Cryptocurrency
Cryptocurrencyצילום: pixabay

Cryptocurrency, born during the Great Recession, has advanced from an overlooked asset to a prevalent investment. A few years ago, only a small percentage of people held digital assets. Now, 1 in 5 people invest in, trade, or use cryptocurrency. Ethereum and Bitcoin are the most valuable assets by market cap, more established than other options. The share of the population willing to buy Ethereum or Bitcoin grows without ceasing; herd-like behavior drives a remarkable share of individuals’ transactions with crypto accounts. Owning cryptocurrency has become fashionable among people of color, potentially meeting their needs.

Excluded From Conventional Financial Services, People of Color Are Turning to Cryptocurrency

A lack of financial inclusion prevails at every level of the financial system. People of color are excluded from conventional financial services due to the racial wealth gap, which has continued to advance on account of decades of discriminatory laws and policies. They don’t have access to the same financial resources and opportunities as their white peers. An ever-increasing number of African Americans are participating in the cryptocurrency industry as a way to build wealth outside the traditional banking system. Digital assets enable the unbanked population to access financial services without needing a bank account – a mobile phone and an Internet connection are sufficient. Blockchain-based financial services like savings, loans, and insurance can be retrieved via decentralized applications (dApps).

Cryptocurrencies like Ethereum and Bitcoin operate on blockchain technology, basically, a decentralized network spread across multiple computers. The value of the aforementioned digital assets is based on supply and demand, not the federal government or items of value, but all rules have an exception. Stablecoins are pegged to reference assets, either fiat money, exchange-traded commodities, or another cryptocurrency. For instance, Tether, which runs on the Ethereum blockchain, pegs its value to the US dollar at a 1:1 ratio, so it’s not affected by market volatility like Ethereum. Countless cryptocurrencies have emerged since Bitcoin was created in 2009, of which examples can be made of Binance Coin, Cardano, Ripple, Dogecoin, Solana, and Polygon.

People Of Color Are More Likely Than Their White Peers to Own Cryptocurrency

According to a survey undertaken by the Pew Research Center in 2021, people of color are more likely to invest in, trade, or use cryptocurrency. By contrast, some 13% of their white peers have heard nothing about cryptocurrency. Typically, African Americans perceive the stock market as more risky and less fair, which could explain their enthusiasm for cryptocurrency. Taking into account the wealth divide, investing in digital assets could help them gain financial ground in a short amount of time. Indeed, it’s possible to create wealth with cryptocurrency, but there will always be someone losing money than profiting from it.

For a long time, cryptocurrency was billed as a vehicle for wealth. The formula is simple: wait for a dip and use the chance to buy cryptocurrency. It remains the same for Ethereum, Bitcoin, and other digital assets. At present, ATMs are clustering in low-income neighborhoods, so it doesn’t come as a surprise that many are familiar with cryptocurrency and its trading. Investors of color tend to hold onto their first investments to give themselves the best chance of success. When investing in digital assets, it’s recommended to buy and hold for at least five years.

African Americans look up to celebrity influencers, athletes, and entertainers who hail cryptocurrency as the future of finance. But it’s not just them who are pitching cryptocurrency. High school classmates, cousins, and former co-workers, to name a few, boast about making a lot of money from investing in cryptocurrency, NFTs, and other metaverse projects, so people of color have faith in cryptocurrency and the underlying technology. Even if cryptocurrency is highly volatile, it’s possible to mitigate the risks by researching any exchange prior to making a purchase and storing the tokens in a secure wallet.

Could Cryptocurrency Be the Way for People of Color to Take Financial Fortitude Back

It’s getting harder and harder for African Americans to meet basic needs financially, even post-COVID-19. More than half of people of color have an emergency fund, and some have taken multiple jobs to make ends meet. In other words, people of color are less likely to climb up the economic ladder and more likely to slide down it. Cryptocurrency could enable African Americans to make up for the stolen financial time. As far as cryptocurrency is concerned, there’s much more information available at the primary level, probably because the market isn’t as mature as traditional stock investing.

Digital assets open up investment opportunities for diverse people, so anyone can invest, provided they meet the legal requirements and understand the risks involved. Many argue that cryptocurrency could drive racial equity by eliminating massive institutions that control traditional finance. Younger people are more involved, able to build wealth, and participate in the American economy. Anyone who dismisses digital assets as being too risky ignores their benefits. Besides regular people, small-business owners and professionals with advanced academic degrees or six-digit incomes are involved in cryptocurrency. They see the value blockchain technology could potentially have in the future (i.e., web browsing, identity management, gaming, etc.).

Conclusion

People of color are attracted to cryptocurrency for various reasons, such as the racial wealth gap and situational awareness, among other things. Regulation has never been inclusive, so this is obviously an opportunity to level the playing field. Information and educational materials are available to African Americans via social forums like blogs, chat rooms, and FinTech providers’ websites, so they can make informed decisions. Using digital assets to avoid interacting with centralized authority isn’t without risk, but the good news is that risk is manageable. A robust trading plan, for instance, helps obtain consistent results.

Owing to cryptocurrency, there are opportunities outside the mainstream financial system. It’s not a good idea to rush into trading, as the best course of action is to stay focused on holistic goals, such as making passive income. Crypto holdings can be deposited into protocols to be loaned to borrowers. It’s just one example.