NEW YORK (AP) — A software developer has twice attempted to invest in cryptocurrency, only to have his savings wiped out. Despite this, he still advocates its use to minority communities, and he would like to try again.
After a workshop funded by a prominent rapper, a recent college graduate and single mother are now looking to get into bitcoin. The public housing complex where the hip-hop star grew up is where the couple met.
An ex-executive of a crypto exchange feels let down by the false promise that crypto would improve her family’s situation. This was especially true in Ethiopia’s war-torn Tigray region.
The participants were drawn to the potential of crypto to build wealth outside of conventional financial systems that have a history of racial discrimination and apathy towards the economically disadvantaged. However, crypto’s meltdown in the last year has diminished this narrative, sparking a debate between those who still have faith in its future and skeptics who believe misleading ads and celebrity-endorsed hype have lured vulnerable people into a high-risk and untested asset class.
The collapse of two crypto-friendly banks this month has further complicated the situation. Their failure has set back crypto companies that depended on banks to convert digital currencies into US dollars. At the same time, the crisis is also lending support to Bitcoin, the most widely used and oldest digital currency. This reinforces the distrust in the system that spawned cryptocurrencies.
Mariela Regalado, 33, and Jimmy Bario, 22, are neighbors at the Marcy Houses complex in Brooklyn. After attending a workshop called the Bitcoin Academy, which was sponsored by Jay-Z and Jack Dorsey, the co-founder of Block Inc, the parent company of the mobile payment system Cash App, Bario began putting $20 or $30 into bitcoin every other week.
“I don’t see it as something that’s going to, you know, take me out of Brooklyn and buy me a $2 million mansion in Texas,” said Regalado, a mother of two and an educator. “But if it happens, I’m all for it.”
Only a small portion of Americans own cryptocurrency, but the COVID-19 pandemic saw increased adoption as low interest rates made investing in risky assets and borrowing money more appealing. Crypto prices reached their peak in 2021. There are numerous apps, exchanges, and ATM-like crypto machines that make it easy to buy digital coins.
However, after crypto values crashed in 2022, its downsides were exposed. Millions of dollars in investments were lost, and a series of layoffs occurred at crypto exchanges, lenders, and other businesses. In addition to its volatility, crypto lacks protections such as deposit insurance since it isn’t regulated by a single institution. Largely unregulated, this industry is prone to fraud, hacks, and scams.
Cryptocurrencies are based on decentralized ledgers — usually blockchain — enabling peer-to-peer transactions without the need for a middleman like a bank or government. This continues to attract people who have limited access to traditional wealth-building opportunities, such as homeownership, college tuition, or the stock market, said Terri Bradford, a payments specialist at the Kansas City Federal Reserve who has explored crypto’s appeal among many Black investors.
“It doesn’t seem like a lot of people are put off by crypto even though we have seen what happened,” Bradford said.
