Cryptocurrency is a peril for the black community
“The future is crisp! states a digital recreation of a young LeBron James in the ubiquitous TV ad promoting Crypto.com.
That is, the hype.
Cryptocurrency is trending, especially for African Americans. I’m still trying to understand.
The Oxford Online Dictionary defines “cryptocurrency” as “a digital currency in which encryption techniques are used to regulate the generation of monetary units and verify the transfer of funds, operating independently of a central bank” .
Everyone has heard of the most used version, bitcoin.
Los Angeles Lakers icon LeBron James has partnered with Crypto.com to teach kids about crypto blockchain technology, according to a January report from CBS News.
Crypto.com will work with James’s foundation to provide training and workforce development opportunities in emerging technologies, including in underserved neighborhoods, the report said.
Others are getting into crypto, including producer Jay-Z, rappers Ice Cube and Snoop Dog, famed filmmaker Spike Lee, boxing legend Floyd Mayweather Jr., and more.
In the Crypto.com TV commercial, James offers a younger version of himself hip-hop-paced life advice. “Fortune smiles on the brave,” says the ad.
Which brings me to Jonathan Jackson, businessman son of the Reverend Jesse Jackson, who prevailed over 16 other candidates in the June 28 Democratic primary for Illinois’ 1st congressional district seat. .
The not-so-secret sauce that helped Jackson land the coveted nomination: More than $1 million in campaign donations from political action committees tied to cryptocurrency interests, according to reports. This included around $500,000 for TV ads promoting Jackson, courtesy of Protect Our Future, a PAC backed by cryptocurrency billionaire Samuel Bankman-Fried.
These are all powerful signs that black people are being taken seriously – and are taking seriously – the explosive wave of interest in cryptocurrency.
Black artists, athletes and entrepreneurs are lining up to invest and lend their brand names to marketing campaigns.
Black consumers are dazzled by the lure of bitcoin, ethereum and dogecoin, and the promise, for some, of big easy cash.
A 2021 Pew Research Center survey of US consumers found that 18% of black adults had invested, traded or used cryptocurrency, compared to 13% of white adults.
About 44% of Americans who trade in cryptocurrency are people of color, according to a survey conducted by NORC at the University of Chicago.
More than a third of participants in this June 2021 survey reported annual household incomes below $60,000; 55% did not have a university degree.
The choir of crypto disciples calls him a changemaker for those who have been marginalized by America’s banking and investment systems.
“Blockchain technology is revolutionizing our economy, sports and entertainment, the art world, and the way we interact with each other,” James said in the CBS report.
The hoop icon hopes educating young people about technology will help bridge the digital divide. “I want to make sure communities like the one I come from aren’t left behind,” James said.
But cryptography is a dubious solution to this massive problem.
Indeed, black consumers too often rely on usurious currency exchanges, payday loans and pawnbrokers that plague our communities. When an unexpected disaster strikes, we’re less likely to have life, car, and health insurance to mitigate the trauma. We participate in financial planning, traditional investing and entrepreneurship at lower rates than other groups.
But crypto investing is a glittering ornament on what could be a rotten tree. The industry has been criticized for its lack of regulation, transparency and consumer protection. The digital system makes it very vulnerable to fraud and crypto scams proliferate.
Since early May, more than $700 billion has been lost in “a devastating crypto crash, plunging investors into financial ruin and forcing companies like Gemini to cut costs,” The New York Times reported last month.
As things stand, from the cradle to the grave, African Americans are in dire need of financial literacy and the means to create individual, institutional, and generational wealth.
A 2019 analysis from the Institute for Policy Studies examined the persistent and growing “racial wealth divide” in America. Between 1983 and 2016, the median household wealth of a black family fell by more than half after adjusting for inflation, the study found, compared to a 33% increase for the median white household.
The median black family owned $3,600, or 2% of the median white family wealth. The median Latino family owns $6,600, or just 4% of the median White family.
I’ve tried unsuccessfully to get my millennial nephews to bank, save and invest, but it offers little glamour.
This is why marketing campaigns are pushing crypto into fashion, or as the kids would say, “Gucci”.
But when marketers are targeting blacks, bright red flags should be flying high. We have been targeted for everything that ails us: cigarettes, vaping, alcohol, lottery tickets, sugary soft drinks, fast food and more.
African Americans don’t need to add cryptocurrency to our peril list.
Laura Washington is a longtime political commentator and journalist in Chicago. His columns appear in the Tribune every Monday. Write to him at [email protected].
Submit a letter of no more than 400 words to the editor here or email [email protected].