Global grassroots projects can lead to crypto recovery

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At the House Financial Services Committee FTX hearings last month, Rep. Jesus Garcia (D-Ill.) described crypto as an entire industry that thinks it’s above the law, then said something that upset me even more than this unnecessary opening generalization.

Crypto companies make money using only one thing: hype, Garcia said. And when the hype wears off, these companies fail and mainstream investors, especially the disproportionately income laggards, blacks and Latinos, lose out.

Now, it’s true that many people of color have bought crypto in recent years, and by extension, many have lost money to Celsius Network, FTX, Voyager Digital, et al. But there is a subtext to Garcia’s commentary, whether he consciously intended it or not, that patronizes certain communities in the United States and elsewhere as uninformed and vulnerable, denying them agency and missing blindly a greater story of empowerment.

Take a look at hundreds of grassroots crypto projects led by Blacks and Latinos in the United States, and the many crypto-based business models in Africa, Asia, and Latin America, and you will find large swaths of people from limited income, marginalized or oppressed communities looking for new ways to take control of their lives.

There’s a reason the top four positions in Chainalysis activity and the ranking of countries weighted by purchasing power of crypto adoption per capita are taken by Vietnam, the Philippines, Ukraine, and India and why the sixth to tenth positions belong to Pakistan, Brazil, Thailand, Russia and China. And according to a forthcoming report on Dark Experiences in Web3 from the Crypto Research and Design Lab (CRADL), there is also a reason why the fifth position is occupied by the United States, the only developed western country on the list. : it is because of an excessive size. level of adoption among black Americans.

Clue for Garcia: the common denominator of this top 10 is not Sam Bankman-Fried. FTX’s Super Bowl ads featuring Larry David did not subliminally target rickshaw drivers in Vietnam, refugees in Ukraine or, for that matter, black hospitality workers in the United States. Millions of people around the world got into this field because they saw a way around a legacy financial system that had kept them from executing their own untapped potential.

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Of course, 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 global adoption trend among these groups is on the rise and is poised to cause long-term disruption to the Western financial establishment, which, whether it likes to be labeled as such or not, includes privileged crypto brethren. who treated centralized token exchanges like casinos for 10 times their dollar wealth.

These people, once marginalized, are now poised to lead the industry’s recovery from its slump.

Change from the outside, not the inside

I believe that the solutions built by these foreigners will eventually become the true source of this technological revolution promised in the era of Web3. It won’t be like the previous Web2 internet revolution, when US-owned Wall Street-listed Google, Amazon (AMZN) and Facebook disrupted the mainstream commerce infrastructure by enticing Westerners operating inside from these legacy systems to new platform-based business models. . The paradigm shift will emanate from outside the system, from the developing world and from marginalized communities within the developed world.

After the implosion of the CeFi trade and lending bubble, it is they who bring local and real use cases to their communities who now have the opportunity to redefine the purpose of cryptos, to separate it from the empty hype of speculation that FTX has come to define .

CRADL’s unpublished report on black crypto adoption notes a startling statistic from a Federal Reserve Bank of Kansas City survey: 18% of black consumers in the US hold cryptocurrencies while only 7% own stocks and 2% of mutual funds. By comparison, 12% of white consumers own crypto, while 19% own stocks and 12% mutual funds.

The report explores the root cause of this contrast, describing a deep-seated distrust of the stock market and the white financial establishment among Black Americans that stems from the phenomenon of Generational Financial Trauma (GFT) and has in turn fueled an appreciation of the cryptographic narrative of empowerment.

A concept researchers have identified since their studies of Holocaust survivors in the 1960s, GFT is the idea that historical racial injustices are passed down from generation to generation and shape how its victims interact with financial systems. .

Slavery is the quintessential example, a source of lasting trauma that, through structural racism and deep-seated distrust, has imposed burdens on black Americans for centuries.

If you are inclined to reject such ideas and want the descendants of slaves to let go of the past, I urge you to listen to the Money Reimagined episode we released on May 21, 2021. It featured Jerry Tardieu, a Haitian author, entrepreneur and politician; and Daniele Jean-Pierre, co-founder and COO of Zimbali Networks, which develops digital currency payment products on the island.

There we talked about the massive loan that France imposed on the Haitian government formed by the ex-slaves who had ousted their former masters in 1804. It was intended as compensation for the loss of property of slave owners French. The unpaid debt eventually ended up in the hands of the National City Bank of New York, which later became Citibank. The debt was finally repaid in 1947, but not before imposing a century-long burden of economic dependency on the impoverished Caribbean nation. It is understandable that Haitians are wary of Wall Street and open to offers from Zimbalis.

From the Philippines to Nigeria

For other examples of crypto projects developed by and for local communities, check out the projects featured in the Web3athon that CRADL explored in partnership with CoinDesk. Winners and stars included Evolve, which implemented a Polygon-based financial literacy incentive program for Black, Indigenous and People of Color women; IndigiDAO, a decentralized autonomous organization (DAO) for indigenous communities; and the Carbon Coffee Collective, a regenerative finance project providing funding to coffee farms to transition to generative agriculture.

Or consider the phenomenon of Web3 gaming guilds, such as Yield Guild Games from the Philippines or IndiGG DAO, an Indian version. Philippines-based Enfaris Director, CoinDesk Opinion Contributor Leah Callon-Butler, describes these communities of gamers who play to win as a great example of a super popular, community-driven Web3 innovation. She says there are already 17,500 such Web3 guilds around the world.

Callon-Butler also cites Impact Market, a protocol designed for communities to develop financial inclusion and social impact projects, as a tool that is piloting other grassroots empowerment projects in developing countries.

These tools and ideas drive innovation that is tailored to local needs everywhere.

In another 2021 Money Reimagined episode, my co-host Sheila Warren and I learned from Yele Bademosi, the former CEO of payment app Bundle Africa, and Adia Sowho, a builder and venture capitalist. , the explosion of decentralized finance (DeFi) innovation underway in Nigeria. There, local developers who are fed up with rampant inflation and a corrupt and oppressive government are crafting workarounds for the formal financial system.

And in another episode that featured South African digital artist Lethabo Huma, we highlighted the opportunities non-fungible tokens (NFTs) offered black artists and other historically underrepresented artists to sell directly to collectors, avoiding the exclusionary practices of art-in-white snobs. – controlled gallery world.

What is striking about many of these projects is that they are based on something more than technological or financial innovation; it is a form of social innovation, figuring out how communities can use new models of governance and symbolic theories to come together for common and individual benefit.

The more they proliferate, the more they will begin to pose a challenge to the centralized and hierarchical systems of the West, beholden as they are to the financial system run by Wall Street.

It won’t happen overnight, but it does reflect a slow and quiet revolution. Over time, its impact will make FTX’s collapse look like a failure.

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