# Considering Bitcoin
From a Catholic Perspective
### A Systematic Approach
#### By James Lewis
## Introduction
Firstly, before we get straight into passing judgment on Bitcoin, positively or negatively, let us first explore the various ways in which it may be considered. Here are a few:
* Philosophical
*Considering what money and currency are, & whether Bitcoin fits that description*
* Moral
*Considering the morality of holding & using decentralized digital currency*
* Technological
*Considering the technological advantage of Bitcoin as a currency*
* Practical
*Considering the practicality of Bitcoin in particular as money*
If using Bitcoin is philosophically sound, moral, technologically advantageous, and practically advantageous, we may say that it is not only neutral but good to use.
Before I go much further, it must be noted that this is not a methodology to convince others on the efficacy of Bitcoin, but a framework for your own thinking. This is to help you understand arguments for and against Bitcoin. Persuasion is an art, and it requires charisma and your genuine good will. Before this will be useful to you as an orange pill to distribute, you first must win the attention of your listeners and stoke a desire for the proposed good Bitcoin offers. Then, logic will take care of the rest.
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### Philosophical
#### *Consider what money and currency are, & judge whether Bitcoin fits that description*
A simple definition of a money: a store of value, unit of account, & medium of exchange. My own musings on the matter of money will additionally ascribe money to be evidence of good done to or for one’s neighbor (see my thesis ‘On Labor & Trade’). Fundamentally, money is at its best information, a record rooted in reality about reality, specifically a record of the exchange of goods and services, and it derives its value from one’s perception of his neighbors’ desire for it. This becomes self-evident when one considers what might happen to the desire for it if the distributors of necessities suddenly required some other form of payment.
For centuries, if not millennia, gold was the standard medium for money since it is rare, divisible, measurable, and somewhat difficult to forge. It is aesthetically pleasing as a material as well, which is where it first finds value, and this is compounded by its rarity, then its use, then balanced in its distribution.
To briefly expand on this desire, one ought to consider objects of desire as manifestations of truth, goodness, and beauty. Gold has a fundamental goodness in its existence and permanence, beauty as one with eyes may see, and truth in that it is difficult to forge. This organic desire for gold and other precious metals is the basis atop which gold and metal monies derive their social value.
Governments would standardize the units of gold and other precious metals, adding their marks to indicate it, so the amounts could be more easily trusted, but the value remained in the metal and neighbors’ desire for it. Paper gold was a technological improvement in the respect that it was easier to exchange and transport, but this traded some forgeability. Again, gold was the actual money, whereas the paper would represent it and was a representative currency.
Today, paper money is now the standard, backed by the authority of the government and valued by fiat. We can now only call it “money” in the most basic sense, that is we may account with it, exchange with it, and store wealth in it, however that final one seems to be slipping in USD as all other fiat currencies have tended to do in the past. We cannot, however, say its value is derived organically as precious metals. According to the three transcendentals, it only partially contains truth, in that forgeability is still somewhat difficult, and I say “partially” because the issuing governments by the very act of additional issuance undermine the truth of it, that it is a record of good done, for no good has to be done in order to produce it.
Governments now place themselves as authority over the symbol of the good one does rather than regulators of the representation. This novel development is very recent in human history, that is the value of currency originating in governmental authority rather than organically emerging from human desire.
At the very least, Bitcoin matches fiat currency in that most basic sense, since we may account with it, exchange with it, and store wealth in it. That last point, as a store of value, will be revisited later. To be logically consistent, if one accepts fiat from a philosophical point of view as money, so should he of Bitcoin.
Bitcoin does not contain in itself beauty, as gold does, so it does fall short in that transcendental property for a basis for desire. However, it is deeply truthful, for it is by its very nature a pure record. It also contains goodness (existence) in that energy is expended to produce and maintain it, much like gold requires energy to mine, refine, mint, and exchange. The difference in substance is that the substance of gold is in its mass and locale whereas Bitcoin’s substance is in its immutable consensus across the network. This is Bitcoin’s roots into reality.
This contrasts starkly with fiat currency, so one may say it exceeds the current standard for what passes for money. Versus gold, it is hard to say on philosophical grounds whether it meets or exceeds gold as a money, but it at least can be said it does nearly. Being the first of its kind (decentralized digital currency), it has a scarcity which cannot be removed, and for this reason sparks at least some interest if not desire. It will be upon these bases, its originality, truth, and root in reality, that the desire for it is built.
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### Moral
#### *Consider the morality of holding & using decentralized digital currency*
This will be a far-from-complete treatment of the morality of Bitcoin and ‘decentralized digital currency’ as a category, but let us consider some major points:
Does this violate subsidiarity?
In short, it shouldn’t any more than gold did. Gold is a chemical element, and Bitcoin is a ledger; choosing to use such as media of exchange and units of account can be decided upon by even the lowest of authorities. A violation of subsidiarity would be for a national government to mandate or forbid its use when a lower authority could do so. Simply because the ledger is distributed globally does not make this a violation of subsidiarity, because it is not a central authority. In fact, quite the opposite.
Does this usurp the authority of our leaders?
For some issues, those in authority do not have the capacity to dictate, such as to declare squares are round or that marriage suddenly means something other than an exclusive, lifelong union of a single man and a single woman with the purpose of procreation and education of children. If a leader decides it is against the common good to allow for the use of Bitcoin as money, he may or may not be within his power to ban it. This depends on what is being banned:
The use of a ledger in trade (note: not a secret ledger)
Accounting in a foreign currency
Holding informational/digital assets
Trading in unregulated or non-regulable assets
Avoiding trade in official legal tender (may be seen as tax evasion)
Self-custody of funds (as opposed to banked funds, recall the $10k carry threshold)
This is not an exhaustive list of what exactly might be banned, but it does get the conversation started.
It seems to me that banning Bitcoin on any of these fronts cannot be done without violating a more fundamental right of the citizen, except possibly for banning the avoidance of trade in legal tender as a tax evasion technique, but this may also undermine other tax avoidance techniques regularly used by the very wealthy, so this may be unlikely.
Does using Bitcoin or running a node participate in grave evil?
Insofar as it can be used for grave evil, yes, but so too with all money. The participation is a far and remote degree. This is like building a road on which (not “for which”) people are trafficked, or producing cleaning chemicals which are then used to poison, or simply accepting gold from a stranger as money without knowing it was stolen or used in crime. Knowing it can and does get used for illicit means is not evidence enough for participation in grave evil.
Does holding Bitcoin constitute avarice?
It may. This is not an issue with Bitcoin or its use, but its abuse, as with any asset. Purchasing Bitcoin now with the knowledge or expectation that it will multiply in value over time is not enough to constitute avarice or greed, but the intent to profit off one’s neighbors’ misfortune.
"He that gathered in the harvest is a wise son: but he that snorteth in the summer, is the son of confusion."
— Proverbs 10:5
"Let your manners be without covetousness [or the love of money], contented with such things as you have; for he hath said: I will not leave thee, neither will I forsake thee."
— Hebrews 13:5
Contrary to the charge that holding constitutes avarice, Holy Scripture indicate that this the time for harvest for holders of Bitcoin can be legitimately prudent if the object of his love is not money but God and neighbor.
Does Bitcoin Cause Environmental Harm?
To be good stewards of the gift of creation given us by God, the amount of energy used by the Bitcoin network may cause worry. The charge that Bitcoin is bad for the planet is actually unfounded (src: www.coindesk.com/). The incentive is to create lower cost energy, which over time means more efficient energy conversions and using otherwise wasted energy sources. As well, if the worry is that it hampers green tech innovation, quite the opposite, as Bitcoin can be a profitable use of excess power production and can financially justify larger green power sources, accelerating development.
Further thoughts
Again, this is far from an exhaustive treatment, but to begin the conversation and thought process for properly considering Bitcoin as viable from a moral perspective.
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### Technological
#### *Consider the technological advantage of Bitcoin as a currency*
Let us approach Bitcoin as a technology from security, liquidity, and self-custody perspectives.
Bitcoin is a distributed digital ledger secured by proof-of-work using ECDSA (Elliptic Curve Digital Signature Algorithm) and SHA-2 (Secure Hash Algorithm 2). These algorithms are mathematically sound, and to crack them would be an astronomical feat. As of yet, not one attack has been successful on the Bitcoin technology itself, and loss of funds or cyber attacks have fallen into ransomware, weak storage security practices (unencrypted/cloud storage), or physical access.
To put it into perspective, a credit card number only contains 16 identifying digits, 3-4 CVC, and a 4-5 digit pin, a maximum of 1025 possibilities, which is in practice a little lower because of the CC no. encoding. Bitcoin’s keys and addresses (analogous to the CC no. + CVC + pin) contain 256bits, roughly equivalent to 1077 possibilities! This is like guessing three CCno.s with their CVCs and pins simultaneously. If a supercomputer with a billion cores (which grossly dwarfs any supercomputer today) could attempt guesses at 1GHz each, it would take an average of 1.83 × 1051 years to guess just one target private key. To be generous, let’s say the user only generated a 128-bit key (somewhat common, a 12-word seed phrase may sound familiar), a billion CPUs guessing at a billion times a second would take an average of nearly 5.4 trillion years, and I am sure wealthy addresses are secured by better than the minimum 128-bit key.
Allowing that real-world code cracking is more clever than the brute force method, let’s say it cuts the possibilities into the square root; we’re still looking at that same 5.4 trillion years for normally secure wealthy addresses.
As a secure technology, none exceeds Bitcoin.
As a monetary technology, Bitcoin must also be liquid, meaning that its purpose is to transact between individuals. Because Bitcoin is peer-to-peer, no intermediary is needed for individuals to do business. Versus traditional banking, Bitcoin is far faster (transaction finality in 10-min increments, not one or multiple days) and lower fee (I have made transactions for equivalent of $0.25 or so in 2022.)
Additionally, with the long-awaited Lightning Network, this process is expedited and made less expensive. The liquidity of Bitcoin over the Lightning Network can meet and sometimes exceed credit card processing speeds at far lower fees. Continued development on this front will make Bitcoin a faster and more convenient monetary technology. Whereas CC processing may cost a minimum of 0.9% for the largest organizations, and 2.9% for small businesses, Bitcoin Lightning can be measured in PPM (parts per million) not percent at 100ppm or 0.01%, sometimes yet lower.
In terms of liquidity and potential velocity, Bitcoin may already exceed that of CC processing, and far out-does traditional banking.
Lastly, as a self-custody technology, Bitcoin is on-par with cash in one’s wallet, possibly greater as no $10k carry limit exists for Bitcoin. The readiness and permissionlessness of Bitcoin is superior to traditional banking and credit cards while not sacrificing their convenience in online transactability and mass storage. In effect, Bitcoin is personal-property, anti-tyranny, freedom tech.
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### Practical
#### *Consider the practicality of Bitcoin in particular as money*
On practical advantage alone among the enumerated considerations can it be said that it may not be ready. I only say this for the sole reason that it is not widely accepted, so as a currency it is not practical. However, as a store of value, it can be shown that not one person who has held for four or more years has lost versus USD. This may not always be the case, for at some point one may have its finality, but it can be reasonably expected after the above considerations that the US dollar shall continue to devalue, and Bitcoin be distributed until as ubiquitous as gold. At that point, the value of Bitcoin will become as stable as the local market economy.
Many speculate the trajectory of pricing, but this is somewhat derivative (pun intended). The basic truth is that it either takes over the financial world over the next few decades or some other currency with deeper roots in reality is developed (thinking of Texas’ recent digital gold project).
As a financial vehicle, Bitcoin is likely to continue to increase in overall value until it is balanced against distribution.
If only to replace fiat currencies, at the time of writing the estimated value of all fiat worldwide is 4500M BTC, meaning Bitcoin accounts for less than 0.5% of the world’s currency, so we have about another 200x to go. (src fiatmarketcap.com) This would mean a $6-7M/BTC ratio in 2023 dollars, but more likely $8-10M/BTC after the current inflationary fallout is finally fully felt.
In reality, Bitcoin will likely constitute as well a larger portion of world-wide wealth because of it’s fixed supply making it a yet better store of value over longer periods of time, especially as it will become deflationary once the accidental loss begins to match the mining rate. As it stands, the real circulating supply is not the 19.5MBTC but more like 14MBTC because of early loss.
The typical wealth-building strategies utilized will not see a complete replacement, but the price of an asset will begin to match it’s true value without the speculative wealth-building vehicle premium, especially for assets like real estate which has heavily inflated pricing due to fractional reserve lending (something impossible with Bitcoin). Current value of all assets is estimated to be about 30000MBTC.
If Bitcoin eventually constitutes only 10% of the total non-fiat-currency wealth storage in addition to replacing fiat currencies, this number will see roughly 50% more to crest the 8-figure mark at just over $10M/BTC in 2023 USD. There’s also a chance Bitcoin will begin to constitute a larger portion than 10%, but as a conservative estimate, let’s leave it there.
This would mean treating 10sats like we treat a dollar bill in the US.
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### Summary
In summary, Bitcoin exceeds fiat currencies as money from a philosophical perspective, that is whether it is money, seems to be moral, is a technologically sound form of money, and is practical as a store of value over longer periods of time. As well, over time, as the producers of necessary goods and services begin to accept it, Bitcoin will also gain practicality as a medium of exchange.
We may conclude it is good to use.
Other places: [courses.FreshEyesInc.com | Considering Bitcoin](https://courses.fresheyesinc.com/e-book/considering-bitcoin)
