By Valentina Zarya
December 15, 2017

As the price of Bitcoin soared to record highs this week—$10,000, $15,000, then $17,000—the meteoric rise that turned early investors into paper billionaires fueled talk of how the cryptocurrency and its underlying technology, blockchain, could wholly remake the banking system. As MIT researchers argued in a Harvard Business Review article earlier this year: “Blockchain will do to the banking system what the Internet did to media.”

Among the many questions about the future of Bitcoin and its peers—Is it a bubble? Will it pop?—is whether the cryptocurrency industry, like its traditional predecessor, will be molded mainly by men.

Like so many other aspects of the relatively new and purposefully cryptic assets, an answer is difficult to pin down. There’s little data on the gender makeup of investors and entrepreneurs, but to women already in the field, it feels like cryptocurrency is following in banking’s loafer-shaped footsteps.

The Bitcoin investment gender gap

Cryptocurrency transactions are anonymized, meaning the identity (and therefore gender) of owners is hard to pin down. But two informal industry surveys provide at least a peek into who’s buying and selling such assets. The first, a survey distributed in September via EthTrader, an online investment community of Ethereum traders, found that just 4% of traders are women. The second, conducted by MyEtherWaller, an open-source interface for creating Ethereum wallets (a digital currency trader must have a wallet to trade currency and monitor his or her balance) found in October that the number of women traders is closer to 16%.

Among institutional investors, women seem to be scarce, too. After years of attending industry dinners and events—where she says women “automatically gravitate toward each other” because they’re such a minority—Linda Xie, co-founder of cryptoasset fund Scalar Capital, estimates that the number of female investors in the space is about 10%.

Why are women so absent from this space? One factor could be that at their core, investments in Bitcoin and other cryptocurrencies are just that: investments. And in every asset class that’s been studied so far, men take riskier bets than women—and cryptocurrency investing is nothing if not risky.

In one 2013 study, asset management giant Fidelity found that just 4% of women were willing to invest a substantial amount of money to achieve potentially higher returns if it meant possibly losing some or all of an initial investment, compared with 15% of men. One reason for this aversion to risk is confidence: A Merrill Lynch report from 2015 found that 55% of female retail investors surveyed agreed or strongly agreed with the statement, “I know less than the average investor about financial markets and investing in general,” versus just 27% of the men.

Women in the crypto startup ecosystem

Women also appear to be scare among the ranks of the field’s VCs. Again, getting an exact number is challenging, but here, too, the consensus seems to be that women account for between 5% and 10% of the workforce, according to the women VCs and entrepreneurs interviewed for this story.

By that estimate, cryptocurrency’s venture capital scene would reflect the larger VC landscape, where only 7% of partners at the top 100 VC firms are women, according to a 2017 report by TechCrunch. That’s not to say this territory is without its female standouts. RRE Ventures principal Alice Lloyd George, Autonomous Partners founder and managing director Arianna Simpson, and Benchmark General Partner Sarah Tavel are a few of the female VCs making names for themselves as investors in the space.

Crypto-focused VC firms may be plagued by the same pervasive gender biases that dog the industry overall: mostly male partners invest in mostly male teams, who then hire mostly male employees. A 2014 research report by Babson College found that VC firms with a female partner were more than twice as likely as all-male firms to invest in a company with a woman on the management team and three times as likely to invest in women CEOs.

Just how many female CEOs are in the space? It’s unclear how many cryptocurrency or blockchain-related startups have been founded by women, but one helpful starting point is the number of female founders overall: According to a TechCrunch analysis, 17% of venture-backed startups in 2017 have at least one female founder; just a third of those have all-female founding teams.

Anecdotally, Meltem Demirors, director of development at crypto-focused VC firm Digital Currency Group, has already noticed the lack of female advisors and founders at startups within DCG’s portfolio of 67 companies; about 17% of the employees at those companies are female. Those with fewer than 10 employees—about a third—have no women at all, she says. And the women who do work at the bigger companies tend to fill roles that pop up as firms grow, such as marketing and HR.

Nipping Bitcoin ‘bro culture’ in the bud

Demirors’ own experience in the industry has made it clear that as a woman in the space, she’s an anomaly. “When I first joined the industry, I’d walk into a meeting and people would be like, you’re the PR chick,” Demirors recalls. “There’s pervasive gender bias that’s in tech in general and that’s transferred over to Bitcoin.”

Xie says that while no one was openly malicious at industry events, she often felt ignored (“Men would just introduce themselves to each other right in front of me”), underestimated (“People were surprised when I said anything intelligent”) and belittled (“They usually thought I was someone’s plus one”).

Despite—or perhaps because of—the dearth of female leaders in cryptocurrency, the network of women has quickly become a strong one, says Amanda Gutterman, CMO of ConsenSys, a company focused on building the Ethereum ecosystem, and the organizer of the Women in Bitcoin meetup. “It’s a very boisterous event and we’ve built a really dynamic community,” she says.

She remains optimistic that women have a real opportunity to become leaders in the space because it’s not yet an entrenched boys’ club. “Unlike other areas of tech,” she says, the underlying technology “has only been around for a couple of years,” she says. “If you come in right now, you can become an expert really quickly.”

An opportunity for female founders

Blythe Masters, CEO of Digital Assets Holdings LLC, speaks during a Bloomberg Television interview at the Singapore Fintech Conference in Singapore, on Wednesday, Nov. 16, 2016.
Bloomberg Bloomberg via Getty Images

Despite the signs that point to the crypto industry being unwelcoming to women, ConsenSys’s Gutterman sees gender diversity in Bitcoin as “rapidly increasing” and expects the progress to continue. She points to initial coin offerings (ICOs), an alternative way of raising capital, as a valuable avenue for women to get funding outside of the male-dominated ecosystem. In an ICO, a founder releases a public white paper along with a new digital currency that any interested party can purchase.

Since ICOs don’t require pitching to investor teams that tend to be mostly male, they let female founders sidestep “interpersonal bias that’s been crystallized in fundraising mechanisms,” Gutterman says. That hypothesis already seems to be playing out: Four out of 30 of the largest initial coin offerings this year had female co-founders, reports Bloomberg. The largest female-led—and second-largest overall—ICO in 2017 was for blockchain technology company Tezos, founded by CEO Kathleen Breitman. (It’s worth mentioning, however, that the startup is currently embroiled in two separate lawsuits by disgruntled investors.

Other stars in the field include: Blythe Masters, who quit her job as a J.P. Morgan banker to run Digital Asset Holdings, a startup building products on distributed ledger technology for large financial institutions (blockchain is one type of DLT); Elizabeth Stark, who taught at Yale and Stanford before co-founding Lightning Labs, a user interface for digitally sending and receiving instantaneous financial transactions; and Juthica Chou, co-founder of LedgerX, a digital clearing house that facilitates cryptocurrency trading.

Does gender really matter?

It may seem counterintuitive to focus on gender in a space that celebrates anonymity, but cryptocurrency bodes so much opportunity that women’s role in it can’t be ignored. The answer to the question some Bitcoin aficionados are asking—“Why do we care?”—is simple: Without women investing and innovating in this new technology, not only will they miss out on its billions of dollars in potential returns, but the rest of us may miss out on a female perspective on how to apply it.

Generally speaking, men and women have different interests and focus on solving different problems. One illustration: female-founded that raised their first rounds in 2016 were weighted towards education (32%), e-commerce (31%), healthcare (21%), and media and entertainment (21%), according to TechCrunch.

One problem that female-led companies like BitPesa and Tala are tackling using blockchain technology is “banking the unbanked,” Chou says. These fintech startups want to use technology to provide an estimated 2 billion people (more women than men) with access to the basic financial services that many Americans may take for granted: a bank account, access to credit, insurance, and savings products.

Activists for economic development focus on financial inclusion because without it, it’s difficult for those in developing countries to save and practically impossible for them to make transactions outside of their immediate surroundings if they want to start or expand businesses—and therefore contribute to their local economies. The financial inclusion of women in particular is important because they put about 90% of their income into healthcare, education, nutrition, and shelter, Cathleen Tobin, director of product development at Women’s World Banking, tells the Wall Street Journal. “The more income that a woman controls, the more she is able to further the stability of her family.”

BitPesa founder Elizabeth Rossiello’s proposed solution is to build a payment infrastructure that allows customers to transact in Bitcoin with money sent to mobile accounts. In this way, the unbanked can circumvent traditional banking systems altogether and go straight to digital finance, the way many leapfrogged over landlines and desktop computers to laptops and mobile phones. (In Bangladesh, for example, just 1% of residents have a landline, while 94% own a cell phone.)

Women in cryptocurrency overall may have the chance to skip a few steps, too. As a brand-new field with few established leaders, a woman can make a name for herself more quickly than in traditional finance or tech, Gutterman says, bypassing at least some of the gender barriers that come with those industries. “Come on in,” she says, The water’s fine.”

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