At the time, Williams didn’t know much about cryptocurrency but decided to invest a little more than $200 to see where it would get him.
“No one knew what it was,” Williams said. “But it was going to change the world. So I was drinking a lot of crypto Kool-Aid.”
Cryptocurrency — decentralized digital money backed by bitcoin and ethereum — would gain momentum among Black investors in the years to come. As the hype grew, Williams cashed out in 2020 and bought his mom a house. He had learned enough about cryptocurrency to know it was time to get out.
“I was done gambling,” said Williams, now an adjunct law professor at the University of New Hampshire.
Despite his earnings, Williams worries that experienced investors are promoting cryptocurrency to Black Americans as the key to financial inclusion and closing the wealth gap without fully explaining the risks.
A study released earlier this year by Charles Schwab and Ariel Investments found that Black Americans were more likely than White Americans to invest in cryptocurrency. The study highlights data that shows Black investors are less likely than White investors to believe cryptocurrency is a risky investment, despite the extreme volatility of cryptocurrency, Black people, the study says, are also more likely to make investment decisions based on social media or other less credible sources.The disparity leaves Black investors disproportionately vulnerable when the cryptocurrency market collapses. Critics argue that Black Americans lag behind their White counterparts in financial literacy which they say is key to making smart investment decisions with cryptocurrency. Still, social media influencers, Black celebrities, athletes and conference organizers continue efforts to lure more Black investors into cryptocurrency, touting their own financial gains.
“Cryptocurrencies don’t solve living wages, they don’t address unemployment,” Williams said. “Black folks are so eager and so thirsty for financial inclusion and economic opportunity that by default we are more ripe for being exploited.”
But experienced investors say cryptocurrency is appealing to Black people for many reasons. Among them are the low barriers to entry because there are no credit checks or income requirements; the equal opportunity for success regardless of race or generational wealth; and a lot of merchants accept cryptocurrency as a form of payment.
Source: https://www.cnn.com/2022/08/20/us/cryptocurrency-black-investors-reaj/index.html