Crypto’s Diversity Problem: It’s Complicated

We all know the stereotype: The archetypal cryptocurrency fanatic is the “crypto bro,” a white, male software engineer or finance professional who has suddenly come into an unreasonable amount of money.

In reality, there’s much more nuance and variety among the cast of quirky characters who make up the crypto community than that simplistic one-dimensional portrayal allows. Yet, it would still be a glaring mistake to deny that crypto has a diversity issue.

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Surveys routinely show that at least twice as many owners of cryptocurrency are men than are women. And while this recent one from BlockFi pointed to a pickup in interest among women, there’s no undoing the fact that it was predominantly men who got in on the ground floor when BTC, ETH, SOL, et al. were priced at a sliver of where they are now.

Power, in terms of resource allocation, is even more biased in this space. You’ll see in it any cursory glance at the “team” page of most leading crypto projects’ websites. The CoinDesk events programming team is reminded of it every day as it struggles to achieve gender and racial diversity among the speakers at our Consensus Festival in June. My podcast co-host, Sheila Warren, alludes to it this week in describing the occupants of the flight that took her to the SALT-FTX conference in the Bahamas this week. It’s a fact: White men dominate crypto.

To critics of this movement, the monochrome appearance of the community offers a weapon with which to rebut the “crypto for good” language around financial inclusion, empowering underserved people and democratizing money.

Yet, that surface-level assessment misses some striking new adoption trends that aren’t easily apparent to mainstream commentators. Minorities and various other marginalized groups are turning to crypto as a tool and developing unique, new innovative uses for it – often at a faster pace than communities that have traditionally had more privileged access to resources. This experience demands a careful approach to fostering diversity. We must not throw the baby out with the bathwater.

The current rate of new crypto adoption in Africa and Latin America is phenomenal, and by some measures outpacing the West. It’s matched with new hubs of crypto innovation in developing countries such as the Philippines, where the Axie Infinity boom saw the expansion of play-to-earn gaming models.

Similarly, crypto usage by Black Americans is booming as a new ethos around “Black Bitcoin,” the title of Isaiah Jackson’s influential book, starts to emerge. Last year, a USA Today/Harris poll found that 23% of Black Americans and 17% of Hispanic Americans owned cryptocurrencies, compared with only 11% for white Americans.

At the same time, artists of color are embracing the non-fungible token market, adding weight to the thesis that previously marginalized classes of creators are using NFTs to bypass traditional funding intermediaries such as film studios, record labels and art galleries and set the terms of their own success.

Meanwhile, minority-focused decentralized autonomous organizations (DAO) are springing up with the goal of giving certain people a leg up through collective bargaining power. One example is the UnicornDAO founded by Pussy Riot member Nadya Tolokonnikova, which calls itself "a feminist movement aiming to tackle patriarchy in Web 3" and plans to solely invest in female, non-binary, and LGBTQ+ artists in Web 3.

These stories of growth and innovation are a direct outcome of crypto’s disintermediating capacity and its model of permissionless development. There are no gatekeepers telling minority developers, business people or creators what to do; the builders will just build whatever they want. It’s why each story is unique, an experience that’s tailored to the needs of specific communities – a direct reflection of decentralization.

In discussing these successes on this week’s “Money Reimagined” podcast episode, our guests Susan Joseph, executive director of fintech at Cornell University, and Cleve Mesidor, executive director of the Blockchain Foundation, agreed that any efforts to further diversify the industry must not come at the expense of enabling this kind of open innovation.

It would also be a mistake to conclude that these stories imply we should do nothing at all to address diversity in crypto – as might be claimed by those in the crypto space who subscribe to an absolutist laissez-faire economics.

That’s because while there’s diversity in the growth and innovation occurring at the application or product/service layer – where African developers provide payment solutions to local users, for example – the situation is very different at the base protocol layer. There, power – as measured by value held in base tokens such as bitcoin (BTC) and ether (ETH) – remains concentrated in white, male hands.

This matters because that ownership defines the governance structure of the crypto ecosystem built upon those protocols. This power concentration is especially problematic with proof-of-stake consensus algorithms such as Solana, Algorand and others. And we know from the Bitcoin block-size debate (circa 2015) that owners of cryptocurrency wield ultimate power over proof-of-work systems as well.

This matters because the code that runs these protocols’ algorithms is not some neutral factor upon which users can simply “trust in math, not humans.” Rather, it reflects the interests of those who get to define how that code is written. It contains their biases.

So, if these systems are to one day evolve into overarching, society-wide frameworks for finance and economic value transfer, it’s vital they are governed by as wide a group as possible.

How we get there is another issue.