Exploring transformation of value in the digital age
By Michael J. Casey, Chief Content Officer
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There’s no “Money Reimagined” podcast this week, but today’s column was inspired by conversations my co-host Sheila Warren and I have had about the empowerment of crypto communities among people of color around the world.
Have a listen to last week’s end-of-year podcast edition, in which we discuss how the blowup in crypto markets opens the door for a renewed focus on real-world use cases and that the most impactful of those now may emerge outside the developed world. This is a moment for entrepreneurs and artists from Africa, Asia and Latin America – as well as minority economies within the United States – to shine. It’s the topic of this week’s column.
Worldwide Grassroots Projects Can Lead Crypto Recovery
(Rachel Sun/CoinDesk)
During the House Financial Services Committee’s FTX hearings last month, Rep. Jesus Garcia (D-Ill.) described crypto as “an entire industry” that “thinks it’s above the law,” and then said something that irked me even more than that unhelpful opening generalization.
Crypto companies “are making money using one thing: hype,” Garcia said. “And when the hype runs out, these businesses fail and ordinary investors, especially latecomers who are disproportionately low income, Black and Latino, lose.”
Now, it’s true that many people of color bought crypto in recent years and that, by extension, many have lost money on account of Celsius Network, FTX, Voyager Digital, et al. But there’s a subtext to Garcia’s comment – whether or not he consciously intended it – that patronizingly paints certain communities in the U.S. and elsewhere as ill-informed and vulnerable, denying them agency and blindly missing a bigger story of empowerment.
Take a look at hundreds of grassroots crypto projects led by Blacks and Latinos in the U.S., and at the many crypto-based business models arising in Africa, Asia and Latin America, and you will find large swaths of human beings from income-challenged, marginalized or oppressed communities seeking new ways to take charge of their lives.
There’s a reason why the top four positions in Chainalysis’ activity and purchasing power-weighted country ranking of per-capita crypto adoption are occupied by Vietnam, the Philippines, Ukraine and India and why the sixth-through-10th positions belong to, Pakistan, Brazil, Thailand, Russia and China. And according to a forthcoming report on “Black Experiences in Web3” from the Crypto Research and Design Lab (CRADL), there’s also a reason why the fifth position is occupied by the U.S., the only developed Western country in the list: It’s because of an outsized level of adoption among Black Americans.
Hint for Garcia: The common denominator across this top ten is not Sam Bankman-Fried. FTX’s Super Bowl ads featuring Larry David weren’t subliminally targeting rickshaw drivers in Vietnam, refugees in Ukraine or, for that matter, Black hospitality workers in the U.S. Millions of people worldwide got into this field because they saw a way around a legacy financial system that had kept them from executing on their own untapped potential.
Sure, these marginalized early adopters are still a minority in their communities. Cryptocurrencies are far from universally accepted. And the negative sentiment generated by the 2022 meltdown will slow growth. But the worldwide adoption trend among these groups is on the up and it’s poised over the long term to disrupt the Western financial establishment, which whether it likes to be labeled as such or not, includes privileged “crypto bros” who treated centralized token exchanges as casinos to 10-x their dollar wealth.
These people, once marginalized, are now poised to lead the industry’s recovery from its doldrums.
A report from Dan Ashmore at CoinJournal on the makeup of crypto wealth after the 2022 market crash revealed that there are now 73% fewer bitcoin millionaires than a year ago. But it also included a potentially good news angle that caught my attention: that the number of accounts holding more than one bitcoin has surged.
I got my colleague Sage D. Young to produce a six-year version of the longer-time frame chart Ashmore had included in his report. A striking difference jumped out at me between the crypto winters of 2018 and 2022.
Why is it that the bitcoin crash in late 2017 prompted a decline in the number of one-bitcoin accounts and, more or less, stagnation over the following year and half, whereas last year the number skyrocketed following a similar price crash?
My hypothesis is that in recent years, retail buyers of bitcoin have set up automatic dollar-cost–averaging purchases at set intervals with providers like Coinbase (COIN) and as the price of bitcoin has come down, they are now automatically accumulating more of it on a regular basis. The automated nature of these transactions makes them less likely to sell, whereas such arrangements weren’t as widely used in 2018.
The latest trend, one could argue, is a good thing. With millionaires down and “one-coiners” up, it suggests wealth is being democratized, even if, in dollar terms, everyone’s bags are way down.
The Conversation: Mobbed
Poor Gary Gensler. The chairman of Securities and Exchange Commission, now a pariah among crypto supporters for his less-than-friendly approach to regulating the sector, will forever be unable to post light-hearted friendly tweets with a mob coming after him in his replies. Example from this week below.
Relevant Reads: Crypto’s Grim Reaper
One way in which crypto winter has been especially brutal: layoffs, about which this week brought more nasty news.
That came on the heels of Coinbase’s big announcement that it was cutting a further 950 jobs following prior cuts last year. Jamie Crawley reported.
It’s hardly consolation for the laid-off staff, but it seems Wall Street was quite happy that Coinbase took the action, according to Helene Braun’s report.
To get a sense of just how bad things have been across the industry, take a look at this “grim count” compiled last week by Fran Velasquez with help from other CoinDesk staff.
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