “assets” that have no underlying value.
MA: Today, Samson describes crypto as a Ponzi scheme.
WILLIAMS: If you want to sustain your faith-based currency, the best way to do that is prey on the uninformed.
MA: Samson says he sold off most of his crypto holdings a couple of years ago, but he still has a foot in the space. He has a consulting business where he focuses on blockchain. And so while he still sees some promising uses for the technology, he’s no longer betting on crypto as an investment or as something that’s going to help solve the racial wealth gap.
WILLIAMS: The day someone says, here’s how bitcoin or crypto solved unemployment and a living wage, then I will take them seriously. So if you don’t have a job, you don’t have the disposable income to invest. And so bitcoin doesn’t address human rights, civil rights, voting rights. Before I got out of the church of bitcoin, I did pretty well, but I’m still a Black guy in America. Is bitcoin going to help other Black and brown folks out of the vestiges of unchecked capitalism? No. Why? ‘Cause that’s a political decision.
MA: In other words, Samson does not think that crypto is going to help spread the wealth. And there’s actually early economic research to suggest the wealth already in crypto is pretty concentrated. According to this one study that looked at bitcoin, they have the .01%. The researchers estimated just 1/100 of a percent of bitcoin investors held more than a quarter of all the bitcoin in circulation.
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MA: This episode was produced by Nicky Ouellet and engineered by Gilly Moon. Catherine Yang (ph) checked the facts. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.
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