July 15, 2018
Governments around the world are trying to regulate cryptocurrencies by fitting them into already-existing legal definitions. But, why should countries have all the fun? Religious leaders and scholars, who cannot make new definitions in their scripture, have to do the same and examine the religious validity of Bitcoin use.
This post is not meant to be a scholarly analysis of the views of religious texts on cryptocurrencies. It only aims to cover contemporary Christian, Jewish and Islamic perspectives on cryptocurrencies. Unfortunately (or maybe fortunately), I could not find statements by Buddhist, Hindu, Sikh, Zoroastrian clergy/commentators on the subject. Let me know if I'm missing something, I will be happy to update it.
"Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” (Proverbs 13:11)
As far as I can tell, no authoritative statement has been made on the religious validity of cryptocurrencies by the Vatican or any other major Church. We have to rely on Christian commentators, who mostly agree that Bitcoin is a speculative bubble, and it seems un-Christianlike to invest in it.
Robert Netzly, the CEO of Inspire Investing (which provides "low cost, biblically responsible investments"), quotes Proverbs 13:11 and recommends staying off the Bitcoin mania because it's driven by "greed", "plain and simple".
Joe Carter, of the Acton Institute and the Gospel Coalition, is also of the opinion that Bitcoin is a bubble. However, he is not so quick to discard its technological importance. He notes, "[i]f the experiment is unlikely to succeed, then why should anyone bother paying attention to Bitcoin? The reason can be found in another, more successful, completely pernicious, online venture: porn." Since the "Internet was completely funded by porn", and porn "has been a driver of innovation in many areas of information technology", he concludes, "[t]he question we Christians must ask is whether it is wise stewardship to fund the growth of a system in which thousands of people will eventually lose real, significant wealth in the hope that it might lead to [...] innovations [in peer-to-peer trust systems]." Philip Booth, professor of finance, public policy and ethics at St Mary’s University, expresses a similar view in the Catholic Herald.
Perhaps the strongest criticism comes from Bishop Hilarion, an influential clergyman in the Orthodox Church of Russia. (Personally, he has "not yet been asked to bless anyone’s mining operation.") He feels that "cryptocurrency is a new financial bubble, a new Ponzi scheme, behind which there is nothing." He also said the same thing about US dollars.
Some other churches don't seem to mind Bitcoin at all. SpendBitcoins.com lists four churches that accept Bitcoins as donations. I was able to find a. few. more. And if you're still not sure whether it's Christian-like to invest in Bitcoin, may I recommend Christ Coin?
Since Islam has its own systems of banking and finance, I was not surprised to find some serious academic literature on whether cryptocurrencies are shari'ah-compliant.
A good starting point is Cryptocurrencies from Islamic Perspecties: The Case of Bitcoin. He notes that all currency which has no intrinsic value is, strictly speaking, not shari'ah-compliant. Normally, fiat national currencies are allowed through "maslahah" jurisprudence (which adjudicates prohibition/permission on the basis of societal value, usually invoked in cases not regulated by the Qur'an or the teachings of Prophet Muhammad). Meera concludes that, "strictly speaking, cryptocurrencies that are not backed with real assets are not shari’ah-compliant", but "gold-backed cryptocurrencies" are consistent with shari'ah.
Mufti Faraz Adam, a Shari'ah Consultant at Amanah Finance Consultancy Ltd., takes Bitcoin through three Islamic criteria for money:
1. Mal (Wealth): "what is normally desired and can be stored up for the time of need"
2. Taqawwum (Legality): asset must be lawful
3. Thamaniyyah: "potential of something to be a measure of value and be commonly used as a medium of exchange"
In his long paper, he concludes that Bitcoin passes the Mal and Taqawwum tests, but fails the Thamaniyyah test because it has "security risk, technological risk, money laundering risk, volatility risk, data risk, transaction risk, intermediary risk, regulatory challenge, structural deflation risk, competition, scalability risk, monopoly risk, liquidity risk." (If you are Satoshi Nakomoto, please visit this page.)
Shawki Allam, Grand Mufti of Egypt, seems to agree with the "risk" argument since he issued a fatwa in January 2018 declaring cryptocurrency trading as forbidden under Islamic law on similar grounds. The Turkish Ministry Presidency of Religious Affairs, in 2017, declared all cryptocurrency trade un-Islamic because they don't have government backing. Two imams in Turkey have been fired because they allegedly invested in Bitcoin. A Saudi cleric has also declared Bitcoins as haram.
In India, Maulana Wali Rahmani, general secretary of the All India Muslim Personal Law Board, issued a statement declaring Bitcoins as un-Islamic. Running off the Saudi cleric's reasoning, he raises six objections:
"1. No government or banking control over bitcoin
2. No physical presence of coin or cryptocurrency
3. Highly volatile, no link between cryptocurrency and physical assets such as gold, silver, metals.
4. No protection against theft, hacking etc.
5. Strong possibility of its use in buying drugs, money laundering, terrorism, anti-social activities
6. No legal avenues such as moving courts and institutions to redress grievances"
(Bonus 1: In his paper, Bitcoin and Islamic Finance, Jan Bergsta notes that Bitcoin mining may be problematic in Islam due to its probabalistic returns.)
(Bonus 2: If you're Muslim and invested in Bitcoin, don't worry: Mufti Adam's aforementioned paper says, "[n]evertheless, any return on Bitcoin investments would be lawful and shari'ah compliant.")
(Bonus 3: There is a whole project called Islam and Bitcoin, with a blog and a podcast!)
Rabbi Yehuda Shurpin, of the Chabad, makes it clear that Bitcoin is not currency according to the Torah. However, it may be treated as a commodity. (Who knew 21st century lawyers get their arguments from Hasidism?) Since the laws of usury apply to commodities as well, "[p]ractically, that means that if you borrow bitcoins from someone, you need to return the value of the bitcoins you borrowed, not actual bitcoins."
Vyacheslav Semenchuk, on the other hand, may not have given this too much thought since he launched Bitcoen, "the first Kosher cryptocurrency."
Contemporary religious views on cryptocurrencies are nuanced (especially in Islamic scholarship), but none have come out strongly in favour of it. Additionally, most commentary seems to be on Bitcoin, rather than cryptocurrencies in general. In the future, each cryptocurrency may merit its own religious analysis.
Thankfully, none of this matters. As Becoming Christians notes, "You see, at the end, it is really not Bitcoin that we should be worrying about. It is our relationship with God."