For Black America, Bitcoin Is Hope

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.

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