That’s all true. But it also might be the most important invention of this decade.
Really. So my question is this: will the Church miss it?
Much of the Church is still playing catch-up on old-news technologies like websites, smartphones, and social media. We need to do a better job of taking seriously new up-and-coming technologies before we’re already behind. And I believe bitcoin should be near the top of the list.
But wait – what is bitcoin exactly?
Here’s a quick rundown for the uninitiated: bitcoin is a decentralized, permissionless digital currency that lives on the Internet. You can store, send, and receive bitcoins super fast all over the world with nothing but a program on your computer or app on your smartphone.
Unlike our current financial system, which was developed long before the digital era and relies on large, expensive bureaucratic institutions, bitcoin sweeps all of that away and was designed from the ground up to take advantage of the benefits of the digital world. Some people like to say bitcoin is to the banking system what email is to sending letters through the postal service.
The key breakthrough of bitcoin is its blockchain, the distributed ledger that keeps track of who owns what bitcoin. Instead of being controlled and managed by a central authority or organization, the blockchain ledger is public and kept on computers all over the world. Anyone can maintain their own copy. Whenever a new transaction occurs, it’s broadcasted to everyone maintaining a copy of the ledger and checked for validly. When used correctly, cheating is essentially impossible because everyone can verify each transaction.
This makes two revolutionary things possible: (1) the ability to have scarce digital goods (in this case, bitcoins) without a central managing authority, and (2) a common record of information (not just bitcoin transactions, more on that below) that is virtually impossible for any one party to alter. Combined with all the other benefits of anything digital – it’s super fast, cheap, global, etc – and you have a truly breakthrough technology.
That’s why hundreds of millions of dollars of venture capital has already been invested in bitcoin related companies. Ivy League universities are offering bitcoin courses. The NASDAQ is experimenting with a bitcoin-based trading system. The country Honduras is using bitcoin to build a better property title system. Major online retailers like Overstock.com, Microsoft, Expedia, and many more already accept it for payment, as well as tens of thousands brick and mortar stores.
Of course, bitcoin might completely fail. It’s only been around six years; it’s still experimental in many ways. There are known weaknesses (all systems have weaknesses that must be managed), but the most damaging weakness might not even be known yet.
But even if bitcoin fails, I believe the underlying technology that makes bitcoin work is still valuable. Just as the failure of MySpace wasn’t due to social media being a bad idea, even if bitcoin fails, other similar implementations of the technology will likely live on. Everything on the list below could work on other systems built on the same core technology.
Whether bitcoin or some other implementation of the core technology succeeds, it could have radical implications for authority structures, social justice, and the life of the Church. Here is a non-exhaustive list of a few ideas of what I mean that should make Catholics want to take a closer look:
1) Helping the poor in the developing world
So you want to help the world’s poor (the Church is interested in that, right?). Bitcoin could end up being a huge help.
Participation in the world’s economic system requires the use of a banking system. Unfortunately, much of the world’s population in developing countries simply does not have access to this banking system, or their country’s financial system is corrupt or otherwise unreliable.
Ironically, one technology that people in the developing world increasingly do have access to is the Internet, mostly via cheap smartphones. And that’s all you need to use bitcoin. You download a free bitcoin wallet app and, boom, you can send and receive bitcoin all over the world – and do it exponentially faster and cheaper than you could do it even if you had the most developed banking system.
Of course, this would have most of its benefits only if bitcoin was accepted more widely as a currency. But bitcoin is growing in popularity all the time, and the more people there are working for its use to spread (there’s a lot of work to be done), the faster we can get to a world where a person can enjoy all the benefits of the digital global economy without waiting for the pre-digital banking system behemoth to finally serve their area in a just and reliable way.
2) Super fast, cheap, and secure international payments
The Catholic Church is a global institution. Bitcoin is a global currency. Think these two things might go together?
Wealthier parts of the Church often try to help support poorer parts of the Church. But every country has its own currency, and sending money internationally means navigating the extremely slow and expensive international money transfer system. The problem can be compounded in parts of the world that are hostile to the Church, or if one is trying to get money to places without a dependable banking system.
Enter bitcoin. Not only is it a truly global currency, it has many other significant advantages over the traditional banking system. Like email, bitcoin can be sent to anyone in the world in seconds, with the transaction fully confirmed in less than an hour. It can be done with near zero fees (nowadays around 2 cents), and without the involvement or approval of any (possibly corrupt) third party that might give the Church problems. Compare that to days or weeks of waiting for money to be transferred, hefty fees, and the possibility of corruption in the process, and the choice is easy.
Granted, as already mentioned, bitcoins themselves, once received, wouldn’t be too useful when and until there is a large enough part of the economy that accepts them, which isn’t really the case right now depending on where you live.
But even in the mean time, many parts of the world have bitcoin exchanges for their local currencies. Because of this, in some cases, it might still be faster and cheaper to send someone bitcoin and have them exchange it for their local currency in a local exchange, rather than send them government currency through the international money transfer system.
3) A common repository of Sacramental information for the whole Church
Bitcoin was built as a currency and payment system, but it can also function as an extremely secure public store of information.
Whenever you make a bitcoin transaction, you can attach a small amount of information to that transaction that will also be recorded on the bitcoin blockchain. Once the information has been added to the blockchain, it can never be removed or altered. And since the blockchain is publicly available to anyone with an Internet connection, the information can be accessed anywhere in the world.
There is already a company named Everledger that is using precisely this function of the bitcoin blockchain to keep track of diamond ownership (this is also the function of bitcoin Honduras is using for their property title system, mentioned above), and some people think this function could be used for things like voting in elections.
I wonder if this could be used to help the Church keep track of, say, Sacramental records? It’s very important to the life of the Church that the Church knows who has received certain Sacraments like Baptism, Confirmation, Holy Matrimony, and Holy Orders.
Right now, parishes obviously do their best to keep records of who has received what Sacrament and to pass that information on to other parishes when necessary. But it’s a slow, clunky system that requires a lot of trust in individual Catholics to be honest about what Sacraments they have received and where. If all of that information was also stored on the blockchain, parishes could theoretically verify Sacramental information instantly.
4) Financial transparency for powerful organizations
What if all powerful organizations kept their financial information in a way that was fully transparent all the time?
You may have heard that bitcoin can be used anonymously. That’s true, depending on how it’s used. But it can also be the most transparent money system we’ve ever had.
Remember how I mentioned the bitcoin ledger is public and anyone can have a copy? The ledger doesn’t contain names – e.g. Bob sent 1 bitcoin to Alice – but bitcoin wallet addresses, which are sort of like email addresses. Even if you can see all the transactions, if you don’t know who owns the wallet addresses, then the people making the transaction remain anonymous to you. But if you do know the owner of a bitcoin address, you can see every transaction they have ever made.
What if governments, politicians, or important organizations used bitcoin and were required to keep their bitcoin addresses public? Anyone could get real-time, completely dependable information on their finances. And something like that could possibly help cut down on corruption and other financial problems.
5) All the uses we haven’t thought of yet
This is the most exciting section. Of course, the first 4 things on this list is by no means exhaustive of all the possibilities people have thought of already; they are just examples to get readers thinking. Nonetheless, at around 6 years old, bitcoin as a technology is a still in its infancy. Like the Internet in the 1980s, people haven’t even thought of all the ways it might be used.
But I know one thing for sure: Catholics shouldn’t be content with taking a backseat.
So I encourage Catholic of all states within the Church to educated themselves; to watch the documentary The Rise and Rise of Bitcoin, to read Digital Gold and The Age of Cryptocurrency – and start dreaming up ways to change the world.