The lure of cryptocurrency is in the eye of the beholder. It can be an investment, a way to avoid bank fees and government control, or a secured asset holding. To the promoters of MazaCoin and NativeCoin (N8V), it’s all of the above plus a powerful argument that cryptocurrency would give financial sovereignty to Native American communities.
In 2009, the world was introduced to a new way of economic transaction with the creation of cryptocurrency. Since then, there are now almost 20,000 different types of crypto currencies throughout the globe, according to Investopedia. A handful of those thousands became household names, most notably Bitcoin, Ethereum, and Dogecoin.
Elizabeth Kwok, assistant director in the division of litigation technology and analysis bureau of consumer protection at the Federal Trade Commission, says this freedom has inspired rural communities in areas like Puerto Rico to adopt cryptos as a way of financial freedom.
“These communities have cropped up of people who are interested in almost living off the grid and having this total kind of alternate community based on using cryptocurrencies,” Kwok said during a recent media briefing with Ethnic Media Services and the FTC.
That sense of economic freedom is the reason that some Native American tribes have been using such currencies as a way of financial sovereignty and boosting their local economies. Two major players across Indian Country are MazaCoin, which has been used across the Pine Ridge Indian Reservation in South Dakota, and NativeCoin (N8V) that was established with the goal of being an “all-in-one digital currency” according to Michigan Technology Law Review.
The aspect of sovereignty is what also sets Native currencies apart from the mainstream cryptos, as they do not fall under any current or proposed federal regulations. “MazaCoin as a sovereign currency remains under the direct jurisdiction of the tribe,” said Payu Harris, creator of MazaCoin.
Harris says that financial independence from the U.S. government allows greater autonomy for tribes who utilize it, and is an indirect way to create wealth through strengthening their economic systems.
“It opens the door for tribes to establish their own monetary policies which espouses a strong economic modality,” Harris said.
By adopting a cryptocurrency like MazaCoin, Harris says tribes would also be able to distance themselves from the U.S. dollar and any of its recession and inflation struggles as well as have the ability to “tokenize” things like natural resources under a blockchain system that would allow for greater transparency.
A blockchain is a digital ledger of transactions and a way of recording information that makes it almost impossible to change or hack, essentially making these transactions fairly safe for users.
However, not everyone is convinced that it makes sense for tribes to adopt these niche currencies.
Shawn Spruce, an education consultant and co-host of the podcast “Natives on a Budget”, says the inconsistency of most cryptos is what keeps them from being a viable option for tribal organizations, who are often risk adverse in their investments
“I don’t think that’s what a tribe wants from a currency. If I have a currency, I want to make sure what it’s worth today is what it’s worth tomorrow,” Spruce said.
The FTC recently held a media briefing with Ethnic Media services discussing the potential scams that are often seen when investing in cryptocurrencies, and reported that one-in-every-four dollars invested in crypto was lost to fraud in recent months.
Aspects that would allow for financial freedom through use of cryptos, such as having no centralized authority or third party, is one of biggest reasons scams have taken off, according to Cristina Miranda, a consumer education specialist with the FTC.
“A lot of people are getting scammed because they are unfamiliar with how cryptocurrency really works,” she said. “There’s this fear of missing out on something that they believe can make them a lot of money.”
That sense of “FOMO” is something that Spruce believes has led to the commodification, or sensationalism, of investing in cryptos for many people.
“People are looking at this as a form of currency as much as they are a type of commodity,” said Spruce.
A big struggle beyond combating fraud that tribal-ran cryptos face is setting themselves apart from the thousands of currencies that are already in the market, says Spruce, who isn’t certain there’s a way to “make it really big” by adopting such cryptos.
“I’m not convinced there is a need for tribes to do crypto,” said Spruce. “You’ve got to have enough people to buy into your currency that they’re going to give it a platform to thrive.”
“And what do we have to offer? What’s the incentive for anybody to invest in a tribal crypto as opposed to the umpteen other cryptos?”
But even if Native Americans are interested in mainstream cryptocurrencies for investment, people should be cautious of traps and scams that have sprung up everywhere.
That was the case of Jeffrey Vaulx, a special education teacher based in Memphis. Sweetened by the rich-quick cryptocurrency investment scheme pitched by a “Facebook friend”, Vaulx unknowingly wire transferred $1,000 into a fake account. By the time his “scam” sensor awakened, the “Facebook friend” and Vaulx’s money had already disappeared.
According to the FTC, cryptocurrency scammers have defrauded consumers like Vaulx more than 1.3 billion dollars just in the period between January 2021 and June 2022 in the US.
