Black investors say crypto remains key to building wealth even as digital assets sell off sharply in 2022

In 2013, as crypto was creeping into the mainstream, Cleve Mesidor worked as an employee in the Obama administration’s Department of Commerce. As a favor to a friend, Mesidor helped write a press release about bitcoin. Although she was rather uninterested and unimpressed at the time, within a few years Mesidor would find herself immersed in the world of crypto, quitting her job to become a full-time industry representative and committed investor.

The awakening to the crypto world came a few years after Mesidor helped with her friend’s press release, when she saw “Dope”, a film about a group of black teenagers who use bitcoin to thwart a financial criminal. The film, she said, sparked a vision in her head of crypto as a path to racial equality, a tool for people who were either accidentally or deliberately left out of the traditional financial system.

That kind of awakening is a common experience for minority investors who say they are bullish on crypto and are continuing to hold on even as the market suffers through a steep selloff this year.

The losses, they say, are irrelevant to the overall goal of the project, with tokens like bitcoin and ethereum offering a sense of freedom, and the potential to level the playing field with those who have never experienced discrimination from lenders or bankers.

Jacob Faber, an NYU professor and expert on social inequality, told Insider that the perspective of people like Mesidor was likely the result of a long history of discrimination in the financial system, with well-documented evidence of bias in everything from opening bank accounts to getting a mortgage to get a loan to start a business.

A survey by Ariel Investments and Charles Schwab released in April found that 28% of black Americans say they distrust banks, compared to just 18% of white Americans. 56% also reported not feeling respected by financial institutions, something Mesidor can relate to. She recalled experiences where she and her family were refused loan applications or were treated badly by bank employees.

“I wasn’t even taken seriously. You know, when someone just says ‘why are you wasting my time?'” Mesidor said. “Get a degree. We did it. Get a good paying job with benefits, did it. And still it’s not enough.”

The result over time has been that many black and minority investors are either shut out or shy away from traditional investment opportunities that can be offered to white investors, and possibly lured by decentralized (and often riskier) investments.

Only 34% of black Americans own stocks compared to 61% of white Americans, according to the Federal Reserve Board, but that ratio is reversed when it comes to cryptocurrency. Among black investors, 25% own crypto compared to just 15% of white investors, Ariel and Charles Schwab reported.

It also means black investors could have more significant exposure to 2022’s crypto crash, which has reduced its total market capitalization by around $2 trillion since last November and sent bitcoin tumbling from $69,000 to just over $20,000.

But Mesidor feels that the trend towards digital assets is only natural for black investors.

“If traditional finance has worked for you, you see crypto as risky. You see it as speculative. For those of us who have been locked out, traditional finance is risky,” she said. “Asking for a loan is risky. You know the answer, right?”

Crypto has been touted as an egalitarian form of finance, away banks and their conscious or unconscious biases. That’s the beauty of what Mesidor refers to as “self-sovereign identity,” that you don’t need government attention to build the same wealth as your peers.

Still, others are more skeptical.

“The proliferation of cryptocurrencies and non-fungible assets has become a kind of Ponzi scheme,” NYU’s Faber said of the trend, adding that any ambition for racial equality obscured the industry’s risks, which could actually further erode minority wealth.

“The idea that this could be a democratizing currency is not supported by the facts at all,” Faber said.

And yet black investors are still twice as likely to say crypto is their best investment option, according to Ariel and Charles Schwab. After years of research, Mesidor ended a career in politics and entered crypto full-time in 2017 as head of her non-profit Blockchain Foundation. Unfazed by bitcoin’s plunge, she notes that this is not her first crypto winter, but her third.

“We’ve learned that get-rich-quick schemes in this society rarely work for us,” Mesidor said. “This is not about ‘oh my god, the price of crypto’. It’s about building products and services, breaking down barriers, creating access for people.”

She says she’s in the market for the long term, and among thousands of tokens, she’s bullish on the biggest ones.

“I think bitcoin is my north star in terms of crypto,” Mesidor said.