For Black America, Bitcoin Is Hope, Bitcoin Is Change

Bitcoin represents monetary freedom and thus a new and viable solution to closing the wealth gap.

Introduction

This essay is designed to address internal risk areas in African American household economics, offer realistic mitigation strategies and summarize why I believe Bitcoin will be a permanent, generational solution to the racial wealth gap. I will leverage the themes of “harder, smarter, faster, stronger” by Michael Saylor, using my own voice. I believe this is the best introduction to Bitcoin for my intended audience as they are not likely exposed to Saylor’s ideas and thoughts.

Conspicuous Consumption

The theme of Black American culture has reverberated with the pursuit of freedom for generations. The state of Black economics has been generally troublesome. Our history is rife with limited opportunities and concerted efforts to suppress our economic growth. But though there is an abundance of data about external negative forces, internal negative forces are at work as well.

A 2007 study by Charles, Hurst and Roussanov looked into the concept of consumerism and how it manifested in the American home by ethnicity. They recalled the concept of “conspicuous consumption” coined in 1899 by economist Thorstein Veblen. This idea is defined as the purchases made by the ultra-wealthy for no other purpose than the indication of one’s economic power. While Veblen focused on the wealthy, this trio studied the common household and its own version of “visual consumption”, which assessed goods and services based on their ability to relay a sense of economic status explicitly to a stranger.

In their study, using Consumer Expenditure Survey (CEX) data from 1986-2002, they found Black and Hispanic Americans spent about 30% more of their respective income on visible goods, whereas all races were generally similar regarding consumables.

These numbers, while definitely dated, are still cause for inquiry. Looking into the 2019 CEX data, Black Americans have closed the gap for total automotive expenditures, but other data categories reveal the same theme almost 20 years later. In 2019,

• Black Americans spent 25% more than other races (income relative) on beauty products and services.
• Black Americans spent 45% more than other races (income relative) on apparel and clothing. (Specifically, 116% more is spent than other races on footwear!)
• Black Americans spent 24% more than other races (income relative) on audio/video equipment and services.

Based on the above numbers,

• A reduction of expenditure on beauty products to the aggregate of other races would save $153 annually for the average Black household.
• A reduction of expenditure on apparel to the aggregate of other races would save $601 annually for the average Black household.
• A reduction of expenditure on audio/video equipment to the aggregate of other races would save $199 annually for the average Black household.

Reducing spending habits to just the level of other races in these categories alone would result in an 18.47% increase in net income available for the average Black household. Let’s remember this number as we go on a brief tangent.

Root Causes? Change Yourself Before You Change Others

Blacks consume less than whites in essentially every other expenditure category. However, these specific overspending categories are clear indicators of a strong internal force that values “being seen” over growing wealth. This dynamic is a byproduct of our inflationary monetary system. A combination of distrust in the government, a feeling of exclusion from financial institutions and the experience of economic hardship hitting the urban Black population hardest has resulted in a tendency to take advantage of a dollar at its peak value: as soon as it is received. Instead of saving at 1% APY with a local bank (with which Black Americans have had historically rocky relationships), Black individuals will spend their income on goods that bring them an immediate sense of intrinsic value. Sadly, this dynamic is a perfect reflection of the central bank’s desires as they implement policies to separate individuals from their income as swiftly as possible.

Because of Black Americans’ ability to define cultural and fashion trends for decades, they often find their intrinsic value in the accumulation of the everchanging foundational labels representative of the people. Brands like Cross Colors, FUBU, Rocawear, Sean John, Jordan, Nike, Adidas, Reebok have all had their time as most-valued, and are even making a nostalgic resurgence for the continuing retro trend. In the last decade, high-fashion brands like Supreme, Gucci, Balenciaga, Rick Owens and Louis Vuitton have made their way into the “must own” category for many men and women of color. I could name more and would likely still overlook many others. Black people know how to spend money and they look good doing it.But that is the trap, isn’t it?

The race to acquire things for vanity’s sake is entrenched in Black culture with no signs of changing, regardless of what happens in the economy. For this reason, Black people have long been among the Federal Reserve’s best clients.

In good economic times:

The Fed prints money and Black people spend it.

In bad economic times:

The Fed prints money and Black people spend it.

There can be a number of interconnected reasons why this is the state of Black Americans household economics: slavery, systemic racism, poor parenting, peer pressure, absence of positive role models. What matters most is that there is a solution for legitimate change: Bitcoin.

Consumers to Conquerors

Bitcoin represents a big part of the “change” people of color have been searching for in America. Bitcoin is an asset that can finally efficiently accomplish the harnessing of the value of work. Over its 12 years of existence it has proven itself to weather bad times, withstand negative press, grow despite government attacks and gain increasing attention without a CEO or professional marketing campaign.

Remember that 18.47% discrepancy between net incomes? What could you do with an extra 18% at the end of the year? What do people normally do? Some of the best sales of the year hit right around tax refund time. A down payment for a new car, a spring wardrobe, or a new color of Nike Lebrons just in time for the playoffs. With an acute awareness of the way the Black community inhibits itself through these sorts of choices there should be a newfound distaste for goods that reinforce the status quo. I propose that we have given enough to the rich rulers of the land and that we instead invest that newfound income into bitcoin.

Why Bitcoin?

Due to the built-in scarcity of the Bitcoin protocol, there will never be more than 21 million coins. This is rarity in its truest form. To the contrary, virtually every other asset one can think of is subject to a form of inflation or debasement of its ownership. More houses can be built in a city, more company stock can be created which dilutes the shares you own and gold will continually become more common as more is mined over time. Even the Jordan Brand remade the Space Jams that you have been holding in your closet, and don’t think they won’t remake them again and again. Bitcoin, however, can never be changed from its founding principles and protocol. People describe this trait as a characteristic of hard money. We want assets that have constant characteristics that don’t change quickly due to external forces.

Because bitcoin is a token on an evolving digital network, it is programmable. Its potential uses are only limited to the innovative minds of humanity and our descendants. Its ability to move and protect itself is scalable directly related to technology of the day. That is not the same as the financial vehicles of our past that we still use. Could you imagine as we continue into the future and see drones, augmented and virtual reality and self-driving cars materialize all around us, but our money remains the same as what people used in the 1960s? The banking industry has long avoided and scoffed at innovation because their current formula has benefitted their centralized stakeholders at the expense of their customer base.

If you prefer a smartphone over one from years past, you should also prefer “smart money” to see how intelligently our finances can assist us in the future. Bitcoin is smart money.

Bitcoin is as easy to purchase as it is to move. It has the potential to create immense velocity of money compared to other store of value (SOV) assets. This is sometimes an overlooked attribute when we think about investing because we are so used to options that are static and illiquid. Some people have a second home as an investment property. This makes sense as it can generate income, but it can generate many other things as well: maintenance expenses, property taxes, insurance costs, toxic tenants and for most people a need for proximity. You tend to want to be a drive away from your property in case of an urgent matter. If you want to sell, it must be all or none and with that goes another 2.5-3% of the value to a realtor after you spent the same fee amount to purchase it. Bitcoin gives its owner so many more options. Since one bitcoin can be divided into 100 million units known as Satoshis, it is an ideal investment vehicle for all economic classes to access. It is impossible to be “priced out” like so many other choices. You can send it anywhere in minutes as it is verifiable on the blockchain on any node around the world. Traditional assets like homes, land, or gold are often too expensive to move without institutions or a middleman taking a significant percentage of the value. An asset can become a liability if it is difficult or costly to liquidate. The ability to make a financial decision free of restraint is power. Bitcoin is a powerful, strong asset over time and across space.

You pick your phone, computer and internet primarily based on their speed. The faster you can execute a command, the sooner you can get on with your life. Peer-to-peer technology removes the archaic middleman (banks, settlement networks) from the necessity of everyday transactions. Maybe this is not a big deal for the common American consumer, but this can be a night and day difference for the 6% of households that are unbanked in America. For those interested in the welfare of their African cousins across the Atlantic, an article was recently written documenting real stories of how Bitcoin’s decentralized nature enables people to persevere in oppressive and tyrannical environments. 

It is as fast and easy as an email to move across the world. It is massless, meaning you can escape troubling situations without the fear of leaving everything you own behind. Try the same with moving gold of any large size and you will likely pay a substantial fee for security, physical transport, and insurance, and still risk commandeering. Assets that are fast are valuable in our global future and for the oppressed 4.3 billion people living under authoritarian governments.

Free To Act, So Be Free!

An asset of such incredible ingenuity and strength has been called “gold 2.0”, as it executes the use cases of gold so much better than the metal itself. Imagine 150 years ago while our ancestors were on the verge of the end of slavery, the rest of the country was doing everything they could to get a stake of the treasure that was to be found in California. But our people had no chance. This is not because we did not want or care about gold, but because we were still enslaved and not free to exercise our rights. Are we still mentally enslaved by the system that is the cause for so much despair? If there is any feeling of disservice from the economic rules that govern your life, an investment in bitcoin in any sum is an investment in real hope, not just a political slogan for vote grabbing.

We are living in the midst of the Gold Rush 2.0. As of January 2021, only 22% of American adults own Bitcoin and some believe less than 2% of the world owns any amount of bitcoin. Over any four-year period of its 12 year existence bitcoin has only grown in price.

With $700 billion in market cap at the time of writing, bitcoin represents roughly 10% of gold’s market cap. Many people think bitcoin’s enhanced utility will enable it to surpass gold’s market value in the future. That means there is a possibility of another 10x in price. While the price looks ominous, it truly is just the beginning for this asset as more large firms establish their investment positions. Even beyond its potential growth to rival gold’s value, there is further opportunity to compete with the bond and real estate market for value investing. All encompassing, Bitcoin’s total addressable market is more than 100x where it sits currently and is expected to grow in value as technology evolves and supply shrinks. Never before have Black people in America been in reach of such a powerful asset.

Knowledge for the Future

In closing, even on the small chance that those gains are not realized, one of the biggest qualities of owning bitcoin is how it inspires its owners to seek knowledge about the world around them. The people that defend and argue for the philosophy behind Bitcoin are brilliant minds, but they all are very quick to admit in humility how much they have learned and how much more they have to learn. That knowledge and desire for knowledge can be passed down to generations as easily as a trust fund. We as Black people owe it to our future generations to grow “harder, faster, smarter, stronger” so that they may build off of what we learn.

More than ever before, it is most critical that the American Black population reconsider their state in society, their individual values, and the priority of the dollar they spend. The financial landscape is rapidly changing. Bitcoin is an asset that now has mainstream adoption. With it comes opportunity to invest in a simple way with no hooks or tricks. If you have a cell phone or an internet connection, you have direct access to a simple dollar-to-bitcoin transaction at a low cost. The most popular store of value asset on the planet is also the easiest to acquire for Americans. Hope is here. Change has arrived.

“Knowledge makes a man unfit to be a slave.” -Fredrick Douglass

This is a guest post by Ulric Pattillo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.