Crypto’s collapse strikes deep into Black community

By Chris Fry, January 8, 2023

Back in July 2014, Slate.com published an article by Black writer Jamelle Bouie titled “The Crisis in Black Home Ownership”, which described the catastrophic impact of the Great Recession on Black families:

 In 2005, three years before the Great Recession, the median Black household had a net worth of $12,124. Yes, this was far behind the median white household—which had a net worth of $134,992—but it was a huge improvement from previous decades, in which housing discrimination made wealth accumulation difficult (if not impossible) for the large majority of African-American families.

By the official end of the recession in 2009, median household net worth for Blacks had fallen to $5,677—a generation’s worth of hard work and progress wiped out. (The number for whites, by comparison, was $113,149.) Overall, from 2007 to 2010, wealth for Blacks declined by an average of 31 percent, home equity by an average of 28 percent, and retirement savings by an average of 35 percent. By contrast, whites lost 11 percent in wealth, lost 24 percent in home equity, and gained 9 percent in retirement savings. According to a 2013 report by researchers at Brandeis University, “half the collective wealth of African-American families was stripped away during the Great Recession.”

In 2009, when the Great Recession began to ebb, computer researchers developed the first cryptocurrency, which is a digital currency tied to distributed encoded ledger. Anonymous traders can conduct purchases and other transactions without using traditional banks, without credit checks and largely without government oversight, particularly by the IRS.

This system has had growing appeal among the oppressed and other workers so battered by the catastrophic economic devastation unleashed on them during the Great Recession, when so many lost their homes, their jobs and their life savings to the vulture investment banks like Citibank, Wells Fargo, and others.

In the last two years crypto companies have advertised heavily, particularly in the Black and Latinx communities:

Just a few short months ago, venture capital firms, celebrities and even some elected officials were hailing cryptocurrency as the future of personal finance, an investment vehicle that could turn modest nest eggs into massive fortunes.

Among the advantages touted by its supporters was the claim that crypto had the potential to close a pernicious, generations-old racial wealth gap for Black and Latino would-be investors. Cryptocurrencies, the narrative went, were primed to “democratize finance….”

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