At Coinbase, we believe diverse opinions, backgrounds, and experiences are essential to our mission of creating an open financial system for the world — one that’s more equitable and accessible. In time for Black History Month, we partnered with Qriously to ask 5,126 people ages 18+ in the US and UK about their experiences with the current financial system, their thoughts on how technology will impact the world, and their interest in crypto. We also asked prominent People of Color involved in crypto how it can help solve the problems of our current financial system and the importance for everyone to get a seat at the table.
Key findings from Coinbase research
Twice as many Black Americans have been negatively impacted by the current financial system as White Americans
College-educated Black Americans are nearly twice as interested as college-educated White Americans in learning more about crypto
The majority of Black Americans believe tech will have a positive impact on society
1 in 3 Black Americans believe all ethnicities/races have equal access to the financial system
Black Americans lead the charge when it comes to interest in understanding crypto
In our survey, 48 percent of Black Americans indicated they have been negatively impacted by the current financial system (banking, currencies, stock markets, lending/borrowing, etc.) because of their race or gender. 24 percent of White Americans responded similarly.
When broken down by age, 48 percent of 18–34 year olds and 52 percent of 55+ year olds have been negatively impacted, indicating that bias in the financial system hasn’t changed much over time.
Previous studies — and historical facts — back up these findings. According to a 2014 report from Zillow, Black Americans make up only 3 percent of conventional mortgage applications, the lowest rate of any racial group. But Black Americans also face the highest denial rate, about 25 percent versus only 10 percent for White American applicants.¹
How can crypto correct the inequity of our financial system? “Crypto incentivizes people to operate together who normally wouldn’t, says Steven McKie, Founder and CEO of Amentum, a cryptocurrency investment firm. “Cultural groups, whether they’re religious or ethnic, have positive benefits to the participants of those groups. The core reason there’s a benefit is because it’s easy to create social trust with things that are familiar.
Now the cool thing about crypto is it’s trustless technology. The system is neutral. Crypto moves us away from an environment where we need to assume trust in a group before we can do business. With crypto, there’s redundant systems that prevent someone from screwing you over. If you’re a minority or part of an underrepresented group, and you’re used to only trusting one type of ethnic group or social group, now you can expand your window.”
Vernon Johnson, Co-founder of Yup, a decentralized social capital protocol, and former VP of Columbia University’s blockchain organization, agrees. “Many cryptocurrency transactions are pseudonymous and don’t require the disclosure of your real world identity, which may ease some of the apprehensions about racial discrimination in Finance 1.0,” says Vernon. “It becomes much harder to perceive racial identity in a world where people’s real identities are obfuscated. Crypto allows people to be evaluated solely on their digital reputation and transaction history versus more traditional financial options that require in-person meetings or disclosure of real world identity documents.
In general, Black Americans have a more optimistic view of technology with 58 percent agreeing that technological innovation, in general, has a positive impact on society. Black Americans are also more likely to agree that technological innovation can solve many of the world’s problems, with 51 percent agreeing to the statement versus only 39 percent of White Americans, and a majority also believe that tech will impact the financial system positively in the next 10 years.
Technology has always been a key part of our financial system. Money, like other useful technologies, has gone through many upgrades over the years. From trading shells and metal coins to tapping apps and trading stocks, money has evolved from facilitating transactions between neighbors to connecting billions of people worldwide. However, since our traditional system of money depends on geographic location, financial institutions, and government control, it has limitations that can greatly affect access.
Today, it’s estimated that more than 2.5 billion people have smartphones, with that number growing in both advanced economies and emerging economies.² And more than a million people have been accessing the internet for the first time each day since January 2018.³
However, there are still 1.7 billion people globally who don’t have access to a financial account.⁴ “Several reasons include a lack of a reliable government issued identity and high fees,” says Vernon. “Additionally, many national currencies are volatile and aren’t reliable stores of value. A disproportionate number of People of Color face these problems, and crypto seeks to use open market incentives to level the playing field. On the upside, many of the unbanked have access to a smartphone and the internet, which allows them to plug into cryptocurrency-based financial services.”
Carmelle Cadet, Founder and CEO of EMTECH, a technology and services company that’s helping Central Banks in emerging markets build modern financial systems with blockchain technology, agrees that crypto is ushering in a new generation of innovation. “At the core of it all, there’s a lot of inefficiency in the legacy systems. They’re breaking because they weren’t built for how globally connected we now are,” says Carmelle. “So when it comes to improving the financial markets, building a new infrastructure is needed at this point.”
Black Americans in our survey were closely split in their belief of whether all ethnicities/races have equal access to the current financial system, with 35 percent agreeing to the statement, 37 percent disagreeing, and 28 percent answering neutral. When asked at what pace are all ethnicities/races getting equal access, only 22 percent answered faster than expected.
One factor that affects access to the financial system is having government-issued photo identification, which is needed to open a bank account in the US. According to a survey conducted by the Brennan Center for Justice at NYU School of Law, as many as 11 percent of US citizens — and as many as 25 percent of African American citizens — don’t have government-issued photo ID.⁵
“The first thing I would want crypto to fix would be identity,” says Robert Greenfield, Head of Social Impact at ConsenSys. “A digital identity has more of a major impact than you can even fathom. If you don’t have a driver’s license, you can’t even participate in humanitarian aid programs.”
“You could have a cryptographic type of token that a central bank could issue,” says Carmelle. “If you have a crypto token that is the legal tender, that is trusted and redeemable, it would help close the gap with people who don’t qualify or don’t fit into the typical banking system. With crypto, they could have a mechanism to access digital means of exchange. They have a digital way of storing their cash and they can have a cryptographic way of maintaining their identity. That’s what excites me about crypto. It fills a gap, it fulfills a need that commercial banks can’t.”
When it comes to understanding crypto, Black Americans show more interest than any other respondents with 70 percent being interested, compared to 42 percent of White Americans.
College-educated Black Americans are nearly twice as interested as their White American counterparts, with 75 percent interested in learning more versus 39 percent of their White American counterparts.
When broken down by age, 21 percent of Black Americans over the age of 55 are very interested in learning about crypto, compared to 6 percent of White Americans over the age of 55.
1 in 3 Black Americans also responded they would be even more interested in understanding crypto if someone explained how it could make access to the financial system more equal.
Steven believes learning about crypto and getting involved is a growing opportunity for People of Color. “There’s a lot of opportunities to find your tribe if you look for it. And crypto has matured enough to the point where you can peek your head in and a year from now, you will feel even more represented. So it’s a really safe opportunity,” said Steven. “Find your crowd, listen to the different discussions and find where in the conversation you feel like you belong. There’s such a wide array of different voices and personalities that you can listen to now, to form your perspective. Now is the time that you need to insert yourself into the community until you feel like you’re a part of the community. That’s how anyone joins any new community, they just kind of jump in.”
“In the last tech revolution, the emergence of the internet, there was very little representation for People of Color,” Vernon says. “And that trend has continued, as black and brown people are underrepresented at tech companies, have a harder time raising venture capital, and generally have fewer opportunities to enter tech. As a result, communities of color have had little ownership and stake in the wealth and innovation generated by the last tech revolution. Unfortunately, black people were beneficiaries as consumers and internet users, but few were core stakeholders in the companies and protocols that helped bring about such change. This time needs to be different. It’s important that underrepresented people of color play a role in helping shape Web 3.0 and partake in the new opportunities that will arise from it.”
“You have to take the first step,” Robert says. “If you don’t want to be an engineer, that’s fine. There’s still a lot of design problems that need to be solved. You don’t like design? Well, there’s still a lot of legal ambiguity that needs to be corrected. So I always tell people to try to find what your passion is first, and understand that there’s a place in the blockchain ecosystem that you could do really, really well.”
Diversity also directly correlates to a company’s bottomline, according to a study by the Boston Consulting Group. They surveyed more than 1,700 companies in 8 countries and found that companies that have more diverse management teams have 19 percent higher revenue due to better innovation and improved financial performance.⁶
“Working with different people, and not just of different ethnicities, but also from different regions as well, just makes for better leaders. And better leaders make for a less political environment, and a less political environment is more operationally efficient,” says Robert.
Many talented people of color often choose the “safe” option when it comes to job opportunities, says Vernon. “This leads to highly qualified people of color being funnelled into large established corporations instead of taking risks. As a result, their impact is capped and constrained by the glass ceilings of corporate America. Entering crypto is a superior option because an individual’s impact is magnified significantly. They’ll be at the cutting-edge, helping build the infrastructure for the decentralized internet. I believe this will be one of the most transformative events of the next decade.”
Carmelle believes Black Americans should learn about crypto because it’s a way to “hedge the system.”
“When we look at 2008, whether you were in a large economy or a developing economy, we were all on pins and needles whether our money was going to be in the bank, whether we were safe. You have a lot of people who lost their jobs. Everything is so intertwined into our sole financial system,” says Carmelle. “We need an alternative in case it’s all going to hell tomorrow. Crypto is your shot to have a seat at the table, to build something that works for you, for your people. You can’t turn the other way, otherwise you’re going to miss this innovation cycle and you’re going to have someone else telling you how you store your money and how much you pay to move it.”
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Methodology: To assess People of Color’s sentiments about inclusion and the financial system, Coinbase commissioned a study conducted by Qriously of 5,126 people ages 18+ in the US and UK during January 2020. The survey asked questions about their thoughts on money, technology, and the financial system to derive the statistics cited in this post.
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