Billionaires Crashing Crypto Market Hurting San Diego's Homeless Community
The Cryptocurrency Market's Recent Wild Ride Has Wreaked Havoc on San Diego's Homeless Bitcoin Community
"It's all BS if you ask me. More of the same. We have to live like everyone else, and they're acting like it's a game."
This week the price of Bitcoin fell by more than 30% in just a few days from its all-time high of just a month ago.
This drop has been attributed to billionaire and Tesla CEO Elon Musk's interest in the cryptocurrency and his very public narrative about it on Twitter.
After learning about how San Diego's unhoused community was turning to the Bitcoin ecosystem to conduct their day to day financial needs from Mary, a homeless woman outside a coffee shop near San Diego State last month, I was curious to see how Bitcoin's wild market swings were affecting those who actually use Bitcoin.
A Brief Timeline of the Market Volatility
At the end of February Elon Musk announced on Twitter that Tesla had bought $1.5bn in bitcoin and would shortly begin accepting the digital asset as payment.
This announcement accelerated an already stellar year for bitcoin's recovery and growth following a sharp sell off at the start of the pandemic.
This news was met with enthusiasm among San Diego's unbanked community. In a matter of weeks and months they saw meaningful change in their financial trajectory.
"It felt like I might have a chance here, you know?"
Seemingly learning in real time, Mr. Musk announced on Twitter that Tesla would suspend their Bitcoin acceptance, though he did say they would not be divesting. The change in policy stemmed from concern over the level of energy Bitcoin mining consumes, and how that energy is produced.
The about face sent markets tumbling.
Critics of Musk suspected a number of alternative theories for the policy shift, from his affinity for Doge coin, to simply being ignorant on the subject.
On the ground, and for underserved communities, the fallout was real and immediate.
While Elon Musk didn’t comment for this story about San Diego’s homeless population, he did respond to a thread expressing similar concerns from a top investment podcaster in the UK about underserved communities in El Salvador who rely on bitcoin in much the same way. His response was that the thread was “obnoxious.”
Mary's Use of Bitcoin
According to Mary, San Diego's homeless community is increasingly turning to bitcoin exchanges to store their money.
Money stored in bitcoin or stable coins can earn upwards of 5% interest. A standard savings account, which she says she can't get anyway, earns well under 1% annually.
She then uses a software wallet on her phone to move tokens around to eventually land on the cash app where she can swipe her linked debit card.
Certainly more cumbersome and complicated than standard banking, not made any easier by increased market volatility.
"It's like we make a little bit of progress, and they take it back. My life isn't a game. I can't afford to work 30% harder than I already am."
And that seems to be the rub with bitcoin. As a portable value store over the long term, it seems like it has a lot of potential for people in Mary's predicament. For those who aren't in the banking system.
It's a lot safer, for instance, for her wealth to be stored on a software wallet on an exchange than it is for her to carry around gold she can pawn at a local shop.
But the wild price fluctuations, for whatever reason, make it very difficult to have the money on hand to buy a cup of coffee and know with confidence what you're spending.
For now, she's going to plug along and has agreed to check in via email for follow-ups on how the experience is.
Anecdotally, she does say that adoption is growing among her friends in the community. The proliferation of Bitcoin backed debit cards and apps like the Cash App have made it easier to navigate society without a bank.
As May gray's thick marine layer began to spit drops of rain at us, we decided to wrap up our conversation. I asked her what was next.
"Hey, it's San Diego. It's always sunny. What have I got to complain about?" Mary says as we pay our bills separately.
She insists that she doesn't need a hand out, but could do without rich "expletives" making everything worse.
Time will tell.