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Bitcoin Is Kosher: A Halachic Analysis Of Bitcoin – Crypto.IQ

There have been plenty of articles in the mainstream crypto news about whether Bitcoin is Halal under Islamic Sharia law, but there has been nothing about whether Bitcoin is kosher according to Jewish law (Halacha). In the following article, we explore the 613 commandments in the Torah and discuss all of the commandments relevant to Bitcoin. We’ll also cite some additional Rabbinical sources.

For starters, Chabad has concisely answered the question of whether Bitcoin is money. Anything with value is considered money, and therefore Bitcoin is money according to Halacha. However, Bitcoin is not considered currency according to Halacha. This is because Bitcoin is not the legal tender of any country or the official currency of any specific locale.

Under Halacha, Bitcoin is considered a commodity, since its price fluctuates relative to the local currency. Foreign currencies are considered commodities under Halacha as well. Perhaps in the future, once Bitcoin is truly adopted, it will be considered a currency, according to Halacha.

Therefore, Bitcoin is a legal form of money under Halacha. However, there are plenty of Halachic laws that must be followed to avoid using Bitcoin illegally.

Do Not Use Bitcoin On Shabbos, Rosh Hashanah, Yom Kippur, The 1st and 7th Day of Passover, Shavuot, Sukkot, Nor Shemini Atzeret

It is prohibited to work on Shabbat, so performing actions to earn Bitcoin on Shabbos would be prohibited. It is said that any money earned on Shabbat will be lost, and in general, life will be much worse, including severe punishment in the afterlife.

That being said, automatic processes like Bitcoin mining can be done on Shabbos, as long as the person doing the mining does not monitor their mining machine in any way. Further, gaining money by holding Bitcoin during Shabbos is ok, as long as the person holding the Bitcoin does not do any work on Shabbos itself. Essentially, as long as you start something before Shabbos, and you don’t think about it and don’t do any work to keep it running during Shabbos, then it is legal to earn money from it.

It is forbidden to turn on light switches or use electronics, so there would be no way for Bitcoin to be used on Shabbos for someone who follows Halacha. This differs from actual cash money. It is forbidden to earn money, but it is common to use money if you put the money together with a piece of food while carrying it or paying with it. In a Bitcoin dominated world, perhaps paper wallet Bitcoins would be a necessity among the Orthodox Jewish community.

Other holy days that have similar prohibitions are Yom Kippur, Rosh Hashanah, Shavuot, the first and seventh day of Passover, Sukkot, and Shemini Atzeret.

Bitcoin Dealers And Merchants Are Prohibited From Messing With The Exchange Rate

Commandment 469 says “Each individual must ensure that his scales and weights are accurate”, commandment  470 says “Not to commit injustice with scales and weights” and commandment 471 says “Not to possess inaccurate scales and weights even if they are not for use.” Commandment 500 says “Not to overcharge or underpay for an article.”

Basically, merchants that accept Bitcoin should not dishonestly lower the BTC to USD exchange rate in order to receive more Bitcoin than they deserve. Likewise, Bitcoin dealers should not increase the BTC to USD exchange rate in a dishonest way so they send less Bitcoins than the customer paid for.

The key word here is dishonest since according to generally accepted Torah principles, businesses can charge up to 100 percent more for a product than they paid. So if a merchant or Bitcoin dealer is being honest and open with their fees, there is no violation of Halacha. If a merchant or Bitcoin dealer tries to take more fees by changing the exchange rate, then it is against the Torah.

Give Some Bitcoin To Charity

In the Torah, it says to give charity to the poor and needy. Some people say 10 percent of income, but that is not a rigid requirement. Basically, the Bitcoin community can follow the Dogecoin community’s lead, and give out Bitcoin to people who are doing mitzvahs (good deeds) or give Bitcoin to people that need money for food. On r/dogecoin, it is common for people to receive Dogecoins for interesting posts, while on r/Bitcoin practically no one ever tips. It is actually a violation of the Torah to hoard Bitcoins without giving some money to charity.

Halacha Laws For Loaning Bitcoin

Near the beginning of this article it was discussed how Bitcoin is not currency, but rather it is money. When it comes to lending, currency can be repaid at a later time on a 1:1 basis. However, money like Bitcoin, or other things like gold or apples, must be repaid according to the fiat value. So if Bitcoin increases in price, less Bitcoin is paid back when the loan is repaid.

Loaning or borrowing at interest is forbidden in the Torah. Even participating in a loan that involves interest, like being a witness, is a violation. If someone cannot repay a loan, it is against Halacha for the debtor to pressure the borrower. It is a violation to pressure borrowers to give collateral, collateral must be willingly given. If the borrower needs their collateral back the debtor must give the collateral back without delay, even without repayment. Finally, if a loan continues for 7 years, then it must be released even without repayment.

Most of the Bitcoin loan sites that have existed, like BTCJam and Bitlendingclub, have completely violated Halacha. They treated Bitcoin as currency and required 1:1 repayment, they included interest, and they threatened people who did not pay. Both BTCJam and Bitlendingclub have collapsed and gone out of business.

Do Not Steal or Scam To Obtain Bitcoin

This one is right in the 10 commandments that most people are aware of. Additionally, 467 says “Not to steal money stealthily.” This is common sense. Obviously hacking is against the Torah, and against the laws of practically any government.

Commandment 476 says “Not to covet and scheme to acquire another’s possession.” This is relevant to all of the different types of cryptocurrency scams, including ICO scams. Scams, no matter how articulate, fall under the category of stealing and are forbidden. Additionally, commandment 495 says “Not to put a stumbling block before a blind man (nor harmful advice).” Essentially, misleading people into falling for scams is against the Torah.

Do Not Withhold Wages Or Fail To Pay A Debt

Commandment 518 says “Pay wages on the day they were earned.” Therefore, if companies who pay with Bitcoin want to follow Halacha, they should pay their workers with Bitcoin each and every day. Further commandment 475 says “Not to withhold wages or fail to repay a debt.” This can be interpreted once again as employers need to pay workers, but perhaps can also be thought of when it comes to cryptocurrency exchanges freezing funds. There have been numerous incidents when a cryptocurrency exchange held customers’ money. Under Halacha, the exchange must repay that money since it is a debt.

To summarize, Bitcoin is legal Halachically, but it is important to not use Bitcoin to break the other Halacha laws that involve money. It could be said that Bitcoin is kosher since that is a common expression used for things that are Halachically legal.

 


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