Is Bitcoin a Currency?
The question of whether or not bitcoin is really money has gained attention in light of recnt events in the bitcoin world. Even the Torah, the traditional Jewish law, has weighed in on what defines currency, according to a recent post in Chabad.org, a website dedicated to empowering Jews worldwide with knowledge of their 3,300-year-old tradition.
Does Judaism consider bitcoins to be money? The question was addressed in an article under that very heading by Rabbi Yehuda Shurpin, who responds to questions posed to the website.
Monetary Value Is What Counts
As long as something has monetary value, it does not make a difference in Jewish law whether it is actual “currency” or not in most instances, Shurpin noted.
The question of how to define currency is addressed in the context of a law governing lending money and merchandise.
According to Jewish law, a Jew cannot lend money with interest to another Jew, Shurpin noted. The law applies not only to money, but to merchandise. One is allowed to borrow, but in some cases, even borrowing was forbidden because the value of the merchandise can increase by the time it is repaid.
Rule On Loaning Merchandise
Loans of merchandise have to be based on the value of the merchandise at the time it is borrowed. When returning the merchandise, it must be returned in an amount equivalent to its value when it was borrowed.
There are three exceptions to the rule on borrowing and returning merchandise in equivalent amounts.
1) When borrowing a small amount, it can be returned in an equivalent amount since any change in the price will be insignificant.
2) When the borrower has a small amount of what he is borrowing, he can borrow more of that merchandise.
3) If the merchandise carries a fixed market price and is easily available, one can borrow and return an equivalent item.
What Is Currency?
Currency in Jewish law is defined as something having been decreed as legal tender by the sovereign government and accepted as the currency in the given locale.
Based on this definition, bitcoin is not currency, Shurpin noted. Instead, it is considered a commodity, like most foreign currency. Hence, if you borrow bitcoins, you have to return them in the same value you borrowed them at.
Because usury laws are complex, the sages warn the prohibition against usury is more serious than that of other monetary prohibitions. The law notes that in the merit of being meticulous, Jews will merit entrance to the Promised Land.
The question has gained a lot of interest in the bitcoin community recently since a Florida judge dismissed charges against a man accused of violating an anti-money laundering law when he tried to launder bitcoin to an undercover detective. The judge ruled that the cryptocurrency was not “tangible wealth” and not considered money since it wasn’t backed by any bank or a government.