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NEW YORK (AP) -- A software developer twice invested his savings in cryptocurrencies, only to lose it all. But he still promotes it to the black community and would like to get back in himself.
A recent college graduate and a single mom are dabbling hopefully in bitcoin after attending a crypto workshop sponsored by rapper Jay-Z at the public housing complex where the hip-hop star grew up.
But a former executive at a cryptocurrency exchange feels disillusioned by the false promise of crypto helping her family in Ethiopia's war-torn Tigray region.
All were drawn by the idea of crypto as a pathway to wealth-building outside of traditional financial systems with a long history of racial discrimination and indifference to the needs of low-income communities. But crypto's meltdown over the past year has dealt a blow to that narrative, fueling a debate between those who continue to believe in its future and skeptics who say misleading advertising and celebrity-fueled hype have drawn vulnerable people to a risky and unproven asset class.
The collapse of two crypto-friendly banks this month, Silvergate Capital Corp. and Signature Bank, complicates the picture. Their failure was a setback for crypto companies that relied on the banks to convert digital currencies to U.S. dollars. Yet the crisis bolstered Bitcoin, the oldest and most popular digital currency, by reinforcing a distrust in the banking system that helped give rise to cryptocurrencies in the first place.
Mariela Regalado, 33, and Jimmy Bario, 22, neighbors at the Marcy Houses complex in Brooklyn, started putting $20 or $30 into bitcoin every two weeks or so after attending "Bitcoin Academy," a workshop sponsored last summer by Jay-Z and Jack Dorsey, co-founder of Block Inc., the parent company of mobile payment system Cash App.
"I don't see it as something that's going to, you know, take me out of Brooklyn and buy me a $2 million mansion in Texas," said Regalado, an educational consultant and mother of a toddler. "But if it happens, I'm all for it."
Only a small minority of the U.S. population owns cryptocurrency, but adoption increased during the COVID-19 pandemic as low interest rates made borrowing money and investing in risky assets more attractive. Prices peaked in 2021, and a constellation of apps, exchanges and even ATM-like crypto machines made buying digital coins easy.
But the drawbacks of crypto played out dramatically after prices cratered in 2022, wiping out millions in investments and leading to a cascade of bankruptcies and layoffs at crypto exchanges, lenders and other companies. Along with its volatility, crypto lacks protections such as deposit insurance since it's not controlled by any single institution. Largely unregulated, the industry is susceptible to scams, hacks and fraud.
Cryptocurrencies are built on decentralized ledgers -- usually blockchain -- allowing peer-to-peer transactions without a middleman like a bank or government. That continues to appeal to many people who face barriers to traditional wealth-building avenues such as homeownership, college education, or the stock market, said Terri Bradford, a payment specialist at the Kansas City Federal Reserve, who has researched crypto's popularity among many Black investors.
"It doesn't appear that a whole lot of people are dissuaded from crypto even though we have observed what has happened," Bradford said.