Cryptocurrency: A Halachic Perspective

Abstract

Cryptographic currencies are digital means of transferring value through a network of computers that operates independently of any central authority, such as a government or a bank. These currencies enable various uses, including payment and investment. They are generated through technological processes, and their value is determined by the consensus of participants, rather than by the value of a commodity or the decree of a central body. This raises the question: What is the halachic (Jewish legal) stance on such forms of money? In this chapter, the author claims that the foundation of Jewish monetary law is mutual consent. The transfer of property must be conducted with the agreement of both parties; unauthorized transfer is considered a theft. To ensure this consent, halacha traditionally prefers tangible reality and concrete forms. For instance, halacha does not recognize a transfer of ownership to a fetus. These principles raise fundamental questions about the compatibility of halacha with the modern economy. Yet halachic authorities adjusted halachic demands to tangibility if mutual consent is achieved, mainly if a market for these abstract transactions is in existence. Since cryptographic currencies have a vital market, halacha must accept them.