Crypto is still an important market for non-white investors despite the crash
- Some minority investors say crypto is still an important investment even after the big crash this year.
- According to a survey, 25% of black investors own cryptocurrency compared to 15% of white investors.
- Experts have expressed concern about the risk exposure of minority investors in the cryptocurrency market.
In 2013, while cryptocurrency was creeping into the mainstream, Cliff Messidor was working as an appointee in the Obama administration’s Department of Commerce. As a favor to a friend, Messidor helped write a press release about Bitcoin. Despite her lack of interest and dislike at the time, within just a few years, Messidor found herself immersed in the world of cryptocurrency, quitting her job to become a full-time representative of the industry and a committed investor.
The awakening to the cryptocurrency world came a few years after Messidor helped out with her friend’s press release, when she saw “Dope.”And the A movie about a group of black teens who use bitcoin to thwart a financial criminal. She said the film sparked a vision in her mind of cryptocurrencies as a path to racial equality, a tool for people who have been mistakenly or intentionally excluded from the traditional financial system.
This kind of awakening is a common experience for minority investors who say they are bullish on cryptocurrencies – and who continue to hold even as the market suffers a sharp sell-off this year.
They say the losses are insignificant to the overall goal of the project, as tokens such as bitcoin and ethereum provide a sense of freedom, and equal opportunity for those who have not been discriminated against by lenders or bankers.
Jacob Faber, a New York University professor and expert on social inequality, told Insider that the perspective of people like Messidor was likely the result of a long history of discrimination in the financial system, with well-documented evidence of bias in everything from opening bank accounts to getting a loan. Real estate loan for starting a business.
A survey conducted by Ariel Investments and Charles Schwab in April showed that 28% of black Americans say they do not trust banks, compared to just 18% of white Americans. 56% also reported that they do not feel respected by financial institutions – something Mesidore can relate to. She recalled her and her family’s experiences of being refused loan applications or being mistreated by bank employees.
“I didn’t take it seriously,” Messidor said. “You know, when someone’s like, ‘Why are you wasting my time?'” “Get a degree. We did it. Get a well-paid job with benefits, and you did. And it still wasn’t enough.”
The result has been over time that many black and minority investors are either blocked or shy away from traditional investment opportunities that would be offered to white investors, possibly attracted by decentralized (and often riskier) investments.
Only 34% of black Americans own stocks compared to 61% of white Americans, according to the Federal Reserve, but that percentage flips when it comes to cryptocurrencies. Ariel and Charles Schwab report that among black investors, 25% own cryptocurrency compared to only 15% of white investors.
It also means that black investors may be more exposed to the crypto crash in 2022, which has slashed total market capitalization by nearly $2 trillion since last November and sent bitcoin down from $69,000 to just over $20,000.
But Messidor sees the trend toward digital assets only natural for black investors.
“If traditional finance is working in your favour, you see cryptocurrency as risky. You see it as speculative. For those of us who have been outlawed, traditional finance is risky,” she said. “Application for a loan is risky. You know the answer, right?”
Cryptocurrency has been described as a form of level playing field, free from banks and their conscious or unconscious biases. It’s the beauty of what Masidor refers to as a “sovereign identity” – you don’t need the government’s attention to build the same wealth as your peers.
However, there are others who are more skeptical.
“The proliferation of cryptocurrencies and non-fungible assets has become a kind of Ponzi scheme,” New York University’s Faber said of the trend, adding that any aspirations toward racial equality mask the risks of the industry, which could in fact further erode minority wealth.
“The idea that this currency can be converted to democracy is not supported by the facts at all,” Faber said.
However, black investors are still twice as likely to say that cryptocurrency is their best investment option, according to Ariel and Charles Schwab. After years of research, Messidor ended her career in politics and got involved in cryptocurrency full time in 2017 as president of the non-profit Blockchain Foundation. She is unfazed by the bitcoin plunge, stating that this is not her first crypto winter, but rather her third.
“We’ve learned that get-rich-quick schemes in this society rarely do us any good,” Messidor said. “It’s not about ‘Oh my God, the price of cryptocurrencies.’ It’s about building products and services, breaking down barriers, and creating access for people.”
She says she has been in the market for a long time, and out of thousands of coins she is bullish on the biggest.
“I think bitcoin is the north star for me in terms of cryptocurrency,” Messidor said.