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

Bitcoin and Foreign Currency

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

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 bitcoin does not 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 bitcoin from someone, you need to return the value of the bitcoin you borrowed, not actual bitcoin.

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!