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Is there anything intrinsically evil in the "wave of the future" in cryptocurrencies? My father-in-law was going to set up some accounts for my kids and I was thinking. Hmm, I should think about this a bit. I see bitcoin mining to be a bit like gambling, but only in the sense that mining in general is kind of like gambling and I see several categories that a Catholic sense of justice might be troubled in terms of accessibility and accountability.

But what issues, if any, have Catholic moral theologians, ethicists and purveyors of natural law (i.e. popular bloggers) came up with concerning Cryptocurrencies.

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  • This is a topical and important question. Only this morning I was given this Scripture and I think it's relevant to the subject: "Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say,'Who is the LORD?' Or I may become poor and steal, and so dishonour the name of my God." See also Romans 14:23.
    – Lesley
    Feb 20 at 11:07
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What ethical considerations, if any, should Catholic have about cryptocurrencies?

An article published on 19 July 2017 suggested that the Vatican may launch a “blessed” cryptocurrency, taxed in favour of the world’s poor. One fear is that nefarious traders would continue their schemes, now under the blessing palms of the Pope. Part of the article said:

It is the “taxation void” of crypto currencies that attracts this initiative. This void is especially attractive given the fact that all crypto transactions are exposed on a general ledger, making transaction taxes so readily enforceable. And what’s more: traders can be taxed without having their identities exposed. The Vatican angle will replace the ugly word of taxation with the uplifting word of charitable contribution.

Some analysts expressed concern that this idea might be preemptively taken up by nimble Muslim clerics, cajoling more than a billion Muslims to trade with a “caliphate cryptocurrency” and pour money to terrorists. It is the very fact that Bitcoin ‘backed-by-nothing’ currency is steadily gaining in value that sends more and more people towards creative imitations, with some hard to foresee consequences.

Source: A Catholic Bitcoin? Vatican may launch a “blessed” cryptocurrency, taxed in favor of world poor

Another article, published 6 June 2018, reprinted from the Institute of Economic Affairs, said this:

The most famous cryptocurrency, Bitcoin, tries to mimic a gold mine. People beaver away using computing algorithms to solve puzzles that earn them a Bitcoin. The supply of Bitcoin is limited and, just like gold, it becomes harder to mine as time goes on. It is because it is limited in supply that its proponents hope it will keep its value and not be subject to inflation.

Unlike gold, however, Bitcoins have no intrinsic value... Because of this, the value of Bitcoin fluctuates wildly as people speculate on it. There is a long history of Catholic teaching on speculation – much of it sceptical. Most economists, though, would argue strongly against any prohibition of speculation, because without speculation prices can deviate from their fair value for long periods, causing significant disruption. Nevertheless, if cryptocurrencies were simply vehicles for speculation, we would have to question their social value.

However, the decentralised systems and encrypted record-keeping used by cryptocurrencies have made them attractive to money launderers, drug dealers, and fraudsters. Certainly, the Church should condemn this activity and any involvement with it, but this is no reason to oppose cryptocurrencies themselves.

The article concluded that because different systems have their own ethical and economic challenges, Catholic social teaching should address these rather than condemning new forms of money out of hand.

Source: A Catholic take on cryptocurrencies

Apart from ethical issues surrounding speculation and possible financial crashes, there is also the question of criminal activity, using Cryptocurrencies to launder money. However, one of the more shocking issues concerns the amount of electricity consumed by such activities and the resulting C02 emissions into our environment. "Mining" for the cryptocurrency is power-hungry, involving heavy computer calculations to verify transactions. Here is an extract from a BBC News article:

Bitcoin uses more energy than Argentina. If Bitcoin was a country, it would be in the top 30 country energy users worldwide. In order to "mine" Bitcoin, computers - often specialised ones - are connected to the cryptocurrency network. They have the job of verifying transactions made by people who send or receive Bitcoin. This process involves solving puzzles, which, while not integral to verifying movements of the currency, provide a hurdle to ensure no-one fraudulently edits the global record of all transactions. As a reward, miners occasionally receive small amounts of Bitcoin in what is often likened to a lottery. To increase profits, people often connect large numbers of miners to the network - even entire warehouses full of them. That uses lots of electricity because the computers are more or less constantly working to complete the puzzles.

Source: Bitcoin consumes 'more electricity than Argentina

Read the article and weep.

P.S. I have no idea if the Vatican has entered into any scheme involving cryptocurrencies, but I believe that the ethical issues surrounding cryptocurrencies should be carefully considered by ALL Christians.

P.P.S. Revelation 13:16-17 came to mind, that "no-one could buy or sell unless he had the mark, which is the name of the beast or the number of his name".

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Morality of mining

Cryptocurrency mining

Bitcoin mining is not gambling any more than actual gold mining is gambling or running algorithms on computers is gambling. Mining is essential to the functioning of ledgers based on blockchains.

Mining

Bitcoin mining is the process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy way to make money.

It was "an easy way to make money" back in circa 2009, when an average computer user could mine, but today it requires giant warehouses with racks and racks of ASIC miners and megawatts of electricity.

Gold mining

Actual gold mining (like any other mineral extraction) is a "praiseworthy" form of moneymaking because it "acquires money from natural things (e.g., crops and animals)", as St. Thomas Aquinas commentates on Aristotle's Politics in Sententia Politic. lib. 1 l. 8 n. 13, comparing it to unnatural forms of moneymaking like usury and unnecessary buying and selling:

And there is another kind of moneymaking, interest (called τόκος in Greek), whereby money increases itself. And so the Greeks called it τόκος, since that means offspring. For we perceive that things generated by nature are like the things generating them. And so there is a kind of generation when money increases from money. And so also such acquisition of money is the most contrary to nature, since it is according to nature that money is acquired from natural things, not from money. Therefore, one kind of moneymaking is praiseworthy ["that acquires money from natural things (e.g., crops and animals)"], and three kinds [the other two: (1) "commerce…transformed from what is a necessity of nature to what desire demands" and (2) "lending money for a fee"] contemptible, as he [Aristotle] has said.


See Bit by Bit: How P2P [peer-to-peer, like the Bitcoin network] Is Freeing the World by Catholic economist Jeffrey Tucker; ch. 3 is titled "Bitcoin". Catholic demographer Eric Sammons's Bitcoin Basics is a good intro.

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  • It's more of a pyramid scheme than gambling - any profit has to come from someone else.
    – curiousdannii
    Feb 19 at 1:03
  • @curiousdannii Pyramid schemes can use any currency. They don't have to do with the currency.
    – Geremia
    Feb 19 at 3:56
  • What I meant was that the increase in value of something like bitcoin is like a pyramid scheme. As a currency it can be used in transactions regardless of BTC-USD rates. But BTC going to $50,000USD? That's basically a pyramid scheme. A "speculative bubble" is probably the accurate term.
    – curiousdannii
    Feb 19 at 4:00
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    @curiousdannii Bitcoin is a deflationary currency by design (cf. Controlled supply and arguments against bitcoin being susceptible to Deflationary spiral), so its value is expected to continue increasing.
    – Geremia
    Feb 19 at 4:13

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