Laura Washington: Cryptocurrency is a peril for the Black community

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“The future is crunk!” declares a digital re-creation of a young LeBron James in the ubiquitous TV commercial promoting Crypto.com.

That is, hype.

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Wild. Exciting.

Cryptocurrency is hot, especially for African Americans. I am still trying to figure it out.

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The online Oxford Dictionary defines “cryptocurrency” as “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”

Everyone has heard of the most widely used version, bitcoin.

LeBron James, the Los Angeles Lakers icon, has hooked up with Crypto.com to teach children about crypto blockchain technology, according to a January report by CBS News.

Crypto.com will work with James’ foundation to offer educational and workforce development opportunities in emerging technologies, including in underserved neighborhoods, the report stated.

Others jumping into crypto include the producer Jay-Z, rappers Ice Cube and Snoop Dog, famed filmmaker Spike Lee, boxing legend Floyd Mayweather Jr. and so on.

In the Crypto.com TV ad, James offers a younger version of himself life tips to the beat of hip-hop. “Fortune Favors the Brave,” the ad declares.

Which brings me to Jonathan Jackson, the businessman son of the Rev. Jesse Jackson, who prevailed over 16 other candidates in the June 28 Democratic primary for Illinois’ 1st Congressional District seat.

The not-so-secret sauce that helped Jackson snare the coveted nomination: more than $1 million in campaign donations from political action committees tied to cryptocurrency interests, according to news reports. That included about $500,000 for TV ads promoting Jackson, courtesy of Protect Our Future, a PAC backed by Samuel Bankman-Fried, the cryptocurrency billionaire.

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These are all potent signs that Black people are being taken seriously by — and are taking seriously — the explosive wave of interest in cryptocurrency.

Black entertainers, athletes and entrepreneurs are lining up to invest and lend their marquee names to marketing campaigns.

Black consumers are dazzled by the lure of bitcoin, ethereum and dogecoin, and the promise, for some, of big, easy money.

A 2021 Pew Research Center survey of U.S. consumers found that 18% of Black adults had invested in, traded or used a cryptocurrency, compared with 13% of white adults.

About 44% of the Americans who trade in cryptocurrency are people of color, according to a survey conducted by NORC at the University of Chicago.

More than one-third of the participants in that June 2021 survey reported annual household incomes under $60,000; 55% did not have a college degree.

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The chorus of crypto’s disciples call it a change-maker for those who have been marginalized by America’s banking and investment systems.

“Blockchain technology is revolutionizing our economy, sports and entertainment, the art world and how we engage with one another,” James said in the CBS report.

The hoops icon hopes that educating young people about the technology will help address the digital divide. “I want to ensure that communities like the one I come from are not left behind,” James said.

But crypto is a dubious solution to that massive problem.

Indeed, Black consumers too often rely on usurious currency exchanges, payday loans and pawnshops that bedevil our communities. When unexpected disaster hits, we are less likely to have life, auto and health insurance to ease the trauma. We participate in financial planning, traditional investing and entrepreneurship at lower rates than other groups.

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But crypto investing is a glittering ornament on what could be a rotting tree. The industry has been criticized for its lack of regulation, transparency and consumer protections. The digital system makes it highly vulnerable to fraud, and crypto scams are proliferating.

Since early May, more than $700 billion has been lost in “a devastating crypto crash, plunging investors into financial ruin and forcing companies like Gemini to slash costs,” The New York Times reported last month.

As it stands, from cradle to grave, African Americans are in dire need of financial literacy and ways to build individual, institutional and generational wealth.

A 2019 analysis by the Institute for Policy Studies examined the persistent and deepening “racial wealth divide” in America. Between 1983 and 2016, the median household wealth for a Black family dropped by more than half after adjusting for inflation, the study found, compared with a 33% increase for the median white household.

The median Black family owned $3,600 — 2% of the wealth of the median white family. The median Latino family owns $6,600 — just 4% of the median white family.

I have tried in vain to get my millennial nephews to bank, save and invest, but that offers little glamour.

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That’s why marketing campaigns push crypto as hip, or, as the kids would say, “Gucci.”

But when marketers aim at Black folks, the bright red flags should wave high. We have been targeted for everything that ails us: cigarettes, vaping, alcohol, lottery tickets, sugar-laden pop, fast food and more.

African Americans don’t need to add cryptocurrency to our list of perils.

Laura Washington is a political commentator and longtime Chicago journalist. Her columns appear in the Tribune each Monday. Write to her at LauraLauraWashington@gmail.com.

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