The bitcoin narrative has veered far away from early investors' vision of it enabling economic freedom, at least in the U.S. But for many in the Black community, that narrative is still alive and it's imperative that people stay focused on it.
Bitcoin's core values – decentralization, censorship resistance, its peer-to-peer nature – get pushed to the side time and again as the industry tries to grow in a world run by intermediary institutions. Opening an account at a centralized exchange like Coinbase or Kraken (or, until recently, FTX) is the easiest and most common way to get into crypto. And it's safe to bet most people are playing the speculation game, trading crypto on an exchange instead of transacting directly with another person as bitcoin was intended.
There's a long game to play, however, particularly for the Black community. Thanks to bitcoin's core values, anyone can store their wealth or move it around on the network and no one person can stop or control that. For Black people, that's a golden opportunity to level the playing field and give them "sovereignty" over their wealth, said Lamar Wilson, founder of crypto-focused network Black Bitcoin Billionaire.
"A lot of our history with America has not been the greatest," Wilson told CNBC. "Whenever Black people have put their money into things in the past to build wealth in this country, it has been coerced out of their hands, it has been taken from them, it has been burned down or destroyed."
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In the 1800s, Seneca Village, Manhattan's first known community of African-American property owners, was destroyed to build Central Park, for example. The Tulsa race massacre, also known as the Black Wall Street massacre, happened in 1921 when a white mob burned the wealthiest Black community in the U.S. to the ground in the Greenwood district of Tulsa, Oklahoma. A couple years later in California, Manhattan Beach officials forced out Willa and Charles Bruce claiming eminent domain. That land was returned to the Bruce family last year.
"Bitcoin is an asset that you can actually store and hold yourself and no one can take you," Wilson said. "This provides a way to be part of an asset that is globally liquid around the world."
Fast forward to today, and Black people still largely start their wealth building journeys from behind. According to an FDIC survey, the proportion of U.S. households that were unbanked in 2021 was the lowest it's been (4.5%) since the bank regulator began the survey in 2009. Still, within that group, at every income level, there's a big difference in the unbanked rates between Black and white households. Ultimately, that discrepancy shows up in the stock market's racial investing gap.
"The things that we see in our financial system that are meant to protect and hold banks accountable can also end up being a double-edged sword that causes exclusion to certain populations in the financial system," said Courtney Robinson, Block's global head of financial inclusion and policy development.
For example, Know Your Customer laws can keep someone with a certain last name from being able to register for an account, she said. And at some banks, it can cost money just to be able to hold money in a basic checking account.
Robinson said bitcoin is an opportunity "for people who have historically been either left out of the banking system or been involved in it in a way that is made difficult and sometimes expensive to transact without running into those barriers."
Transacting in bitcoin
According to the Federal Reserve's most recent Economic Well-Being of U.S. Households report, issued last spring, crypto investors in 2021 were "disproportionately high-income, almost always had a traditional banking relationship, and typically had other retirement savings." Some 46% had an income of $100,000 or more.
By contrast, lower-income adults (with less than $25,000 in annual income) were more likely to use cryptocurrencies for transaction purposes versus investing. That doesn't ring true for Wilson, however.
"I do work in these communities as far as education, I stay around this community as well and it's where I'm from – I haven't heard anybody saying that they're using bitcoin or any other cryptocurrency just for transacting and it just doesn't make sense," Wilson said.
"Who are they spending with?" he added. "If it's peer-to-peer, there are probably more people that just use Cash App."
Block's consumer app doesn't require customers to connect a bank account to register.
Robinson was similarly skeptical about the data, saying it seems more likely that people buying bitcoin would want to hold onto it. However, she said that much the way bitcoin found (general) acceptance in the investing community as an alternative, bitcoin can gain the same acceptance in certain communities as alternative money.
"We have continued to grow into a world where people are choosing to use it for a variety of use cases," she said. "In the U.S., I think we will see cryptocurrency become another form or way for people to transact alongside any other way they choose to bank. I see it eventually being a matter of choice, something that fits into our existing financial regulatory system."
Keeping communities educated
Bitcoin has come a long way in the past 14 years, but there's a possibility that crypto doesn't go from mass acceptance to mass adoption, according to Tyrone Ross Jr., president and founder of financial planning firm 401 Financial.
He said bitcoin's ability to serve those who have been turned away from the formal financial system is "the one inarguable use case" for it and it's imperative that Black communities stay educated on the possibilities for storing and building generational wealth as well as the challenges of doing so historically.
Although crypto has grown to a $1 trillion market cap in a short period, it has a long way to go to reach mass adoption. It suffers some of the toughest peak-to-trough drawdowns in its bear markets, including the current one.
Long-term investors like Wilson, who has been in crypto for about 10 years, lean on bitcoin's key characteristics to get through the so-called crypto winters, particularly its fixed supply.
"Is it volatile? Yes. But we know that the trajectory, based on the fact that there are only 21 million [coins], has always gone up when more demand comes in," he said. "I don't know that there are too many other options out there that provide you the level of freedom bitcoin provides, without someone else having control over it."