Despite the volatility of the cryptocurrency market, many enthusiasts (especially Black people) believe it can become an alternative financial system.
History has shown that people of color are always under-banked and discriminated against by traditional financial institutions. Research from the Federal Deposit Insurance Corporation supports this argument by reporting that low-income Black and Hispanic families have minimal access to the bank.
The Federal Reserve reports that 40% of black Americans are under or without a bank, with 13% without a bank account, while 27% rely on other financial services.
OneUnited Bank president, COO and owner Terri Williams shared that “banking while Black” is a term used to describe discriminatory banking practices.
“There are many reasons for the large percentage of unbanked or underbanked Black Americans, including lower median income and education, less access to banking services due to a lower concentration of bank branches and a higher concentration of check cashers in Black communities, and systemic racism,” she shared.
Although there are black-owned banks, many still struggle to obtain adequate investment financing and do not have access to the same resources as the big banks.
Olayinka Odeniran, the founder of the Black Women Blockchain Council, says cryptocurrency has become a space where communities of color can support each other and connect without worrying about the bureaucracy of financial systems.
“Everybody always felt that we don’t really care about investing or budgeting,” said Odeniran. “But in essence, we do. It’s just that historically, we have not had resources that allow us to tap in beyond risk, gaining some monetary freedom that’s beyond paycheck to paycheck.”
Despite recent crashes, many still believe cryptocurrency is a better alternative.
The Pew Research Center reports that Blacks, Hispanics and Asians are more likely to say they have been involved in cryptocurrency.
Cleve Mesidor, executive director of the Blockchain Foundation, revealed that people of color are using cryptocurrencies as “an alternative financial system to operate” without suffering the typical discrimination of banks.
“People of color sometimes have difficulty going to get a bank loan or going to get some sort of assistance from the government or a way to start their business and they’re turned down,” crypto enthusiast Steven Bumbera shared. “Crypto doesn’t care.”
Other cryptocurrency enthusiasts share that the benefits of managing money with blockchain technology outweigh the risks. Crypto-backed loans allow borrowers to get money from a money changer or credit bureau without having to face racial discrimination.
“If you are on chain, and you have a wallet address, you’re a wallet address – that’s it,” said Bumbera. “Crypto doesn’t care about color, race, sexual orientation.”
Enthusiasts believe that crypto can be used to directly fund businesses and organizations without penalizing certain third-party donations when transferring money.
As more people of color enter the market, Terri Williams warns that the new financial limits also come with risks and challenges.
“Crypto is not a competitor to traditional banking, but a complement,” she said. “There will continue to be a need for traditional banking services, but crypto, in moderation, can provide opportunities for wealth building and opportunities to develop new services – such as remittance services – that can better meet the needs of the Black community.”