Critics question whether cryptocurrency can create Black wealth
Some proponents of cryptocurrency investments see them as a “shot at a fair financial ecosystem,” while others remain skeptical.
The volatility of the cryptocurrency market has made it a dangerous gamble for some investors. However, those more experienced have seen significant gains, making cryptocurrency—which is decentralized digital money in forms like bitcoin and ethereum—appealing to Black investors as a way to narrow the racial wealth gap.
Samson Williams, an adjunct law professor at the University of New Hampshire, told CNN that despite his own gains—ones that allowed him to buy his mother a house in 2020 with an initial investment of $200 in 2014—he is concerned that the currency comes with risks.
“Cryptocurrencies don’t solve living wages, they don’t address unemployment,” Williams said. “Black folks are so eager and so thirsty for financial inclusion and economic opportunity that by default, we are more ripe for being exploited.”
Cryptocurrency does not have the same barriers as other investment opportunities. There are no credit checks or income requirements, which makes it appealing to Black investors. Additionally, cryptocurrency is growing as an acceptable form of payment, and there is a perceived equal opportunity for success. Learn more for smart wealth handling, read this post about investing in gold and other precious metals.
“It’s going to be scary, and you’ll be nervous because there’s money at play, and lot of times, people are investing more money than they can afford to lose,” Terrance Leonard advised. “But you have to dive in. Treat it like you treat any of your other interests.”
Leonard invested $2,000 in cryptocurrency in 2019, and his investments grew to $1 million by 2021. He bought a house in Washington, D.C., after selling some for the down payment, and he plans to sell more to pay off the mortgage.
The cryptocurrency market is changing, which makes investment riskier, experts say.
“Most African Americans got into cryptocurrency as the values were high, so that means people are losing money,” Algernon Austin, director of race and economic justice for the Center for Economic and Policy Research, told CNN. “And we are talking about a low-wealth population losing wealth, that is not a good thing. It is the most risky investment that you can make.”
Charlene Fadirepo, a Bitcoin adviser, disagrees with Austin, calling cryptocurrency “our shot at a fair financial ecosystem.”
She encouraged Black investors to only invest what they can afford after paying for basic needs.
“This is about responsible and smart investing,” Fadirepo said. “If you are not in a position to invest, if you have significant debt, if you have credit challenges, maybe your first step is to focus on that.”
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