Economics

Christians can’t “invest” in cryptocurrency

I hope this headline got your attention! I can hear some of the objections already:

• What do you mean, we can’t invest in cryptocurrency; don’t you know that it’s the wave of the future?
• My friend bought $2,000 worth of Bitcoin a few years ago, and now it’s worth $16,000!
• It is going to replace the dollar within a few years.
• And crypto is a means for us to resist the prying eyes of the government into our finances – we can shield our savings from the bureaucrats who may seek to punish us for our Christian beliefs by freezing our funds, or taking them from us!

We’ll hope to respond to these thoughts below… so read on!

What is crypto?

First off, what is cryptocurrency?

In brief, crypto is a digital currency, not backed by any government, bank, or physical standard, that is designed as a means to save, to buy, and to sell. There are different types of cryptos, some well-regarded like Bitcoin and Ethereum, and some that have failed spectacularly and are now worth little or nothing (such as OneCoin and SpaceBit). What they all have in common is that they are seeking to replace traditional currency like the Canadian or U.S. dollar with a modern way of doing business and commerce in the marketplace.

In our last issue, RP reprinted a beautiful perspective on investing written by Randy Alcorn called “Investing in Eternity – thinking 30 million years ahead.” If you haven’t read it yet, please go back and peruse it! Alcorn has very thought-provoking and wise perspectives on what we do with the financial gifts the Lord has given us. He writes that “no matter how great an earthly treasure is, it is still worthless in the eyes of eternity.” And Alcorn encourages Christians to think about how we in this lifetime support godly ministries that will have an eternal impact on the lives of lost souls.

Does this mean Christians shouldn’t “invest” at all, and should instead give everything away? Perhaps it depends on one’s definition of investing!

What is investing?

Let’s go back to the basics and consider what this means. Investing can be defined as the commitment of resources to achieve later benefits.

Often, this is understood primarily to be about finances, but that is not always the case. Consider that a mom invests time and energy (the resource) into her children with the goal of raising productive, godly adults (the later benefit). A farmer invests money, labor, and seed (the resources) into a field to grow crops he can sell for others to eat (the later benefits being for both the farmer as he sells, and the buyer as he eats).

Often, there is an element of time that is necessary for an investment to have its intended effect. Kids don’t become adults overnight; a builder might take a year or more to build a beautiful home. Obviously, in this broader sense of the word, Christians should not have any trouble investing, and we do so in our daily lives in myriads of ways.

In the more common sense of the word, investing relates to where we put our finances (the resource) in order to grow them for future use (the later benefit). One might become a partner in a retail store by putting up a percentage of the capital required to get the operation going. Before writing a check, you would want to look at your partners’ business plan, and examine the location and the type of goods that will be sold; you might consider the experience that your partners have in the industry.  You would probably make a list of the pros and cons of the business, and take a responsible risk to invest in the partnership, with the hope that it will generate a profit down the road.

In a similar way, one might buy publicly traded shares in a company that builds cars and trucks that perhaps is expanding into another part of the market. You would have access to a track record of financial performance. You might ask if the company has consistently paid out dividends. Has it managed its money well? Is the leadership of the company committed to its customers? Has the company made risky decisions that could endanger your investment? Are the cars and trucks that the company makes high quality and well received by consumers? These types of questions and this type of study helps an investor to take responsible risks in the hope of a return in the stock market.

What does Scripture say about investing?

The Lord Jesus taught two similar parables that are often quoted about investing. In Matthew 25 and in Luke 19, a wealthy man leaves town for a period of time, and entrusts some of his fortune to servants to manage. When he returns, the master praises those whose trading and commerce compounded the funds they were managing, and condemns the foolish servants who simply buried their coins in the ground. Jesus is teaching about far more than how to handle money in these parables, but it is striking that the master praises unreservedly those that managed well the resources entrusted to them.

The book of Proverbs is full of practical and beautiful counsel for living a godly life, and has much to say about wise and foolish behavior about investing. Solomon teaches us not to spend all our money today, forgetting about the needs that both we and our community will face tomorrow. Proverbs 21:17 and 20 say:

• “Whoever loves pleasure will be a poor man; he who loves wine and oil will not be rich…”
• “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.”

Notice that Solomon does not condemn “keeping” treasure or resources for a rainy day in one’s possession, but calls out as “foolish” the man who recklessly uses all his resources without a thought for the future.

So, the Bible is certainly not anti-investing.

Our savings are not just for ourselves

But what sort of investing should it be?

A Christian’s goal in saving is not just for our own needs tomorrow, but also for the community in which we live, and for future generations of our families. Proverbs 11:24 tells us:

“One gives freely, yet grows all the richer; another withholds what he should give, and only suffers want.”

Then in chapter 13, verse 22 we read:

“A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous.”

We should never withhold from giving generously to the Lord, in our tithes and offerings, and also in our willingness to help our neighbors. Solomon stated this in Proverbs 3:27-28:

“Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, ‘Go and come again, tomorrow I will give it’ – when you have it with you.”

Wealth gained hastily…

Another theme that recurs frequently in Proverbs is the element of patience, or delayed gratification for the wise man.

• “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” – Prov. 13:11
• “Whoever works his land will have plenty of bread, but he who follows worthless pursuits lacks sense.” – Prov. 12:11
• “Whoever is slothful will not roast his game, but the diligent man will get precious wealth.” – Prov. 12:27.

The theme here and in many other passages is that “getting rich quickly” is often a dangerous pursuit – the person who only focuses on rapid accumulation of wealth may be on a foolish pathway that will not be blessed.

One who is focused only on enormous potential returns from an investment may skip the important steps of finding out how a return is being earned, how $100 put into this company or stock will actually earn a profit for the investor. By racing to the potential conclusion (I’m going to make ten times what I put in!) without careful consideration of how one is “working the land,” a foolish investor may have only himself to blame when a scamster absconds with his treasure. Remember Solomon’s warning in Proverbs 14:23: “In all toil there is profit, but mere talk leads only to poverty.”

How are these warnings connected to crypto?

Now that we have considered whether a Christian may invest, we can now ask: Why not cryptocurrency?

The answer is in the very term “currency” itself. Currency is a means of paying for a good or service – it does not on its own produce a good or service that can make or lose money for its owner. While Bitcoin may be a very secure, very stable platform that may become a common way for citizens to buy bread at the grocery store, and to receive our paychecks, it is not producing anything tangible from which to make a profit.

I would argue that Christians could exchange some of their assets into Bitcoin, or into another cryptocurrency, as a way to transact business, or to diversify risk with the Canadian dollar as measured against the U.S. dollar. One who would like to support a currency independent of any one government’s control, might also consider putting some of their savings into a cryptocurrency. The risk, of course, would be that the value of all cryptocurrency is very unstable, and difficult to pin down, but that could be a responsible risk for a citizen.

But doing so is definitively not an investment, because it is not of itself producing anything tangible.

A number of years ago, there was a huge push for people to “invest” in the Iraqi dinar – the currency that is still in use in Iraq. Before the 1990 U.S. invasion of Kuwait, one dinar was worth three times more than a U.S. dollar (at least in theory). Over the next ten years, the currency collapsed, with a dinar becoming worth as little as 3 U.S. cents. Unscrupulous financial advisers urged people to exchange their savings for Iraqi dinars, to take advantage of the dinar’s “inevitable comeback.” The advisers made their money by collecting inflated purchase fees along the way, while the dinar has continued to be worth very little (today being valued at around 7 U.S. cents).

Like Bitcoin, the dinar is a unit of exchange, a way of transacting business. It is certainly possible that both currencies will be worth more in the future. However, it is also very possible that both will be worth far less in the future. If one exchanges currencies that are relatively stable (like the U.S. or Canadian dollar) with volatile currencies, that is not investing, but simply speculating – more like gambling than responsible stewardship.

Christian financial adviser David Bahnsen’ Bahnsen Group is a multi-billion-dollar investment firm. In a recent episode of his Dividend Cafe podcast he agreed that growth of cryptocurrency as a way of conducting business and making payments is likely to continue. But he warns:

“I’d be speculating (if I predicted what) the price of a Bitcoin would be. It could be a hundred thousand, it could be ten thousand, and it could be both next month, and so that’s why it’s not investable for us.”

Bahnsen compares the enthusiasm around cryptocurrencies to other popular investing waves of the recent past that came and went, with the common man inevitably hurt along the way:

“The recent history of euphoric busts all share the same things in common: A casual willingness to ignore common sense in pursuit of a speculative return. From Chinese reverse merger UFOs in 2011 to solar SPACs in 2021 to crypto in 2022, they all possess the same four realities:

• • A willingness to suspend logic, analysis, or traditional wisdom.
  • A popularity that soothed the suspension and added emotional confidence to the speculation.
  • A period of looking like a genius while other “fools” joined the party.
  • A spectacular burst that left capital destruction in its wake.”

Conclusion

While I was hoping to get your attention with the headline of this article, I think it is true. I would argue that not just Christians, but no one can invest in cryptocurrencies, because one does not invest in a currency – it is not a business intended to make a profit.

The broader point that I hope has come through is that speculation in hope of spectacular gain often comes to heartache, enriching unscrupulous characters along the way. Christians can certainly carefully invest their savings in many ways, but always carefully and with the ultimate goal of serving the Lord through the gifts He entrusts to us, for the good of His kingdom here on earth, and for eternity.