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Does Judaism Consider Bitcoins to Be Money?

Does Judaism Consider Bitcoins to Be Money?

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Borrowing and Lending Merchandise in Jewish Law

Before getting into the question of whether something is considered currency, we first need to explain what practical difference it makes.

In most instances, as long as something has monetary value, it makes no difference in Jewish law whether it is actual “currency” or not. There are exceptions, however. We’ll focus on the one that is perhaps the most practical (and the most prone to be disregarded): the laws of interest.

Borrowing Items—Measure for Measure

As I’m sure you know, according to the Torah, a Jew is prohibited from borrowing or lending money to another Jew with interest (usury). This law applies not just to money, but also merchandise (e.g., you cannot lend someone 5 lb. of apples and have them give you back 6 lb.).1

Biblically, one would be allowed to borrow, use and return the same amount of merchandise. However, in many situations, the rabbis prohibited doing so, since the value of the merchandise may have gone up (e.g., the 5 lb. of apples were worth $5 when they were borrowed, but are worth $8 now). This prohibited practice is called se’ah b’se’ah (“measure for a measure”).2

For this reason, “loans” of merchandise need to be made based on the merchandise’s value at the time it was borrowed. If you want to return actual merchandise, then you need to return the amount equivalent to the value of the merchandise at the time it was borrowed (e.g., only $5 worth of apples, even though that is now less than the 5 lb. that were borrowed).

When it comes to currency, however, one can simply borrow and return the same amount of money.3

Exceptions: When is it permitted to return borrowed merchandise?

To digress a bit, there are three general exceptions to the rule of not borrowing and returning an equivalent item:

  • When borrowing a very small amount, such as a loaf of bread, it is permitted to return a loaf, since any potential discrepancy in the price is generally considered insignificant.4
  • ● When the borrower himself has a small amount of the type of merchandise he is borrowing, it is permitted for him to borrow more of that merchandise.5
  • ● If the merchandise in question has a fixed market price and is readily available, then it is permitted to borrow and return an equivalent item.6

Bitcoins and Foreign Currency

Having explained one practical difference between currency and merchandise, we can return to bitcoins.

According to Jewish law, “currency” is defined as something that the sovereign government declared as the legal tender of the country, and/or is the generally accepted currency used in that locale for transactions.7

Based on this definition, it is clear that bitcoins don’t currently have the status of currency according to Jewish law. Like most foreign currency, they are considered a commodity. Practically, that means that if you borrow bitcoins from someone, you need to return the value of the bitcoins you borrowed, not actual bitcoins.

While the laws of usury are sometimes complex, our sages warn that in many respects the prohibition of usury is a lot more severe than other monetary prohibitions.8 In fact, the laws of usury are so important and special that the Torah tells us that in the merit of being meticulous about these laws, we will merit to go to the Promised Land.9 May it be speedily in our days!

Footnotes
2.
See Talmud, Bava Metzia 75a.
3.
Shulchan Aruch, Yoreh De’ah 162:1.
4.
Ibid.
5.
Ibid. 162:2. Since this a rabbinical prohibition to begin with, the rabbis were lenient, and when the borrower has the same type of item already in his possession at the time the item was borrowed, we view the transaction as if the borrower traded his item for that of the lender’s. Therefore, even if the price of the item goes up, there is no concern of interest, since it is as if the item is already in the possession of the lender.
6.
Ibid. 162:3.
7.
See Talmud, Bava Metzia 45a; Shulchan Aruch, Choshen Mishpat 203:8.
8.
Shulchan Aruch ha-Rav, Hilchot Ribbit 1.
9.
See Leviticus 25:36–37 and commentaries.
Rabbi Yehuda Shurpin responds to questions for Chabad.org's Ask the Rabbi service.
Sefira Ross is a freelance designer and illustrator whose original creations grace many Chabad.org pages. Residing in Seattle, Washington, her days are spent between multitasking illustrations and being a mom.
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Abe Phillipines March 31, 2017

Can Noahide legally buya bitcoin as a share or as a investment? Reply

Harry August 21, 2016

Ok, so if I loan someone 100$ to be played back in 1 year, but the Federal Reserve doubles the money supply, so now 100$ then is worth 200$ now, he has to pay $00$ back? Reply

Anonymous USA via lchaim.org.uk August 4, 2016

Does Judaism consider all money to be money? In other words, do we differentiate between the money that represents the necessities of life (food, shelter, clothing) and "funny" money such as an investment in a publicly traded company, whose stock value can be wiped out in the blink of an eye? Reply

Erik Aronesty New York August 4, 2016

Bitcoin is uniquely kosher The currency, bitcoin is issued through the the sole providence of mathematics. These mathematics were created by God. Bitcoin, therefore, is secured by a higher authority than a country, and is unique. It is not a commodity, like a cow. It is a currency issued by the sovereign mathematical nature of the universe. Since it is therefore unique, you must take into account the spirit of Judaism, not the letter of prior interpretation. In my opinion, Bitcoin is a "pure" currency, untainted by country or asset, and should be treated as such. Please borrow, and return Bitcoin ... as Bitcoin. Reply

Ezra Boston, MA August 3, 2016

So are mortgages allowed? So are mortgages allowed? If so why? Must one make sure no jews work at a bank to take out a mortgage? What are the Rules? Reply

Anonymous July 29, 2016

bitcoin Bitcoins do not fall under the category of currency. It is an invention by smart minds to have an edge over others in the world of currency.
Accepting interest is looked down by Torah and those who accept interest do not serve God. If money and earning it was not a motivation then innovation and invention would not go so far. Loans which are interest free serves the purpose of God .It may have been given generations before and one can still earns its rewards generations later.There are rules governing money. Reply