Despite the high volatility of the crypto space, Black investors are still leaning into digital assets over the traditional stock market.
Often, when we think about building money or investing, the stock market has been the most common method. However, Blacks are starting to look into cryptocurrency over the stock market. Almost 44 percent of crypto traders are investors of color, compared to the 35 percent of stock investors, according to a NORC study at the University of Chicago.
Cryptocurrency Is All About the Long Game
When people think of crypto, they usually associate it with a volatile market, but there are attributes of stability that make it a unique and solid form of investing.
“Bitcoin is a longevity plan,” Wilson said. “It’s not necessarily about looking at the price on a daily basis. To me, it is tied to the fact that it is freedom-money. It is sovereignty and an escape from the financial situation that we are in.”
Many African-Americans also use crypto to help establish a form of generational wealth. According to the Federal Reserve System, Black people control about 3.8 percent of the $116 trillion worth of wealth in the U.S.
Price and Value Are Different in Bitcoin
It’s important to recognize the difference between the price and value of bitcoin.
“A couple cryptocurrencies last year grew at an exponential rate, some at 120 percent, some at 600 percent, but there were times during that year where it went down to five, 10, even 30 percent,” Williams said.
Williams went on to to explain why even crypto decreasing in value can be an attractive investment.
“We’re looking at some crypto that is even going down 80 percent, but they’re still accruing value for two reasons: one it’s a long-term play, but you have to understand, it’s like investing in an ATM in 1989 or a cell phone in 1983,” Williams offered. “When those products went to the market, there was a lot of volatility early on. With cryptocurrency, you have to worry about supply affecting the price, but over a five, 10-year span, or not even that, over a 12-month span, if you invest in the right crypto, you will make money over that span.”
It Is Possible to Make Money Overnight
Most everyone has heard stories about those overnight millionaires who gained their success using crypto. And according to Wilson, things like that are rare, but they do happen.
“I mean, if they pick the right cryptocurrency, they can find the right one that gains the attention of someone like Elon Musk and are able to flip it rapidly,” Wilson said. “For cryptocurrencies outside of bitcoin, it’s like going to the store and getting a scratch-off. You can purchase the right one and become a millionaire, but it’s unlikely, so it’s important to look at the economics of cryptocurrency and understand what the underlying technology is before you start just jumping in,” Wilson pointed out.
He knows many investors who’ve hopped into the meme coins of SafeMoon or Shiba Inu really early, “like before anyone thought about it, and then when the wave hit, they were able to become millionaires overnight,” Wilson explained. “But if you think about it, it’s not really overnight because these people took bets way before.”
You Have More Financial Control Over Bitcoin
A shareholder usually looks for cash flow, growth, profits or earnings when investing in stocks.
“Bitcoin is a type of money like we’ve never seen before,” Wilson said. “And that we’ll never see again. It is hard money that’s monetary policy is based on rules set by the actual code itself, and you could run that code yourself. That changes everything because you can run the code and participate in the network, and you don’t have to trust anyone else.”
Wilson explained that investors often look to financials when it comes to stocks, which is information that can’t always be verified.
“So if something happens like Enron and the next thing you know, you’ve lost all your money because you just trusted these K1s or whatever has come out into the market, and that to me is the difference,” Wilson said. “It’s money versus you buying into a business entity that people are manipulating.”
When asked how different crypto was from the stock market regarding outside influences affecting the market, Wilson had this to say: “It’s not.”
Outside Forces Affect Crypto, Which Can Be Extremely Beneficial
“People change their sentiment every day,” Wilson said. “If someone got shot three houses down from your house, the value of your house will probably be lower. Nobody’s coming to your block, trying to buy your house. No one is giving you the real-time value of your house…and if that continues to happen, when it is time for you to sell, you’ll see how volatile the price of your house is.”
But in cryptocurrency, you’ll see that unpredictability and change in real-time. When investing in anything, volatility is inevitable.
“We don’t want to let the similarities between stock and bitcoin affect people from investing in bitcoin,” Williams said. “I don’t think it’s a deterrent.”
It also doesn’t cost a lot to invest in bitcoin. You can put in as little as $100, because the currency is digital and therefore infinitely divisible. But whether you’re investing in crypto or the stock market, “A lot of this stuff is pure bets and hope that you’re going to make some more money,” said Williams.