Despite the volatility of the crypto market, many enthusiasts (particularly people of color) believe that it can become an alternative financial system.
History has shown that people of color have always been underbanked and discriminated against by the traditional financial institutions. Research from the Federal Deposit Insurance Corporation backs this argument, reporting that low-income Hispanic and Black households have minimal bank access.
The Federal Reserve reports that 40% of Black Americans are under or unbanked with 13% not owning a bank account while 27% rely on other financial services.
OneUnited Bank’s president, COO, and owner Terri Williams shared that “banking while Black” is a phrased used to describe discriminatory bank 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 for adequate investment funding and lack access to the same resources of larger banks.
Olayinka Odeniran, the founder of the Black Women Blockchain Council, says that cryptocurrency has become a space where communities of color can support and connect with each other without worrying about the red tape 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 the recent crashes, many still believe that cryptocurrency is a better alternative.
Pew Research Center reports that Black, Hispanic, and Asian people are more likely to say they have dabbled in cryptocurrency.
Cleve Mesidor, executive director of the Blockchain Foundation, revealed that people of color are using crypto as “an alternative financial system to operate” without facing the discrimination typically found in 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 crypto enthusiasts share that the benefits of managing money on blockchain technology outweigh the risks.
With crypto-backed loans, borrowers can get money from an exchange or lending agency without having to deal with 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 crypto can be used to help fund businesses and organizations directly without some donations getting penalized by a third-party when transferring the money.
While more people of color are working within the market, Terri Williams warns that the new financial frontier also comes with risks and challenges.
“Crypto is not a competitor to traditional banking, but a complement,” she said. “There will continued 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.”
Opinions expressed by NY Weekly contributors are their own.