There is an adamant belief amongst proponents of blockchain technology that decentralization and cutting out the middleman will make platforms built on blockchain more inclusive, creating opportunities to empower communities and return real value to users. Given blockchain technology underpins most cryptocurrencies, these espoused principles should hold true, however, it’s already clear that the promise of inclusivity has not overcome deeply ingrained gender biases that have permeated in investing for decades. Unless conscious efforts are made to address the investment gap which already exists in crypto, women will be left out and this absence will not only perpetuate but actually exacerbate the gender wealth gap.
A recent poll conducted by CNBC found that more than twice as many men invested in crypto as women (16% of US men reported investing in crypto vs 7% of US women).1 Another survey found that less than 5%2 of all crypto companies have female founders, and even in our own classroom, we heard from 10 men working in the web3 space yet just one woman joined us (Paige Fetzer-Borelli from Algorand – and she didn’t play a speaking role). Some might argue that crypto and web3 are still early on, so it will take time to build out diverse talent pools and user bases, however widespread adoption of this mindset could have a long-lasting impact. Crypto is one of the fastest growing assets classes and although it comes with significant risk, it has also created tremendous value for many that invest, and most of these early investors and creators are men. Hence, women have already missed out on capturing value, but even great risks for exasperating gender disparities lie ahead.
To date, the value created has primarily been captured by a concentrated group of men, many of whom were already well off, but as crypto grows in popularity and becomes more “mainstream”, the impact on the gender wealth gap will grow in tandem unless the asset class is able to attract more female investors and creators. The wealth gap is broadly defined as sum of one’s assets minus debts. Estimates of the gender wealth gap in the US vary, but in general women hold somewhere between 34 – 55 cents for every dollar of wealth held by males.3 This disparity is driven by a variety of factors including gender wage and opportunity gaps (both of which inhibit asset accumulation), as well as a tendency for women to face larger debt burdens (often tied to student loans and post university employment paths). Thus, when breaking down the equation, it becomes obvious that if only men continue to participate in crypto/web3, it will be only men who capture the economic value and thus grow their pool of assets. Of course, it’s possible that women may not invest in crypto but invest more aggressively in other asset classes to capture value there, however given crypto and web3 are expected to grow rapidly, it would be extremely difficult for women to capture enough value to offset the existing wealth gap PLUS offset gains men obtain through crypto/web3 investing.
So, what must be done? If the industry chooses to follow the approach it has taken to date, my prediction is that in 10 years’ time we will see only modest growth in the prevalence of women owning crypto (i.e. growing from 7% of all women to 10% of all women) and this will growth will likely come from the most sophisticated female investors (where the wealth gap is already smaller.) Unfortunately, if evidence from existing asset classes is any indication, this outcome is probable, as women are still much less likely to invest in even traditional asset classes such as ETFs (14% of men vs 7% of women), individual stocks (40% of men vs 24% of women), mutual funds (30% of men vs 20% of women), real estate (36% of men and 30% of women), and bonds (14% of men vs 11% of women).4 However, it’s important to remember that crypto is underpinned by blockchain technology, which promises inclusivity and dissemination of power, so it’s not an unreasonable expectation crypto should do better than traditional asset classes in overcoming gender disparity. But delivering such a result will require a deliberate and creative efforts on the part of blockchain/crypto/web3 companies.
My recommendation is that players should focus on efforts that educate women and de-risk initial engagement as research shows that two key barriers for women when it comes to investing are 1) feeling unknowledgeable and 2) risk tolerance.5 All education efforts should be easy to access and understand (i.e. breaking down the technology in layman’s terms). Crypto players should collaborate with institutions representing female investors such as Ellevest and Female Invest to reach more experienced investors while also collaborating with employment partners representing female dominated industries (i.e. National Nurses United, National Education Association) to reach less experienced investors. Through these partnerships, crypto companies should focus on delivering user-friendly trainings and open Q&A forums, and could consider partnering with existing web3 education platforms (i.e. Curious Addys Trading Club) for efficiency.
Taking things a step further and thinking about how to de-risk initial engagement, philanthropic donations offer an attractive proposition. Philanthropy is an important tenant of many company strategies, and rather than giving in fiat, crypto companies could donate crypto to female focused groups like those mentioned above, with the stipulation that some portion of the crypto be disseminated as a bonus to users/employees. Any crypto bonuses paid by unions or employer partners would need to be in addition to typical compensation (at least initially), as crypto is not yet user friendly enough to act as income replacement and incorporating the education piece will remain crucial to converting recipients into active crypto investors rather than passive owners.
A final idea (and admittedly the most progressive) would be for crypto platforms to partner with city or state governments to donate crypto rewards to community groups and non-profits that work to support and empower women. This would be similar to how companies partner with local governments to provide grant funding, and the grant would require that receipt organizations disseminate some percentage of the award to female continuants. Partnering with governments will undoubtably present many hurdles, but in addition to helping to get more women to invest in crypto, these efforts could be beneficial for establishing rapport with bodies that will be driving regulation over the coming years. This path likely holds the most promise for reaching less experienced investors, but again, it is essential that education be a key part of any such efforts.
The ideas outlined above are just a starting point, and may seem ambitious or perhaps even unrealistic, but it is my belief that getting more women to invest in crypto will require a truly creative approach. Blockchain technology has promised to break the mold, increase inclusion, and return real value to users, but only time will tell whether such benefits will be extended to both genders, or whether crypto and other blockchain platforms will just replicate the same patterns of exclusion traditional institutions have embodied by for centuries.
Sources
[1] CNBC, “Invest in You” Survey, https://www.surveymonkey.com/curiosity/cnbc-invest-in-you-august-2021/
2 Abra Borrow, “Game Changing Female Leaders in Crypto”, https://www.abra.com/blog/womens-history-month-game-changing-female-leaders-in-crypto/, accessed April 2022.
23Federal Reserve Bank of St. Louis, “Gender Wealth Gap: Families Headed by Women Have Lower Wealth”, https://www.stlouisfed.org/publications/in-the-balance/2021/gender-wealth-gap-families-women-lower-wealth, accessed April 2022.
4 CNBC “Invest in You” Survey, https://www.surveymonkey.com/curiosity/cnbc-invest-in-you-august-2021/
5BNY Mellon, “The Pathway to Inclusive Investment, https://im.bnymellon.com/us/en/intermediary/inclusive-investment.jsp
Chelsea Bruno spent far too long working in finance, and during business school began to explore the tech sector. She considers herself an intellectually curious human, with a deep eagerness to think through and solve tough problems. She’s an optimist, strong supporter of gender equality, loves the outdoors, and believes life is too short for bad coffee, bad wine, or bad company.
0 Comments