Cryptocurrency, the digital currency including bitcoin and Ethereum, has gained momentum among Black investors turned off by the stock market, but many say the risks aren’t being explained.
CNN reports Samson Williams was working in the mortgage lending industry when he got into cryptocurrency in 2014, years before it became mainstream. Williams flirted with cryptocurrency for six years but cashed out in 2020 when he felt he knew enough about cryptocurrency and the industry.
Williams is among several experienced investors sounding the alarm on the risks of cryptocurrency. While cryptocurrency has been promoted as a way to close the racial wealth gap and give financial freedom to Black Americans, its crashes and unregulated market leave investors, especially Black ones vulnerable.
“Cryptocurrencies don’t solve living wages; they don’t address unemployment,” Williams told CNN.
“Black folks are so eager and so thirsty for financial inclusion and economic opportunity that by default, we are more ripe for being exploited.”
Cryptocurrency is money that is bought, exchanged, and sold online. There are several digital currencies, but bitcoin is the most popular due to its low transaction fees and ease of use. The cryptocurrency industry is littered with Black social media influencers, athletes, celebrities and even rappers touting the digital currency.
In addition to the endorsements, cryptocurrencies have attracted Black investors because there isn’t a minimum amount required to invest, which provides an equal opportunity for everyone to benefit.
However, it’s also a risky investment. Earlier this year, the cryptocurrency market lost $500 billion in value in 24 hours. Cryptocurrency exchanges, including Coinbase and Crypto.com, laid off- hundreds of employees.
Algernon Austin, the director of race and economic justice for the Center for Economic and Policy Research, told CNN cryptocurrency is nothing more than a “get rich quick scheme.”
“Most African Americans got into cryptocurrency as the values were high so that means people are losing money,” Austin added.
“And we are talking about a low wealth population losing wealth, that is not a good thing. It is the most risky investment that you can make.”
However, some Black investors, including Charlene Fadirepo, a Bitcoin adviser, said digital currency is a way to level the playing field for Black Americans who have historically been shut out of the banking and finance industry due to decades of racism.
Fadireo adds like the stock market, digital currency investors should be smart about how much and where they put their money.
“This is about responsible and smart investing,” Fadirepo said.
“If you are not in a position to invest, if you have significant debt, if you have credit challenges, maybe your first step is to focus on that.”