Why Bitcoin Is Really about Belonging
by Tamara Moellenberg and Ian Dull
What financial institutions can learn from the hidden cultures of crypto
FTX: FUD or HODL? If you don’t understand the question, it’s a sign that while the crypto community has been shaken by the collapse of FTX in November 2022, it is alive and well as a cultural phenomenon with its own set of behavioral norms and self-contained lingo. (For the record, FUD is cryptospeak for “fear, uncertainty, doubt”; HODL, to hold one’s assets even when the price dips.)
When millions of dollars simply vanished from the exchange FTX, many experts began to wonder, will the crypto market recover? But who are the people actually hurt by FTX’s implosion? What drew them to it in the first place? And what makes them stay, as many do, even through the FUD?
Contrary to stereotype, the average crypto investor is not the Patagonia-vest-wearing, Ivy-league-degree-holding white ‘bro’ – the picture is much more demographically complex. In fact, a recent Pew survey found that Black, Hispanic and Asian Americans were more likely than White Americans to have invested in crypto, while the NORC reports that 44% of crypto traders are non-white and 35% have household incomes below $60k a year.
For these investors, crypto holds the promise of a plausible path to wealth building in the face of historical exclusion. As social scientists, we’ve been digging deep into how crypto communities actually work and found that wealth building is only one, if a major part of crypto’s appeal to these ‘outsider’ investors: what many fail to realise is that it also provides access to a community of like-minded people with similar experiences and backgrounds – a sense of belonging.
So why has crypto, of all places, been the place to turn to for financial inclusion? For one, the history of financial services is one of often explicit exclusion. “For too long, we’ve been left behind,” as Jacinta (not her real name), a Latina we met as part of our study into financial behaviors among young non-white Americans, put it. Red-lining practices have left a devastating legacy and major wealth gaps among minority communities; financial products are couched in vague or intimidating terms; branch offices are located far from under-resourced communities; service staff lack cultural competence and diverse representation; and inherited cultural norms can cause discomfort with certain types of asset classes.
For non-white, under-resourced, and otherwise ‘outsider’ investors, crypto holds an appeal as an opportunity to build wealth, expertise, and a sense of control over financial futures. “It’s giving people a chance to make a living for themselves in a separate arena than traditional finance,” said Jared, a 20-something Taiwanese-American Bitcoin and Ethereum investor, who we met as part of our deep dive into crypto cultures. Self-styled ‘places of the people,’ online crypto communities are accessible from anywhere with a Wi-Fi connection; employ an informal, self-created lingo (e.g. HODL, tendies, diamond hands, and rug pulls), which anyone can learn fairly quickly and informally; are positioned as ‘anti-establishment’ against the very banks and investment firms that historically excluded non-white Americans; require little financial or credit history to access; and, for many, are visibly populated by people who look like and share these outsider investors’ backgrounds. For example, the Black Blockchain Summit draws hundreds of attendees every year, while the Black Bitcoin Billionaire club has 152k members “and growing.”
Crypto then becomes a way of deepening social ties, and sometimes building new ones: vacation updates bleed into trading discussions and vice versa, for instance; moderators and ‘mentors’ in online spaces play avuncular roles in welcoming new members; the lingo and acronyms help ‘newbies’ signal affinity and reify a sense of shared culture and connection. All this gives (often) young investors a way to feel a part of not only a financial space from which they have often been historically shut out, but something even bigger: a counter culture, a social movement, even, the global future. Lazano, a young Cypriot living in the US who we met, put this most succinctly when he said, “I want to be a part of where the future is… something revolutionary.” These bold aspirations are, of course, all well and good until an event like the collapse of FTX hits. What crypto tells us, then, is that financial inclusion isn’t about the simple acquisition of bank accounts or improving savings behavior, it’s about building better belonging, something far from how traditional financial institutions view their own remit. As we see it, belonging needs to be a part of the experience of financial services – not only a pathway to a product, but a way of helping customers fulfill a fundamental psychological need. One lesson from crypto communities is that a powerful form of engagement comes from helping customers connect to each other, providing access to a community of people among whom they feel seen, accepted, motivated, challenged.
What might this look like for financial institutions (FIs), concretely? First, FIs will need to get smarter at identifying who they want to build connections between. Any efforts to foster a sense of community among “HODLers” (crypto holders) and “Normies” (crypto skeptics), for instance, are likely to fall flat. FIs should seek to connect customers based on shared values and attitudes, not just basic demographic or purchase-led characteristics.
Secondly, FIs will also need to be better at galvanizing clients through a common sense of purpose or counter-purpose. Much of the energy of crypto culture, for instance, is defined by its techno-futurist optimism (often playfully communicated through slang, gifs, and memes), not only by its dialectic against centralized finance, governmental control, historical exclusion, the proverbial ‘man’ and so on.
Thirdly, FI’s should also, sometimes, simply get out of the way. Real connection tends to come from the kismet of spontaneity and discovered shared experience – “You got stung by that rug pull? So did I!” – rather than from top-down, forced interactions. In fact, customers are often drawn to online or IRL communities because they want to learn from or share what they’ve learned informally with others – not to interact with formal or official authorities. Providing ways for members of the community to signal their status as either eager to learn or deeply knowledgeable can be a powerful way to help community members quickly recognize the value of each to the other. Crypto communities often do this well, for instance, with leaderboards and quizzes that allow experts to identify themselves. At this point little can be done to save FTX or its hapless founder. But by getting belonging right, FI’s stand to win not only morally, in repairing ties with historically-excluded, under-served populations, but also commercially, building bonds with and between customers that go beyond the product, embedded in their social lives. That way, we might all be saying WAGMI (“we’re all gonna make it”).
Sara Lopez Marin and Ariel Abonizio contributed research for this piece.
