After years of being skeptical about bitcoin, Black Americans are leading the cryptocurrency revolution in 2021. A recent Harris poll shows that 23 percent of African-Americans own cryptocurrency, compared to 11 percent of white Americans and 17 percent for Hispanics. A 2021 University of Chicago survey of 1,004 young adults 18-29 found that 34 percent of traders were people of color who bought crypto over the past 12 months.
Many African-Americans are using bitcoin after being left out of traditional banking and wealth building, according to Ramona Ortega, founder of My Money, My Future.
Even unbanked Black Americans can create a bitcoin wallet and transfer their funds online or through bitcoin debit cards. Unbanked people can also use bitcoin low-fee debit cards like Bitpay or Paxful.
“When we look back at how wealth is built in this country, so many of those opportunities were not even available or were taken away through regulation and or redlining,” said Ortega.
What Is Bitcoin?
Bitcoin is the first and most well-known cryptocurrency. Cryptocurrency is a decentralized digital currency. Unlike the Federal Reserve-printed dollars, bitcoin and other kinds of crypto aren’t tied to any federal bank. Bitcoin runs on a blockchain, the digital ledger that tracks each bitcoin transaction, and a network of miners records the transactions on the blockchain.
Bitcoin has a high value to some investors because there will be a finite quantity of the currency of 21 million bitcoin. While bitcoin’s value has been volatile, its current value has more than doubled since June to $65,000.
Where Can You Buy Crypto?
Crypto is purchased on finance apps like Robinhood, CashApp, and PayPal. To buy crypto on PayPal, investors need a linked debit card or bank account. The fees to buy crypto on PayPal vary depending on how much an investor buys. The fee is 2.50 percent if the sale amount is $25-100. If an investor is purchasing $1,000 and up worth of crypto, the fees go down to 1.50 percent.
Robinhood doesn’t charge fees to trade cryptocurrency on its app. However, investors have to pay the difference between the bid and ask price for the crypto.
Bitcoin can also be bought on coin exchanges through middlemen like Coinbase or Kraken. In addition to those options, decentralized Bitcoin exchanges trade the currency that isn’t tied to one central company. Decentralized exchanges like Uniswap or Venus are available for investors who want to own Bitcoin. The fees for buying crypto on those exchanges depend on how much crypto you buy and the methods used to purchase the digital assets.
More and more companies are accepting bitcoin as a form of payment. Companies like Whole Foods, Home Deport, Microsoft, Esty, Starbucks accept bitcoin. While the companies don’t take Bitcoin directly as payment, they have partnered with apps like Bakkt that convert your Bitcoin into U.S. dollars before crypto holders make purchases. At Starbucks, for example, users must first commission an amount of bitcoin to transfer. The wallet then transfers that amount of bitcoin into the user’s Starbucks app leveraging real-time conversion rates.
Across the country about 2,300 businesses accept bitcoin as a form of payment. For a list, check here.
Left Out of Banks and Investments, Black Americans Are Turning to Crypto
Many Black Americans have been excluded from the traditional banking system. A whopping 43 percent of Black Americans feel the banking system is biased against them, found the Harris Poll. Some 34 percent of African-Americans polled said that crypto’s independence from banks is crucial to Black Americans owning crypto.
“There has been a long history of discrimination in investments. And that could be why we have seen a wide demography of interest and inclusivity in crypto – because it’s new, open and seemingly has fewer barriers to entry,” said John Gerzema, CEO of the Harris Poll, spoke about the poll results.
While crypto purchases have strict guidelines similar to banks, there may be an easier way to purchase the asset since it’s online.
Black Americans also struggle with more credit card debt and see crypto as an option to build wealth.
There is also an investment gap with African-Americans. About 50 percent of Black Americans don’t own stocks, and many African-Americans said they’re left out of the capital system that builds wealth.
Black Americans View Crypto As Part of Economic Freedom
Bitcoin and crypto are more Internet-centered, so Millennials can find more information from trusted financial advisors online. Bitcoin also has a vast social media presence that lets investors have more insight into crypto. After years of lacking knowledge about crypto, social media has helped Black investors learn more about bitcoin and other digital assets.
Black Americans Owning Bitcoin Need to Exercise Caution
While there are benefits to Black Americans owning bitcoin, there are downsides as well. Because crypto is a digital currency, there is the risk of hackers stealing investors’ Bitcoin from a digital wallet. Even if bitcoin is stored in a safe space, there is the risk investors can lose the digital key to the wallet and their crypto.
While bitcoin’s value is high now, it can fluctuate wildly. Just as stocks can go up and down rapidly, bitcoin’s value can drastically change as well. Financial expert Suze Orman suggests that new investors should only invest about $100 a month in bitcoin. She said that if you invest that set amount every month, it won’t matter if the currency’s value goes up and down.