(Image by Caio Resende)
How Bitcoin aligns with the principles of the Catholic Church’s Social Doctrine
The Social Doctrine of the Church comprises a series of Catholic guidelines for the proper conduct of social relationships. It was initiated by Pope Leo XIII (although earlier thinkers had already touched on the subject) due to the changes occurring during the First Industrial Revolution.
In his most famous encyclical, Rerum Novarum, the Pope comments on the social changes of the time and provides guidance on how leaders, citizens, and governments should proceed in a rapidly changing world.
Since then, the Social Doctrine of the Church has evolved with each new Pope, from Saint Pius X to Francis, always emphasizing the value of the human being as one of its basic principles.
The intention of this article is to show how Bitcoin is compatible with the Social Doctrine of the Church and how it can promote the development of a more just society through its principles of scarcity, self-custody, and security.
1. Inequality: accumulation of capital in the hands of a few
The document begins by highlighting some problems associated with changes in the market economy—while also demonstrating that socialism is not the appropriate remedy.
Early in the document, Pope Leo XIII, when discussing existing social conflicts, cites the problem of usury and greed, showing how this increases inequality:
“[…] To this must be added the monopoly of labor and credit papers, which have become the share of a small number of rich and wealthy men, imposing an almost servile yoke on the immense multitude of proletarians.”
This quotation brings a highly relevant issue to the forefront: inequality.
Even today, the concentration of money and power, along with abusive interest conditions, harm the poorest. However, this is where we can see how Bitcoin can alleviate these problems.
Firstly, much of the capital concentration stems from the government’s ability to print money uncontrollably. After all, the government can simply add a few zeros to its bank account and digitally print currency (much easier than printing banknotes).
This causes an imbalance in the economy because, on the other end, the worker is saving money and investing it in a financial asset (say, a fixed income) without realizing that their wealth is slowly diluting (even if, nominally, it appears to be growing).
The result of uncontrolled money printing is inflation. It is worth noting that price increases are merely the effect of inflation; what actually causes it is the printing of money and the consequent increase in the monetary base (which increases the total money in the economy).
For example, if you accumulate money and, after a certain time, own 1% of all existing money, the government can simply issue ten times more currency, diluting your capital to just 0.1% of the total overnight (of course, currency issuance doesn’t happen that quickly; this dilution occurs gradually).
Another contributing factor is the fractional reserve banking system: nowadays, a bank can lend more money than it has. If it has lent, say, one billion dollars, it only needs to have a percentage of the total amount in reserve.
This increases the amount of circulating money even more. What happens is that when a bank faces problems, all account holders try to withdraw money simultaneously, and the bank doesn’t have enough to pay everyone. The result is default.
All this contributes to the concentration of money in the hands of a few: banks can lend money they don’t have at very low interest rates to large corporations, which can simply roll the debt forward and take out another loan.
In current accounting practices, there is even the concept of “healthy debt” for companies—that is, it’s more worthwhile for large corporations to maintain debt than to pay it off, something unfeasible for ordinary people who have to bear increasingly unjust interest rates.
21 million maximum units
But what happens when the currency cannot be multiplied at the whim of a government or bank? What if the currency used is completely transparent, so that no one can print more than the predetermined amount at its creation?
This is precisely the problem that Bitcoin solves: there will never be more than 21 million units. What guarantees this? Bitcoin’s fully transparent programming, reviewed by thousands of programmers over the years.
Changing this rule isn’t simple: for it to occur, all backups of the network (known as Bitcoin nodes) must agree to the change. To run one of these nodes, you just need about 2 TB on a hard drive and a computer (which doesn’t even need to be very modern). Download the software from Bitcoin.org, and in a few days, you’ll have the entire Bitcoin network on your hard drive.
In other words, ordinary people with a bit of money and a few days of downloading can run a copy of the Bitcoin blockchain. These are regular individuals who have adopted the network precisely because they want money that can’t be diluted. Why would these people agree to accept a change in the network that, say, doubles the existing amount of BTC?
After all, if you’re running a Bitcoin node, it’s because you want to support the network and enhance its security. So why would you agree to change it against your own interests?
If there is no consensus in the network and a split occurs, you have a hard fork: Bitcoin divides, something that already happened in 2017, creating Bitcoin Cash. But the community that prioritized Bitcoin’s principles remained steadfast, and today Bitcoin Cash is a shadow of the past.
Even if a billionaire company creates several other nodes and supports a change that increases the existing amount of BTC, common users running their nodes at home may not accept this change and continue running the old code.
And the best part is that you don’t need to do anything: if you have 0.1 Bitcoin and a hard fork occurs, you’ll continue to have 0.1 BTC and 0.1 of the new coin that was created (let’s call it BTCB here).
Thus, you don’t even need to touch that money: if you’re unsure who will win the dispute, keep both. If you remain confident in the original protocol, sell the BTCB and buy more BTC. Just don’t make the mistake of selling your BTC and exchanging it for a dubious protocol.
How Bitcoin promotes equality
The ability to print money and fractional reserves increases the circulating money and benefits those closest to the money issuance—after all, if they receive the money first, they can spend it before it enters the economy.
Since Bitcoin will not have more units beyond the stipulated 21 million, a person can accumulate wealth without being diluted—that is, ensuring they don’t have to worry about their money losing value over time.
This brings us to the next topic.
2. Accumulation of wealth and private property
Further on, Pope Leo XIII demonstrates that there are no issues with individuals accumulating capital and owning private property—on the contrary, it’s beneficial:
“In fact, as is easy to understand, the intrinsic reason for work undertaken by those who exercise a profitable art, the immediate end aimed at by the worker, is to acquire a good that he will own as his own and belonging to him; because, if he puts his strength and industry at the disposal of another, it is evidently for no other reason than to provide for his sustenance and life’s needs, and he expects from his work not only the right to a wage but also a strict and rigorous right to use it as he sees fit.
Therefore, if by reducing his expenses he manages to save some money, and if, to ensure its preservation, he invests it, for example, in a field, it becomes evident that this field is nothing other than his wage transformed: the land thus acquired will be the property of the worker with the same title as the remuneration of his work. But who does not see that this is precisely what constitutes the right of movable and immovable property?”
A significant problem today is the actual ownership of what you purchase. When we stop to evaluate, we see that many things we buy don’t truly belong to us.
For example: when you buy a house or a car, you have to pay property taxes. When you receive your salary, you pay income tax. The DVDs and music CDs you used to buy have turned into subscription services. Your money in the bank can be confiscated if you go against some government determination. Given this, it’s hard to think we truly own these things.
With financial assets, it’s even worse: to own stocks or fixed-income securities, you need to custody them in a bank or financial institution. Gold and other commodities can be owned, true, but gold is subject to counterfeiting, has volume, and isn’t so simple to buy and sell—and when you do, you’ll incur service fees from the companies that deal with it.
Bitcoin is the only asset that allows for true ownership: with 12 words that can be memorized in your head or written down on paper or some offline medium, you have a Bitcoin wallet that cannot be stolen by anyone. Create a wallet offline and send your Bitcoins there: no one can confiscate them.
There is no existing computational power capable of cracking a password on the Bitcoin network. And even if something with such computational capability emerges (like the much-talked-about quantum computers), Bitcoin would still be more secure than the traditional banking system—which would, therefore, be a much more attractive first target.
Responsibility in custody
Of course, owning your Bitcoins without leaving them on an exchange requires responsibility: if you lose the password, your money is lost forever. There’s a risk of theft. But, for better or worse, it all depends on your ability to securely store your assets: you must be responsible for what is yours, contrary to the current thinking that everything should be custodied or intermediated by a bank or specialized professional.
Nowadays, technologies like MultiSig allow for greater security. Other ways to store your private key include using metal plates. There are various methods to increase the chances of keeping your Bitcoin safe, allowing you to be more at ease while keeping what’s yours only for those you want.
3. The domestic society over the civil society
The document also expresses the view that the family is the foundation of society and that the domestic society precedes the state. Therefore, the government should act only in grave cases:
“Similarly, if there is a domestic household that is the scene of serious violations of mutual rights, let the public authority intervene to restore to each their rights. This is not usurping the duties of citizens but strengthening their rights, protecting, and defending them appropriately. However, the actions of those who preside over public governance should not go further; nature forbids them from exceeding these limits. Paternal authority cannot be abolished nor absorbed by the State because it shares a common origin with human life.”
This is a problem that Bitcoin doesn’t solve but at least helps mitigate. This is especially important in times when the State grows and begins to act authoritarily, using traditional media as its right arm.
For example, when a person speaks out against a politician or legislation, one of the ways the government persecutes them is through asset confiscation and freezing bank accounts. This way, the person has no money to live and support their family, having to yield to state pressures and give up opposing authority.
With your Bitcoin key memorized in your head or a physical hard wallet buried or hidden in an inaccessible location, it’s very difficult to confiscate your Bitcoins, giving you the autonomy not to be entirely at the State’s mercy.
Of course, this leads to the problem: how to sell Bitcoins for fiat currency without issues with a State that is persecuting you? Fortunately, there are P2P exchanges that can help in this regard. They charge slightly higher fees but are much more secure.
(Pope Leo XIII discusses the subject of civil liberty more thoroughly in another document called Libertas, which, although less known, is of no lesser quality.)
4. Harmony between classes
The Pope shows that class struggle is not the answer to economic problems—on the contrary, the rich and the poor, employers and workers, should respect each other and act aiming at the common good:
“The chief error in the present question is to believe that the two classes are natural enemies of each other, as if nature had armed the rich and the poor to fight each other in an obstinate duel.”
He continues, addressing the obligations of workers:
“Among these duties, here are those concerning the poor and the worker: he must fully and faithfully perform all the work he freely and equitably contracted to do; he must not harm his employer, neither in his goods nor in his person; his demands must be free from violence and never take the form of seditions […]”
And, continuing about the obligations of employers, he says:
“As for the rich and employers, they must not treat the worker as a slave but respect in him the dignity of man, enhanced even more by that of the Christian.”
It may seem impossible to achieve such harmony: I have been on both the employer’s and employee’s side and can see problems on both ends.
Today, employers pay less and less, demand more and more, and don’t seem to care about their employees’ personal demands. At the same time, it’s increasingly difficult to find people with good professional ethics who don’t just want to do the bare minimum to avoid being fired.
However, with money that maintains its value over time, work relationships change, and a more dignified work environment naturally forms.
Professional life before and after
Consider this: in our parents’ or grandparents’ generation, it was common to work in the same company for decades and retire comfortably. It was normal for even an ordinary worker to buy a house and have a car, supporting their family. There was no need to think about the next promotion or getting lucky with an investment; it was enough to work well, spend wisely, and save a little.
However, in the current generation, we need to take on two or three jobs (or one main job and some freelancing), spend countless hours thinking about how to invest best, and find ways to make money grow, etc. The sharp loss in money’s value (as explained in topic 1) causes this difficulty.
With a system like this, why strive at work? It’s more worthwhile to drag things out, doing the minimum just not to get fired. This is the origin of phenomena like “quiet quitting.”
On the other hand, the small entrepreneur—the one who has a small company with half a dozen employees—finds their hands tied: to keep operations running, they need increasingly higher profits since money loses value every year.
As a result, they pay outdated salaries and, to stay in the market, need to lower the quality of products and services they offer (or pass the costs onto the consumer, risking a reduction in their customer base).
And the owners of big capital benefit from this because there’s no competition, being able to maximize their profits at the cost of reduced salaries for their base-level employees. Large companies usually have cash reserves to burn, and if they need money, they can just take out a loan at reduced rates. It’s clear how this harms the daily operations of virtually every company in the world.
Bitcoin and workplace mentality
Bitcoin creates incentives that make people not want to change it, maintaining only the 21 million units initially programmed (about 18 million, considering the Bitcoin lost forever in its early years). One Bitcoin will always be worth one Bitcoin.
With this, it will be worthwhile to work properly because you’re accumulating something that preserves value instead of losing it. The business owner is encouraged to save cash instead of making disorderly investments. The employee knows they are working and building wealth instead of seeing their real purchasing power only decrease over time.
An average employee, instead of needing to do two freelancing jobs a month and study investments extensively, can instead accumulate Bitcoin for the long term with the certainty that it will maintain its value over time against fiat currencies like the dollar, euro, or real, and that they will have money to buy their house, get married, and have children if they plan properly.
An employee who doesn’t need to worry so much about money can work fewer hours and, in those hours, dedicate quality to the work at hand. The quantity of hours worked will be replaced by quality.
Over time, a long-term mentality will develop on both ends, without companies needing to lower the quality of their products and services, and without employees needing to juggle two jobs simultaneously.
5. Charity
When we talk about capital accumulation, Pope Leo XIII reminds us that it serves not only the individual but should also be used in favor of the needy:
“No one is obliged to relieve his neighbor by depriving himself of what is necessary or of what his family needs; nor even to suppress anything that decency imposes on his person: ‘No one, indeed, should live contrary to decency’ (Summa Theologica, II-II). But once he has sufficiently satisfied necessity and decency, it is a duty to cast the surplus into the lap of the poor: ‘Give alms of such things as you have’ (Luke 11:41).”
When truckers in Canada refused to stop working due to social distancing, they had their accounts frozen (an example of what I discussed in topic 3 of this article). The solution was voluntary help from people through Bitcoin, which could be used to support those who dared to go against the government.
When the conflict between Ukraine and Russia occurred, people worldwide united and donated money to Ukraine through Bitcoin, ensuring food, health, and basic hygiene for thousands.
With Bitcoin, you have money usable anywhere in the world in ten minutes, without bureaucracy and without government intermediaries. If you support a cause, you can donate to it quickly, ensuring your money will arrive without needing intermediaries of dubious trust and without paying taxes (only network fees).
6. Limits on State action
The Social Doctrine of the Church admits a role for the state within its own limits:
“What is required of rulers is a general course of order, which consists in the whole economy of laws and institutions; we mean that they must act so that from the very organization and government of society, prosperity arises spontaneously and effortlessly, both public and private.”
In a world with widespread Bitcoin adoption, people would have true control over their wealth. And with greater dominion over their own assets, contributing to taxes and other activities becomes a mere matter of choice.
This means the state will have to earn citizens’ money because it won’t be able to take it coercively.
Consequently, it will have to step back from areas where it cannot act appropriately and focus on essential activities like health, education, and basic security—and possibly some regulations in industrial activities, in partnerships with private entities.
This considerably reduces the government’s hand in people’s private activities and, consequently, increases individual freedom.
7. Financial education
The document also briefly touches on the subject of financial education, especially for the lower strata of the population:
“It is important, therefore, that laws favor the spirit of property, revive it, and develop it as much as possible among the popular masses.”
If your money is worth less and less (and at an increasingly accelerated rate), the incentive to save it for the long term is lost. This leads to the multiplication of financial scams, “get-rich-quick schemes,” “miracle investments,” and “gambling.”
With real money that is scarce, its tendency is to appreciate in the long term, something clearly demonstrated by the constant significant appreciation of Bitcoin. Compare it with all other cryptocurrencies, and the long-term winner is clear.
If money appreciates, it’s worthwhile to save it. Therefore, people are more incentivized to be responsible in wealth accumulation, which will create a more stable financial picture for individuals.
And when it’s worthwhile to save money, there’s a greater interest in learning how to do so—which helps facilitate the teaching of subjects like personal finance, investments, entrepreneurship, and other topics.
8. Union and associations
The last topic of the document concerns associations among people, such as cooperatives, unions, and others. Associations that arise from people’s free will:
“If, therefore, as is certain, citizens are free to associate, they must likewise be free to endow themselves with statutes and regulations that seem most appropriate to the end they aim at.”
With greater control over their money and less forced government intervention in people’s lives, the tendency is for the formation of these associations to occur entirely organically among groups.
People will themselves take care of their pensions, can organize into cooperatives, and, as is the case in some places, will not be hostages to unions (which, in fact, can perform very positive work for workers when acting on their behalf).
9. Gradual change in society
Finally, I’d like to conclude by saying that this entire process isn’t quick. Decades will pass before everything I’ve outlined here materializes—and even then, society will continue to have problems because the world we live in will never be free from flaws.
Pope Leo XIII, in another document (shorter and less famous) called In Plurimis, talks about how the Church gradually ended ancient slavery through its values and attitudes, not through revolution:
“All the more so if one observes attentively with what sweetness and prudence the Church extirpated and defeated the vile plague of slavery. Indeed, she did not wish to hasten to provide for the ransom and freedom of slaves, for certainly this could not happen except tumultuously, to their harm and to the detriment of society; but with supreme judgment, she had the souls of slaves, under her direction, educated in Christian truth and, with baptism, adopt customs in harmony.”
“[…] Among the Greek Fathers, Chrysostom stands out, who often dealt with this issue and who, with great joy and words, affirmed that slavery, according to the old meaning of the term, in his time had already been eliminated, to the great advantage of the Christian faith, so much so that the name seemed and was empty among the Lord’s disciples.”
This gradual change in pursuit of societal improvement is entirely aligned with Bitcoin’s ethos, which promotes a gradual shift in how we view money and the economy without abrupt changes.
Observing the loss of value of the dollar and other fiat currencies, companies will see that it’s worthwhile to keep their cash in Bitcoin to avoid the loss of money value over time.
Having more cash, they won’t desperately need immediate profit and will be able to think of strategies more focused on the long term, building a better image of their products and services.
This tends to improve the quality and longevity of products and services, which will start to better serve the population.
On the other hand, workers will be able to save in Bitcoin and maintain their standard of living.
They will be able to buy a house more easily because their money won’t dilute. They can avoid incurring numerous debts and have a more appropriate financial future. This reduces poverty in the population and many ills related to security, health, and education.
Overall, we will have a better society with the global adoption of Bitcoin, and this will certainly happen, as there is no way to stop, limit, or regulate it.