The great promise behind crypto was a redistribution of power and wealth from the haves to the have-nots.
But this might be nothing more than a warm and fuzzy front, not dissimilar to NIKE publicly supporting Black Lives Matter while their sweatshops work overtime in China.
Providing the technology to democratize access is one thing, but who will supply the money, time, and education required to take advantage of those opportunities?
If power and wealth are being redistributed, they’re being redistributed from one privileged class to another.
Let’s take a closer look.
According to Bankrate, only 39% of Americans can afford a $1,000 emergency bill — that is to say that almost 2 in 3 Americans has no more than $1,000 in savings.
When you consider that the floor price of appreciating assets such as a parcel of land in The Sandbox metaverse is about 3.2 ETH (about US$10,000 at time of writing), it’s easy to see how most Americans are priced out of the market.
And if that wasn’t enough, access to rapper Snoop Dogg’s mansion in The Sandbox metaverse will set you back about 1 ETH (about US$3,300, and three times more than most Americans have saved).
Recently, fledgling NFT marketplace, LooksRare, announced an airdrop of 125 $LOOKS tokens (worth about US$600). They gave away about US$400 million in tokens — but there was a catch. To claim your airdrop, you must’ve traded over 3 ETH worth of assets (again, about $10,000) on the Opensea marketplace.
And finally, while getting in early on NFT drops such as the Bored Ape Yacht Club would’ve netted you a 1,000X return, the overwhelming majority of NFT drops are not successful, and being early requires being in the know. And that brings me to my next point.
Being in the know requires you to build relationships with the right folks, make yourself visible through content and contributions to online communities, and spend countless hours scanning the scene on crypto Twitter and numerous Discord channels.
For example, I learned about the LooksRare airdrop through the Bankless podcast, as well as a DAO Discord community I’m a member of.
The DAO Discord also gets access to investment deal flow, extending early-stage startup investment opportunities to its members. Most recently, an opportunity came to the group to invest in OpenSea — the world’s biggest NFT marketplace. But the kicker was you, as an individual, you still needed to invest US$50,000 at a minimum. Have nots, meet haves.
On the topic of DAOs, investment DAOs promise to disrupt venture capital by pooling funds from groups of folks online to invest in blockchain-based startup opportunities. But here too, the barriers remain high. Some of the more popular investment DAOs, such as Flamingo DAO, are still required by law to limit members (or limited partners) to a meagre 100, and buying-in requires an investment of 60 ETH (about US$200,000 at time of writing).
If anything, web2 equity crowdfunding platforms which permit retail investors to invest as little as $250 are doing more to democratize access to such opportunities (although let’s face it — the best opportunities don’t land on crowdfunding platforms, they land in the laps of well-established and well-connected investors).
Democratizing access to opportunities? Hardly.
If you’re in the lower to lower-middle class, you’re likely to find yourself with little time on your hands, as you struggle to make ends meet (nor might you have the luxury of reading this article).
Finally, the correlation between education and income in the United States is strong. According to this study, University degree-holding households have a much higher wealth-to-income ratio than their less academically educated peers.
And when it comes to crypto, web3, and NFTs, the learning curve is steep.
In the off-chance that someone from the lower to lower-middle class has some savings, and some time, they will then find themselves facing a mountain to climb insofar as getting educated about crypto is concerned, and may lack the requisite skills to do so.
Not only this, but they may also be more susceptible to online scams and hacks, as well as folks falsely promising to successfully invest their money in crypto — as is the case with traditional financial services and dodgy financial asset managers.
So, while decentralized platforms and a move away from middlemen might give us the infrastructure to redistribute power and wealth, the systemic challenges of money, time, and education are inherent. If power and wealth is being redistributed, it’s being redistributed to younger millennials and Gen-Z kids with the capital, time, and education to take advantage of it.
Maybe it’s just the natural order of things, but unless these systemic challenges are addressed, the gap between the haves and the have-nots will only get bigger as the crypto and web3 space continues to grow.