Black people should stop buying Bitcoin! Here’s why.

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If you’ve been living under a rock for a few years, you might not know that everyone and their moms are buying Bitcoin and other cryptocurrencies.

Cryptocurrencies are forms of currency that can be digitally exchanged for goods and services. Bitcoin is the most popular, but other cryptocurrencies like Ethereum, Dogeoin, and Cardano have also grown in popularity.

A lot of people might disagree with me on this topic, but I read a statistic that scares me. About 44% of those who own cryptocurrency are people of color. This is a very high number considering the volatility of the crypto market.

A survey conducted last summer by NORC.org at the University of Chicago found that 13% of Americans said they bought or traded cryptocurrency in the past 12 months. Of these, 44 percent were non-white, 41 percent were female, and 35 percent had an annual family income of less than $ 60,000.

The average trader was under 40 and did not have a college degree, according to the survey.

Data shows that while fewer black Americans invest in stocks than white people, they are actually more receptive to holding cryptocurrencies. Buying a stock is buying a small stake in a company. Buying crypto allows you to use it as a digital currency, but it is not asset backed. What makes crypto so appealing is the ability to double or triple your money in a short period of time due to the hype over the average investment in stocks which earns 8-10% per year.

Social media spaces like Clubhouse have become a gathering place for those looking to bridge the investment gap between races through cryptocurrencies. But it comes with its own risk.

Here are my 5 reasons not to invest in bitcoin and other cryptocurrencies.

Remember the Dot Com bubble of 2000

If you know the history of the ups and downs of the stock market, then you should know all about the dot com bubble of the 90s, which led to a burst in 2000. In the 90s, investing in the Internet, specifically the .coms, was all the rave. Some companies made absolutely no money, just owned a .com and many investors invested millions in it with the expectation of making money in the future.

New internet-based businesses have sprung up everywhere. The NASDAQ, home of tech stocks, rose from 1,000 points in 1995 to over 5,000 in 2000.

Companies were asking huge prices for their shares when they went to the market and sometimes the value of those shares doubled on day one. It seemed like anyone with an idea for an online business could easily earn millions.

But the party has ended. Many .com companies have been wiped out, and even giants like Amazon have lost 90% of their value. Investors were left in the dust of the crash, many losing their savings.

New industries, like cryptocurrencies, usually start with a lot of excitement and euphoria around them. But, historically, a bad crash occurs that filters out what really works and what doesn’t. If you get caught up in the hype and invest all your money in these markets, the chances that you will be left in the dust when the crash happens is very high.

Governments still don’t know where they stand on Bitcoin and Cryptos

Bitcoin is a decentralized currency, which means that it is not overlooked or managed by any government or centralized system. However, governments around the world can still play an important role in its success or its downfall.

Some countries seem warmer towards it while others are very suspicious because of the lack of control over it. Crypto has also become very popular in criminal activities, with many hackers now demanding Bitcoin as a form of payment or ransom.

These reasons make crypto unpopular with many governments. And when a government is suspicious of a new technology, it may put in place new rules and regulations to limit the use of that technology. In this case, the value of Bitcoin and other cryptos could drop.

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Bitcoin is still incredibly volatile

If you’ve been following Bitcoin for any length of time, you know that bitcoin prices can experience crazy swings within days, or even hours. As with any investment, this makes it a dangerous business. On top of that, it trades 24/7 which can lead to sleepless nights for those who have invested most of their money in this market.

This instability is common for currencies and young markets. At the end of 2017, Bitcoin was at $ 20,000. By February 2018, just a few months, the price had fallen below $ 7,000. Currently, Bitcoin is above $ 40,000 and even hit $ 60,000 recently, but it can easily drop to half its price now in a few months. So if you buy it at any price, the risk of rapid drops is very likely.

On top of that, research has shown that a large percentage of black bitcoin owners have net worth less than $ 60,000. This means that many black crypto investors could put money they cannot afford to lose in these highly volatile markets.

The 2008 housing crash and the black community

It’s no secret that black people in the United States have been systematically excluded from wealth creation for generations. For this reason, we are always looking for ways to catch up. And sometimes we get caught up in booms and crashes at disproportionate rates. The 2008 real estate crash is a perfect example.

Black homebuyers were the biggest victims of predatory home loans during the housing boom. In the mid-2000s, banks and mortgage companies were providing home loans with flexible interest rates to attract unskilled home buyers. Monthly mortgage payments started low and have skyrocketed over time. This left many homeowners unable to meet their monthly payments as the housing market collapsed. This meant that home values ​​had fallen dramatically and foreclosures were the only options for many homeowners.

We now know that real estate is one of the most trusted ways to build wealth. But if you get caught in a boom, chances are you’ll be in pain when the bust inevitably comes along as well.

I am afraid the same will happen with cryptocurrency. While investing is one of the many reliable ways to build wealth, getting caught up in a boom as we see with crypto can be very dangerous. Since the black community invests at disproportionate rates in Bitcoin, if a crash occurs we will be disproportionately injured as well.

RELATED: The 5 Richest African Americans & How They Made Billions!

Crypto is a non-productive asset

A productive asset, such as owning a percentage of a business, has the ability to generate income outside of the rise or fall of its stock price. Popular companies for investing like Coca Cola, Amazon, Apple, and Microsoft all have products they produce or services they render. This means that they generate income every year and a portion of that is returned to their investors in the form of dividends. This is in addition to their stock price which increases every year in most years.

Non-performing assets like cryptocurrency have no way of generating income. Their value is only based on whether another person wants to buy it from another. This is the main reason why legendary investor Warren Buffet doesn’t like crypto.

On this topic, Darrick Hamilton, professor of economics and urban policy said: “It is true that traditional financial systems have not provided access and have frankly exploited black people. But the cure is not to turn to another vulnerable system, however well-meaning it or not. The remedy is a public sector which guarantees them equitable access.

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