Bitcoin and the Value of Trust
Welcome to Casablanca
This talk was delivered on May 16, 2023, at the Thank God for Bitcoin conference in Miami, Florida. Bitcoin is somewhat controversial, and while I own some, I’m neither an authority on it, nor an evangelist for it. I was invited to address the conference because I have published books and articles on the household economy, real property, and risk. I gladly accepted the offer to speak because it afforded me an occasion to reflect on the nature of money and political resistance. What follows is my talk with only a few additions.
We’re All Economists Now
I imagine people looking on via live stream—and even in this room—wonder what a pastor has to say about currency in general and Bitcoin in particular.
If you’re one of them, I don’t blame you. These days pastors tend to specialize in getting people into heaven while leaving other matters to the people who specialize in them. But there are at least two problems with this.
The first is this: historically pastors are not specialists in the sense that people mean when they use the term today. Along with philosophers and theologians, our proper object of study is Reality—because God is ultimately real. I suppose that means we specialize in being a certain sort of generalist. We believe that the world is God’s creation, and that Christ isn’t so much an escape hatch from it as he is the one who redeems it and sets it right. Since I’m a spokesman for Christ I’m just as interested in bringing heaven to earth as I am getting people into heaven—and that means bringing heaven to bear on everything we find in the world, even money.
But there’s another reason. Some things are everyone’s business, whether they want them to be or not.
Psychology is such a thing. We’re surrounded by other people, and we have to work with them whether we like them or not. That means we should think about ourselves, and others, and try to understand why we do the things that we do. Ipso facto we’re amateur psychologists, whether we love psychology, or not, or even people. Or consider theology—there’s no getting out of it, we all have convictions about God, whether we can articulate them or not, or even if we believe in him, or not.
And for the purpose of this talk, we’re all economists. Every day we make judgments about the value of this and that, whether we like to, or not—or whether we’re good at it, or not. Is the car over-priced? Should I buy it? Is it worth putting in overtime at the office if it will make me late for Timmy’s birthday party? And so forth.
I think you see what I mean. Recalling Richard Nixon, we’re not all Keynesians now, we’re all economists, and we always have been.
Axiology and the Study of Value
By the way, there’s a term for the study of value—it’s called axiology.
It’s a branch of philosophy, like metaphysics, or epistemology, or ethics. In fact, it’s something of a hybrid, blending all those things with aesthetics thrown in. That’s because the study of value is also the study of what’s really real. (You’ll see what I mean soon, I hope.)
Philosophers make a valuable distinction between what is intrinsically valuable, and what is only extrinsically so. It’s not difficult to see what they mean. Something that is intrinsically valuable is something worth having for its own sake. Extrinsically valuable things are useful for acquiring other things of value.
Intrinsically valuable things are easy to identify: how about happiness? or friendship? or eternal salvation?
As I noted, extrinsically valuable things are good to have—but primarily because they help us acquire other things.
And here is where currency comes into the picture. It’s often defined as a “means of exchange,” or, “a store of value.” I think that you can see how confusion could arise from the fact that it’s both. Because currency has some value we can mistake it for something that is intrinsically valuable.
The Lord had some shrewd things to say about this.
When it comes to this my favorite parable on the subject might surprise you. It’s the parable of the dishonest manager.
Luke 16:1-13
He also said to the disciples, “There was a rich man who had a manager, and charges were brought to him that this man was wasting his possessions. And he called him and said to him, ‘What is this that I hear about you? Turn in the account of your management, for you can no longer be manager.’ And the manager said to himself, ‘What shall I do, since my master is taking the management away from me? I am not strong enough to dig, and I am ashamed to beg. I have decided what to do, so that when I am removed from management, people may receive me into their houses.’ So, summoning his master’s debtors one by one, he said to the first, ‘How much do you owe my master?’ He said, ‘A hundred measures of oil.’ He said to him, ‘Take your bill, and sit down quickly and write fifty.’ Then he said to another, ‘And how much do you owe?’ He said, ‘A hundred measures of wheat.’ He said to him, ‘Take your bill, and write eighty.’ The master commended the dishonest manager for his shrewdness. For the sons of this world are more shrewd in dealing with their own generation than the sons of light. And I tell you, make friends for yourselves by means of unrighteous wealth, so that when it fails they may receive you into the eternal dwellings.
“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much. If then you have not been faithful in the unrighteous wealth, who will entrust to you the true riches? And if you have not been faithful in that which is another’s, who will give you that which is your own? No servant can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.”
Every parable is subtle, but this one is especially so because the protagonist is an anti-hero. Even so, we’re all supposed to emulate him. But what are we supposed to emulate, his dishonesty, or something else?
This is where you must be shrewd yourself to get the point. The first thing is easy to see—friends in need are valuable because they’re friends in deed, and it is wise to use what you have to make them. But the real point—the one implicit in the story—is this: we really are that manager, whether we know it, or not, or are shrewd, or not. That’s because we’re playing with house money. Everything belongs to God. And here’s the punch line—the house wants us to use what isn’t ours to buy things that can be ours, or as philosophers like to say, we should exchange extrinsically valuable things for things that are intrinsically valuable.
Margaret Thatcher once said that it’s easy to spend other people’s money—but sooner or later it runs out. But that’s not the case with God. After all, when we take what belongs to God, he’s no poorer. It’s all his, no matter whose pocket it’s in. (Don’t get me wrong, stealing is wrong, but that’s because God cares about us, not himself.) The Master in the story is God, not your employer.
Jesus had more to say on the subject. Here are two short parables to consider. They’re found in Matthew’s gospel.
Matthew 13:44-46
“The kingdom of heaven is like treasure hidden in a field, which a man found and covered up. Then in his joy he goes and sells all that he has and buys that field.
“Again, the kingdom of heaven is like a merchant in search of fine pearls, who, on finding one pearl of great value, went and sold all that he had and bought it.
This time the message isn’t about house money—it’s about your money, and everything else you have. And the point of both parables is there is one thing of supreme value that you should exchange everything else to possess. If you do, you’ll be a wealthy man. If you don’t, you’ll be poorer for it.
One last story, but this time Jesus is in it, rather than simply telling it. It’s found in Luke’s gospel.
Luke 18:18-23
And a ruler asked him, “Good Teacher, what must I do to inherit eternal life?” And Jesus said to him, “Why do you call me good? No one is good except God alone. You know the commandments: ‘Do not commit adultery, Do not murder, Do not steal, Do not bear false witness, Honor your father and mother.’” And he said, “All these I have kept from my youth.” When Jesus heard this, he said to him, “One thing you still lack. Sell all that you have and distribute to the poor, and you will have treasure in heaven; and come, follow me.” But when he heard these things, he became very sad, for he was extremely rich.
This is one of those moments when someone tries to be polite and someone else takes advantage to make a point. And what’s the point? There are two: the stated one, and the implied one. Only God is good—meaning, he is the only intrinsically valuable thing there is. (If the term “thing” can be used for the one who created everything else.) And second, Jesus hints at his identity here, and his worth. He’s worth everything.
Finally, one last thing—if God is the only one who is good, then every other good thing must in some sense owe its goodness to him. For example, I think we’d all agree that health is intrinsically valuable. But where does it come from?—sure, diet and exercise, but you know what I mean. God grants it, along with everything else that’s good.
But there’s also a sense that even extrinsically valuable things owe their value to God.
I think currency is a prime example of what I mean. Let’s look at it now.
Currency Wars
What can we exchange for things that have value?
Whatever it is, it can’t be valuable in the same way intrinsically valuable things are. Making that sort of exchange would be foolish.
But whatever it is, we’ll still need to believe it has some value—even if it is only extrinsically valuable.
Once again, I’m in territory that preachers can pontificate on without apology—faith.
We first learn to trust people at home, as small children. (Children who are surrounded by people who can’t be trusted have a difficult time trusting anyone, and can end up miserable in the end unless the grace of God comes to the rescue.)
When it comes to households, I’ve spent the last ten years or so thinking and writing about them. And here’s something you probably already know. The two Greek words that we derive the English word, “economy” from are οικοs and νομοs, for—the law of the house.
In premodern households, members of a household shared in the work of a house, and shared what it produced. It might have been subsistence farming, or a trade. But whatever it was it was closer to a gift-giving economy than a market economy. In a way you could say it was socialism, but socialism on the only scale that actually works. But even when households made things for the market the trust that made cooperation possible within a household had to be extended in some way to the larger world.
And here is where currency came in.
The word currency has its own history—it’s derived from the Latin, “currere” for, to flow, or to run—like a current of water or electricity. But what’s flowing in a market economy when we use currency? You know, value.
How currencies come to carry value is somewhat mysterious. But people use currency every day without a theory that would help them understand how a piece of paper that costs less than a cent to produce comes to be worth many times that—sometimes hundreds of thousands of times.
And then, in some instances, they suddenly lose faith and a currency, and it is worthless. Classic examples include Confederate money and wheelbarrows of marks during the Weimar Republic.
Perhaps this can serve as our starting point. Maybe we can reverse engineer how people come to lose faith in a currency in order to discover how currencies become valuable in the first place.
Welcome to Casablanca
The classic film, Casablanca is useful for thinking about this.
It’s the Second World War and refugees are fleeing Europe as the Nazis advance. Casablanca is in French Morocco, and while not formally subject to the Nazis like a large swath of France, the future is uncertain and the local authorities collaborate, just in case.
When it comes to the refugees, we see what they’re willing to pay for freedom. The opening scene at Rick’s Café’ Americain shows them at tables exchanging whatever they can for letters of transit to Lisbon, and ultimately, the Americas.
Since national currencies are compromised because of the war, other valuables must be used for exchange. At one table a woman offers a diamond necklace, and later, in a poignant scene, another woman considers selling her body.
But the story revolves around the owner of Rick’s Café Americain, played by Humphrey Bogart. He’s cynical, tough-minded, worldly-wise, and softhearted. And because he is wise as a serpent and innocent as a dove, he stands out. Everyone trusts him—even the villains in the film.
There’s something else that people trust in the film—letters of transit. Anyone in possession of those has a ticket to freedom.
A set signed by General de Gaulle himself happen to be in the possession of a character named Ugarte, played by the great character actor, Peter Lorre. After killing two German couriers to get them, he asks Rick to hide them.
In a marvelous exchange, Ugarte asks, “Rick, you despise me, don’t you?” Rick answers deadpan, “If I gave you any thought, I suppose I would.” Ugarte responds, “Rick, I have many friends in Casablanca, but because you despise me, you’re the only one I trust.”
So subtle, yet revealing. Ultimately trust is the real currency—people we can trust, things that we believe have value—in this case letters of transit—these are the things that make an economy possible.
I submit for your consideration that, while the world feels like an episode of Twilight Zone at the moment, we’re actually in something more like Casablanca. The future is doubtful, and we wonder who, and what, is trustworthy.
Eternal Verities or Relativism
Fiat currencies are a peculiar form of currency. They’re issued by governments, and the only thing standing behind them is a promise, (or is it a threat?) “You can trust us.” Obviously, in the case of the dollar, it’s the United States government.
But what if you don’t trust a government or its currency? What if a government is taken over by a criminal gang, like the Nazis, or the Communists, what then? It’s happened before, some people suspect it’s happening now, even in America.
In Book IV of City of God, Augustine tells a marvelous story about a pirate who had been seized was brought before Alexander the Great. Here’s Augustine:
“Justice being taken away, then, what are kingdoms but great robberies? For what are robbers themselves but little kingdoms? The band itself is made up of men; it is ruled by the authority of a prince. It is knit together by the pact of a confederacy; the booty is divided by the law agreed on. If, by the admittance of abandoned men, this evil increases to such a degree that it holds places, fixed abodes, takes possession of cities, and subdues peoples, it assumes more plainly the name of kingdom, because the reality is now manifestly conferred upon it, not by the removal of covetousness, but by the addition of impunity. Indeed, that was an apt and true reply which was given to Alexander the Great by a pirate who had been seized. For when that king had asked the man what he meant by keeping hostile possession of the sea, he answered with bold pride, ‘What thou meanest by seizing the whole earth; but because I do it with a petty ship, I am called a robber, whilst thou who dost it with a great fleet art styled an emperor.”
Governments go bad, as any casual reading of history will tell you. And when they are no longer just, they might as well be gangs of robbers. But at least at the start, the robberies are committed quietly, even bureaucratically. And one of the more insidious ways this is done through debasing a currency. In effect it’s stealth taxation. Governments go into debt just like you and me, but unlike you and me they can print money to pay the bills. When they do that the debt remains fixed, but the cost of money goes down. Well-connected people can do just fine when this happens, but people on fixed incomes—the ones who can least afford to see their savings and income lose value—do very poorly.
Fiat currencies being what they are, and people being what they are, this seems almost inevitable. Since fiat currencies are not based on anything more substantial than the integrity of the government standing behind them, when a government goes bad, they go bad. To put it another way, they’re value is relative to the probity of a government.
Is this the way it has to be though? Can’t we find another basis for a currency, something stable and difficult to debase?
The Book of Leviticus sets down this rule when it comes to justice:
“You shall do no injustice in court. You shall not be partial to the poor or defer to the great, but in righteousness you shall judge your neighbor.” Leviticus 19:15
And judgment isn’t limited to courts—every day in the market we exercise it. That’s why just a few verses later we’re told:
“You shall do no wrong in judgment, in measures of length or weight or quantity. You shall have just balances, just weights, a just ephah, a just hin; I am the Lord your God, who brought you out of the land of Egypt.” Leviticus 19:35-36.
There doesn’t appear to be an exception when it comes to governments and their currencies.
Where Can We Find Just Measures?
Historically, backing a currency with gold was considered the best way to keep it trustworthy. Instead of relying on the probity of a government there was something else behind the currency. Those days are behind us.
Most people blame Richard Nixon for overturning the gold standard in 1971. But its days were numbered. It was already fatally wounded by the innocuously named, Bank Holiday Act of 1933. FDR is the real culprit. Because of the act banks were no longer permitted to exchange dollars for gold on demand, worse, everyone in possession of gold was required by law to sell it to the US Treasury at a discount. Then the dollar was devalued by more than thirty percent shortly after that. So much for, “You can trust us.”
The great J. Gresham Machen lived to see it and he had this to say about the Bank Holiday Act. Allow me to quote him at length.
“I think the really significant thing that we find is that America has turned away from God.
In the political and social discussions of the day, God’s law has ceased to be regarded as a factor that deserves be reckoned with at all. That is true in regard to the higher ranges of human life; it is also true in regard to that mammon in which our Lord said a man must be faithful if he is to be faithful in higher things.
We hear much about mammon today: We hear much about the currency; we hear much about the question whether what is euphemistically called a “managed currency” is or is not economically more advantageous than the gold standard.
But the sad thing is that in all this discussion we hear little about simple honesty, which is the law of God. I can remember when I had a certain patriotic pride in the good faith of the United States government, in those bygone days when the phrase “sound as a dollar” had not yet become a jest. The United States government, in its business dealings, seemed to me to be the very embodiment of integrity; I regarded it as almost inconceivable that it would repudiate its corporate obligations.
Yet today it has done just that. Of course, there are times when a government or an individual must fail to meet obligations. That is when the government or the individual is bankrupt, when the government or the individual acknowledges the justice of the obligations but is under the necessity of pleading that they cannot be met. I am not saying, therefore, that when a country goes off the gold standard it is necessarily acting dishonestly. But it is not such an honest bankruptcy which we have in the United States at the present time.
On the contrary, what we have is a very ruthless application of the devil’s principle that “might makes right.” Look at a United States gold certificate, if you can find one somewhere in a museum today without being put in jail for looking at it. Upon it the United States government promises to pay very specifically not in some other currency but in gold. It is a solemn obligation of the United States. It is a solemn contract–not of any individual, but of the United States government–a contract to the fulfillment of which the honor of the American people is pledged, a contract with the holder of the note. Today not only is that contract not fulfilled, but the holder of the contract is threatened with imprisonment unless he hands over to the defaulting party the contract itself.
I tell you, my friends, there are many things that are uncertain about the future, but of one thing we can be sure: A nation that tramples thus upon the law of God, that tramples upon the basic principles of integrity, is headed for destruction unless it repents in time.”
Most of the time people point to gold’s scarcity as the reason for using it as a standard. It’s because gold is scarce that it’s a hedge against debasing a currency. And the same line of reasoning is applied to Bitcoin. There are people far more qualified than I am who can explain why Bitcoin is scarce, so I won’t spend time explaining why.
But while scarcity is important, is that all there is to it?
No, I think more can be said for both gold and Bitcoin. And it has to do with God, goodness, and the nature of value. And when it comes to those things, I might have something to say that’s worth hearing.
There’s something about gold that we intuitively know reflects heavenly things. It’s beautiful, for one thing, it’s heavy, for another (the Hebrew word for glory literally means heavy), and last of all it doesn’t tarnish or fade. And these are things that people in every culture have valued at every time in human history. In scripture the association of gold with divinity is everywhere: gold could be found in Havilah, for instance, right near Eden (Gen. 2:11-12) and it was the metal used for the Ark of the Covenant, where the Lord spoke from the Mercy Seat (Ex. 25:10-22), then there are those streets of gold in the New Jerusalem (Rev. 21).
Can something remotely similar be said for Bitcoin? Is there something to it that reminds us of heavenly things, even though we can’t see it, or hold it, and literally it’s nothing but ones and zeroes?
I believe so. But it isn’t intuitive, instead, it’s conceptual. And since most people can’t write code, its value will have to be demonstrated over time by early adopters. But there’s nothing new about that.
What makes Bitcoin an analog to heavenly things is its rules; it’s designed to resist manipulation, unlike fiat currency. And it is its stability that reminds me of God’s unchanging nature, and the fixed character of his law. God isn’t fickle, or arbitrary, or on the make. He’s wise, and consistent, and just. As the Apostle James put it, there’s no “shadow of turning” with him. (James. 1:17)
If Bitcoin can demonstrate God-like probity while fiat currencies around the world are debased through inflation and debt manipulation, I think that even atheists will find themselves thanking God for Bitcoin.
But there is one more thing I’d like to say for Bitcoin, something hinted at a couple of times already, but I should make clear. Political freedom is intrinsically valuable, and we should be willing to pay for it, and for that, Bitcoin might prove very valuable.
Fiat currencies have been used by governments (and the banks they control), to control people—as we saw demonstrated with the Canadian truckers. Suddenly, hard-working people can be denied access to what is rightfully theirs—their own money—simply because a government says so.
Because Bitcoin is not issued by (or controlled by) governments, it can be a ticket to freedom, like a letter of transit. (And I’m told by those in the know, that it was used to help Canadian truckers, and in spite of repeated attempts to quash it in China, the CCP hasn’t been able to do so—and that’s saying something.)
If it had been available in Casablanca perhaps it would have been accepted at one of the tables in Rick’s Café’ Americain.
Bitcoin isn’t risk-free, as anyone who’s watched its price fluctuate over the last few years knows. But there’s no such thing as a risk-free investment, or a risk-free life. Such is the cost of freedom; such is the cost of living. But those things are intrinsically valuable, and worth the risk.
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