Cryptocurrencies have never been more popular, with an estimated 300 million users worldwide and an aggregate value of $2.22 trillion. Bitcoin, the original crypto, reached an all-time per-coin high of $60,000-plus earlier this year, a staggering milestone considering it was only valued at $2 just 10 years ago, shortly after its 2009 launch.But despite the increase in global reach and perceived legitimacy, questions about cryptocurrency — a digital and purportedly decentralized alternative to so-called “fiat currency” issued and backed by the state — remain widespread.

And for Catholics, those questions aren’t merely about what crypto is, how it works, and what its market values is, but also the moral implications associated with its use. How does the spread of cryptocurrency impact human flourishing and the common good? And how should Catholics approach crypto when it comes to owning or investing in it?

If you’re looking for official Church answers — a papal bull on cryptocurrency every morning with your copy of the Register, as it were — you’re out of luck. While a 2017 Vatican conference addressed crypto — especially its usage in human trafficking — and it was once alleged that the Holy See was considering launching a “Catholic bitcoin,” no sort of official moral assessment or guidance has been issued by any curial office. A 2018 Vatican bolletino addressing the world’s financial system and produced through collaboration between theologians, economists and Church leadership, for instance, made no mention of the phenomenon, by then already prevalent and rapidly growing.

Joseph Capizzi, a moral theologian and executive director of the Institute for Human Ecology at The Catholic University of America, says the Church’s lack of official guidance on crypto isn’t surprising. He says recent Church teaching has tended to focus less on the mechanisms of measuring and transferring wealth and profit and more on their relationship to human virtue and social flourishing.

“The modern encyclical tradition has been very good on questions of these sorts, and deficient in terms of anticipating questions about currency,” he said.

Without an application of Christian social teaching to cryptocurrency issued from the Church’s teaching authority, Catholics and other people of goodwill are left to think through the ethical considerations of cryptocurrency themselves — often coming to dramatically different conclusions.

 

‘Thank God for Bitcoin’

For some, Bitcoin is an answer to prayer — or at least a means to a more just way of doing money than the current “fiat currency” model, in which legal tender has value because the government says it does. That’s the argument at the heart of Thank God for Bitcoin: The Creation, Corruption, and Redemption of Money, a 146-page book published last year. 

According to co-author J.M. Bush, a reformed evangelical, fiat currency approaches violate the biblical “sowing and reaping” principle found, for instance, in Romans 2:6 — namely the notion that one’s wealth should reflect their work. Because the U.S. dollar’s value hasn’t been tied to gold since 1971, the Federal Reserve System can effectively introduce new currency into the system at its own discretion, manipulating the value of currency and potentially distorting the relationship between the work people have done and the wealth they actually have. As several critics have pointed out, this kind of inflationary monetary policy has the greatest negative impact upon the lower classes, who tend to have more of their wealth tied up in cash, as opposed to more stable assets like land and capital.

Bitcoin — which came on the scene in the immediate aftermath of the 2008 financial crisis that featured wild monetary mismanagement by the government and the companies they bailed out — promised an end to the government’s manipulative monopoly on currency. 

As described, the currency is decentralized and self-sustaining, maintained by a set of computer protocols and not a board of bureaucrats. Additionally, the hard-cap of 21,000 bitcoins in existence is said to prevent inflation — your bitcoin won’t lose relative value because previously-non-existent coins are created and introduced into the digital market. 

The only way to obtain bitcoin is to pay for the energy to “mine” them, a process that involves specialized computers solving complex algorithms, or to purchase them from someone who has already made the initial investment. The blockchain technology that underlies cryptocurrency allows for allegedly perfect accounting and transparency of transactions and assets. A bitcoin, which is a digital marker with no tangible presence, has no value, except the value people choose to ascribe to it.

Bush, who began buying bitcoin in 2017, says the cryptocurrency “took monetary governance out of the hands of the privileged few, establishing an unchangeable system that bound all participants to play by its rules and adapt to it, rather than bending it to their own will.”

A missionary in Uruguay, he says that about half the people at his church are Venezuelan immigrants, who were robbed of their wealth by poor governmental monetary policy in their home country.

“They appreciate what it means to have money that can’t simply be stolen from them via [government] money printing,” he said, although he says that some forms of cryptocurrency have 70% of their value concentrated in the hands of a few individuals, making them effectively centralized. 

Bush added that Bitcoin “forces governments to acknowledge their natural limits while also almost ensuring that as many people as possible, whether rich or poor, are being treated impartially,” echoing the taglines of Bitcoin owners and cryptocurrency companies that are increasingly focusing on poorer countries in Latin America and Africa, where currency is especially volatile, billing their product as a way to avoid inflation and build wealth. 

Catholics have also taken a leading role in promoting cryptocurrency-acceptance. Author Eric Sammons, for instance, has argued that crypto “applies [the Catholic understanding of] freedom to money itself” by making use of currency completely voluntary, and has also said that Catholics should pay special attention to this form of decentralized currency at a time when religious voices are increasingly being marginalized from the mainstream. 

Former presidential candidate Rick Santorum sat on the advisory board of crypto start-up Cathio, and another entity, the apparently now defunct Catholic Blockchain, advocated for Church acceptance of cryptocurrency, even appointing Padre Pio as the “patron saint of blockchain.” Some Catholic organizations, like Catholic Charities USA, are also now accepting donations in the form of crypto.

 

Stable Currency

One guiding principle for morally evaluating cryptocurrency is the Church’s insistence on the need for a “stable currency” in society. Pope St. John Paul II, for instance, wrote in Centesimus Annus that a stable currency allows “those who work and produce [to] enjoy the fruits of their labors and thus feel encouraged to work efficiently and honestly,” while the lack of this stability — often coupled with corruption and purely speculative “get rich quick” practices — “constitutes one of the chief obstacles to development and to the economic order.” The state, John Paul writes, has the responsibility for ensuring a stable currency.

Stephen Barrow, an economist and the managing director of programs at the free-market-oriented Acton Institute, says cryptocurrency presents both potentially stabilizing and destabilizing elements.

The destabilizing tendencies aren’t hard to see, as the recent fluctuation of the value of Bitcoin — which increased sixfold in the span of nine months only to be cut in half over the next two — demonstrates. While such fluctuations may not trouble investors, they’re problematic for people who might rely on the currency to purchase essential goods, like in El Salvador, where bitcoin is being adopted as legal tender in what The Wall Street Journal has described as a “risky experiment.”

“That’s one thing that we would want to look to is to see whether or not the introduction of these kinds of technologies would be disruptive to the point of doing broader economic damage,” said Barrow.

But he also noted that the availability of crypto could help curb currency instability by putting pressure on government-controlled central banks to stop their inflationary habits. 

Barrow also noted that while the state has the duty to promote a stable currency, there’s nothing in the social tradition that implies that the government needs to have a monopoly on currency — though it would need mechanisms in place to appropriately tax cryptocurrency transactions and prevent an “underground economy” disconnected from the rest of society from forming. 

Additionally, Barrow says the state needs to put in place consumer protection laws helping to mitigate and penalize fraud and distortion, which are already rampant in the crypto world, something that’s happening more or less in real time, as government agencies respond to ever-in-flux world of crypto. 

For instance, earlier this year, New York banned crypto companies Tether and Bitfinex from doing business in the state after the platforms covered up losses of $850 million in order to continue to sell clients their cryptocurrencies. 

“Unless you know what you’re doing — which, by the way, most of probably don’t because it’s evolving so rapidly — next thing you know, you end up losing what you’ve invested or your money is stolen by bad actors,” he said.

Pointing again to Centesimus Annus, in which John Paul says “the Church has no models to present,” but instead offers an “indispensable and ideal orientation” for economic activity, Barrow says Catholics should focus on how to use cryptocurrency and its underlying technology for good.

“The important consideration is developing systems which serve the common good,” he said.

 

‘Mythology of Cryptocurrency’

However, other voices in the conversation question whether it’s possible to use cryptocurrency in an ethical way.

Elizabeth Renieris, founding director of the Notre Dame-IBM Technology Ethics Lab, says the philosophical underpinnings of crypto are radically anti-social.

“It’s betting against institutions and trust and collaboration,” Renieris said, noting that crypto enthusiasts “get excited” when the world is in chaos, because “it’s good for business.”

According to Renieris, the altruistic messaging of crypto companies doing business in poor nations is largely empty rhetoric, masking a “neocolonist, exploitative relationship.” 

In countries in Africa, for instance, crypto companies make it easy to sign up, but harvest users’ personal data and hide hosts of transaction fees and exist costs. Or in the case of El Salvador, she says bitcoin billionaires are dumping their crypto for government-backed cash and real assets once it has already reached maximum value.

And contrary to the “mythology of cryptocurrency,” Renieris says the technology is not as impartial as its proponents claim it is, with a small percentage owning most of any given cryptocurrency and therefore maintaining “a lot of control over decisions about how the coin is managed and operated,” almost like a private version of the Fed’s decision-making process. 

Even Bitcoin, she says, widely considered to be the most pure and impartial of the cryptos, is not as decentralized as it appears, as the core team that maintains and owns most of the currency regularly meets to make decisions about buying and selling, effectively influencing the currency’s value and knowing about these shifts ahead of time.

“That’s the biggest issue: the mismatch between expectations and reality,” she says of cryptocurrency.

Jacob Imam is the co-founder and director of New Polity, a journal of Catholic political and economic thought. He largely agrees with crypto-enthusiasts’ criticisms of current U.S. monetary policy, which he says is a form of counterfeiting money. He says the so-called Keynesian approach to macroeconomics that animates the Federal Reserve prioritizes the flow of money through the economy, but penalizes thrift, decreases the quality of goods, and deprioritizes ownership of private property. 

However, Imam’s not convinced the crypto-revolution is a step in the right direction.

“I’m very much for the return of ‘sound money,’ but I just don’t think that Bitcoin is a good alternative,” said Imam, who has previously compared Bitcoin to a form of idolatry. 

For one, Imam criticizes the way cryptocurrency trading and investment has promoted usury, which the Fifth Lateran Council defined as “when, from its uses, a thing that produces nothing, is applied to the acquiring of gain and profit without any work, any expense or any risk.” 

Some of Bitcoin’s earliest investors, for instance, have seen their initial investment increase in value by a rate of nearly a trillion — with no additional work expended. He sees what’s happening in El Salvador, where billionaires will exchange their artificial, value-inflated currency in exchange for real lands, goods and infrastructure in the poverty-ridden country, as deeply unjust.

In contemporary times, what actually constitutes usury and what Catholic moral teaching says about gaining money through interest and investments are hotly contested topics, perhaps not unrelated to the fact that these practices are so thoroughly a part of the global financial system and that the Church itself even participates in investment practices that may have been considered usurious in previous centuries.

Notably, Pope Francis spoke out forcefully against usury in 2018, calling it a “grave sin” that kills life, stomps on human dignity, promotes corruptions, and sets up obstacles to the common good.”Whatever the Church’s current ambivalence toward usury, Imam notes there is a long list of revered teachers in the tradition, including St. Thomas Aquinas and Blessed John Dun Scotus, who have condemned the practice as contrary to justice and charity.

“If you’re buying something and holding it only for it to increase in wealth, then you have fallen prey to usury. And most of all you’ve fallen prey to avarice.” Imam notes that many in the tradition have urged those who have made money through usury to give their excess profits to the poor.

Imam also criticizes the mind-boggling amount of energy needed to keep Bitcoin up and running and to continue “mining” new currency — more energy than the entire nation of Argentina, or approximately 5% of Bitcoin’s total value. While money is normally supposed to represent work, Imam says that in the case of Bitcoin it actually “represents waste,” which is especially troubling considering the energy used could have instead been used to produce real economic goods.

 

Reform of Systems and Souls

In terms of monetary reform, Imam is an advocate for re-tying currency to a precious metal like gold. For one, gold is more evenly distributed in the world, not concentrating monetary power in the hands of a few cryptocurrency kings. And, in addition to being imperishable and needing minimal upkeep, gold has a value independent of being used as currency, which Imam says helps its users “have an attachment to the real world” and to economic activity. He’s open to using something like digitized currency, but so long as it’s tied to a real good, like gold.

However, Imam is also adamant that no monetary system will function well if the people in it are without virtue. He says that even more so than a currency revolution, Catholics are in need of revitalizing traditional habits associated with the use of money, like justice, liberality, beneficence and almsgiving.

“We’re not going to cultivate a good monetary policy until we actually cultivate good souls,” said Imam, who has discussed monetary virtues on New Polity’s “Good Money” podcast.

In terms of personal investment in cryptocurrency, Imam recommends a kind of “examination of conscience.”

“Why am I investing? Am I just trying to get wealth without work or am I really trying to aid the common good? And how can I do that better?” For his part, Imam recommends investing locally in an endeavor one can be involved in, and says gold can be a better store of value than crypto, given its stability.

Other Catholic thinkers, like Acton’s Barrow, don’t think the Church’s traditional teachings against usury and speculation prohibit investment today, although he does caution against a kind of “lottery ticket” approach to investing that is purely speculative. Instead, Barrow sees deliberate and intentional investing in companies or forms of cryptocurrency as a way to not only receive a positive return, but also as a way to “enable the marketplace to sort out what is and is not a viable technology and improvement.”

For his part, CUA’s Capizzi warns those thinking about buying cryptocurrency to “proceed very cautiously, morally and financially,” citing its volatility and the tradition’s warnings against temptations of money. Instead, somewhat tongue-in-cheek, he suggests Catholics looking to invest their money consider a different option

“Buy land?”