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tkc1Christians colleges aren’t usually known for being on the cutting-edge of technology. But The King’s College, an evangelical college located in New York City, is leading the way by becoming the first accredited college in the United States to accept Bitcoin for tuition and other expenses:

“The King’s College seeks to transform society by preparing students for careers in which they help to shape and eventually to lead strategic public and private institutions. Allowing Bitcoin to be used to pay for a King’s education decreases our costs while simultaneously allowing our students to be a part of this exciting new technology,” said Dr. Gregory Alan Thornbury, President of The King’s College.

Coin.co CEO Brendan Diaz added, “Over the past year, the Coin.co team has led the effort to enable U.S. colleges, universities and other major institutions to accept Bitcoin without incurring any currency risk. Coin.co is proud to be working with The King’s College, and to be a part of pioneering the use of Bitcoin for education.”

Before commenting on their adoption of cryptocurrency for tuition, let me express my admiration for TKC. I’m a fan of the school’s president, Dr. Gregory Alan Thornbury, and our friend and Acton contributor Dr. Anthony Bradley, who is a professor of theology and ethics at the school. I applaud the college for being savvy enough to accept Bitcoins—and would advise students to be savvy enough not to pay their tuition with them.

The reason, as I’ve pointed out before, is that Bitcoins are no longer completely fungible.

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MoneyRoll

Note: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Money

What it Means: In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (more on that in a moment).

There are three basic ways to exchange goods and services: gifting (e.g., I give you a banana, expecting nothing in return); barter (e.g., I give you a banana, in exchange you give me an apple); by using money (e.g., I give you a banana, in exchange you give me $1). Money was invented (and reinvented in every culture) because it makes exchanges easier than the barter system.

What Money Is: Money is a shared belief system used to simplify exchanges of goods and services. To be used as money people have to share a belief that the item —whether paper, gold, rocks, etc. — can perform three main functions: be a store of value, be used as a unit of account, and serve as a medium of exchange.

In the next section we’ll examine these functions. For now, here are two examples of how money serves as a shared belief system:
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bitcoin-wallBitcoin is dead, long live Bitcoin.

A few weeks ago the IRS killed off any chance that Bitcoin could become a mainstream currency. That’s probably for the best since it clears the way for it to become something much more important: the world’s first completely open financial network.

Timothy B. Lee has a superb article explaining why this could be transformative. Lee highlights one particularly helpful innovation:

One obvious application is international money transfers. Companies like Western Union and Moneygram can charge as much as 8 percent to transfer cash from one country to another, and transfers can take as long as 3 days to complete. In contrast, Bitcoin transactions only take about 30 minutes to clear, and Bitcoin transaction fees could be a lot less than 8 percent.

An “alternative to Western Union” doesn’t sound revolutionary, does it? Now look at this graphic produced by The Daily Mail which shows how much money is being sent by migrants to their families back home.
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bitcoin“For federal tax purposes, virtual currency is treated as property.”

With those ten words, the IRS has made it more difficult — if not impossible — for bitcoin and other virtual currencies from gaining widespread, mainstream acceptance as a currency for commercial transactions. Because they are now treated as property, virtual currencies are considered, like stocks, bonds, and other investment property, as capital assets and will be subject to capital gains tax.

But why does this hinder bitcoins use a currency? The answer is fungibility: Bitcoins are no longer completely fungible.
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Blog author: jcarter
posted by on Wednesday, March 5, 2014

bitcoin-deadLast year I wrote a series of blog posts about what Christians should know about Bitcoin. In response, one astute reader pointed out an odd juxtaposition: my conclusion seemed to imply that Christians should avoid Bitcoin “at all cost” and yet the Acton Institute accepts donations in Bitcoin. “I really want to know the rationale behind this,” he said.

Well, the rationale is easy enough to explain: Not everyone at Acton agrees with me. Like other nerds who have an interest in the intersection of economics, liberty, and technology, many of us at Acton disagree about the merits of Bitcoin. (I’d offer to place a gentleman’s wager on the future of the crypto-currency, but they’d want to bet using Bitcoin. Either way – whether it increased in value or went defunct – I’d end up the loser.)

Opinions are still divided, but the evidence that Bitcoin is doomed to failure piles up almost every day. Over the 8 month span from October 2010 to June 2011, the market value of Bitcoins skyrocketed 9667-fold from a value of $0.06 to $29. Later, when I wrote my series last April, a single Bitcoin was worth less than $100. Today, it is worth $660, and that’s after falling from a high of $1,100 in November 2013. A currency that can fluctuate from $0.06 to $1,110 in a three-year period is not a currency – it’s a speculative bubble.

Of course, we Bitcoin doomsayers have been waiting for the bubble to pop for some time now. We also tend to think that every new drop is a sign of it’s impending doom. Fellow naysayer Jonathan Last is sure, this time, that the end of Bitcoin is near:
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Fresco of Lazarus and the rich man.

Fresco of Lazarus and the rich man.

In the editor’s notes of the new issue of Religion & Liberty, I mentioned Time magazine’s iconic 1964 photo spread “War on Poverty: Portraits From an Appalachian Battleground.” Appalachia was a major target of America’s war on poverty. Today many of those same problems persist despite the steady stream of federal dollars. Unfortunately, unintended consequences from government spending, has expanded many of the problems, as Kevin D. Williamson covered so well in the piece “The White Ghetto” for National Review. Fr. James Schall notes in this interview, “Governments are often the one agency most responsible for poverty in the name of getting rid of it.”

What I appreciate about the interview, is Schall gives us a unique perspective and new ways to think about poverty. Schall, a Catholic priest, is a prolific author who taught at Georgetown University for over 35 years.

The feature piece of the issue, written by Eric James Russell and Rodger E. Broomé is titled, “The Tipped Scales Against our Youth.” The authors cover the challenges facing many young people today and offer solutions toward fixing them.

Rev. Johannes Jacobse offers an excellent review of George Gilder’s new book, Knowledge and Power. Joseph Sunde posted an interview with Gilder on the new book on the PowerBlog. Timothy J. Barnett reviews Reckoning with Markets: Moral Reflection in Economics by James Halteman and Edd Noell.

The “In the Liberal Tradition Figure” for this issue is Hildegard of Bingen (1098-1179). In reading some of her writings, I noticed a strong affinity for work, especially affirming the work of lay people within the Church. Unfortunately, a lot of her teachings have been hijacked by crackpots and various new age movements. R&L believes it’s important to recover the truth and holiness she championed. Hildegard is a saint in the Anglican and Catholic churches, and Pope Benedict named her a Doctor of the Church.

Rev. Robert Sirico contributes a piece titled “Breaking Bread at Acton University.” If you are considering attending Acton University and have never been, this is definitely a must read.

There is more content in the latest issue of R&L, including our executive director’s explanation of why the Acton Institute is accepting Bitcoin donations. The decision by itself has garnered considerable media coverage.

Acton Now Accepts BitcoinOver the course of 2013 we’ve enabled new methods of giving including Dwolla and PayPal.  Additionally, recurring monthly donations are now possible via PayPal and credit card.

This week we’re introducing the ability to donate with Bitcoin, the popular digital currency.  Learn more about Bitcoin at Bitcoins.com or by reading Joe Carter’s posts (part 1, part 2, and part 3) here at the PowerBlog.  The option of donating anonymously with Bitcoin is also possible.

Click here to donate to Acton with Bitcoin.

Blog author: jcarter
posted by on Wednesday, August 21, 2013

Egypt’s Christians Are Facing a Jihad
Nina Shea, National Review Online

As of Sunday night, some 58 churches, as well as several convents, monasteries, and schools, dozens of Christian homes and businesses, even the YMCA, have been documented as looted and burned or subject to other destruction by Islamist rioters.

The Texafication of American Catholicism
Michael Moreland, Mirror of Justice

Texas Attorney General Greg Abbott announced earlier this summer that he is running for Governor, but a neglected aspect of the coverage was that Abbott (the favorite in the race next year) would, to my knowledge, be the first Catholic to hold major (Governor or US Senator) statewide office in Texas.

Michigan among states profiting most from ‘sin taxes’
Mike Sauter , Detroit Free Press

In 2011, state governments collected more than $50 billion in taxes and proceeds from vice: gambling, smoking and alcohol consumption.

Bitcoin: A Primer for Policymakers
Jerry Brito and Andrea Castillo , Mercatus Center

The characteristics that make Bitcoin so innovative have also made it a target for regulators, who fear that the cryptocurrency will aid tax evasion, money laundering, and other crimes.

bitcoinLast month, in my series on Bitcoin, I wrote that for the crypto-currency to succeed it will one day have to become trusted by more mainstream consumers, which requires adding such features as regulatory oversight and a centralized monetary authority—the very features of other currencies that Bitcoin was created to avoid.

That day may be coming sooner than later:
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Joe has done us all a real service in putting together his three part (1, 2, 3) primer on Bitcoin (full PDF here).

I am curious, though, what the justification is for referring to Bitcoin as a “commodity” currency. Consider this from Izabella Kaminska at the FT Alphaville blog:

For those who insist that the term “fiat” refers exclusively to government-issued fiat currency, it’s perhaps better to interpret our use in the evolutionary sense.

Meaning that Bitcoin (and other virtual currencies) represent not commodity money, not managed money, nor even old fashioned government-issued fiat money, but a whole new type of super fiat that is rendered valuable by the issuing crowd (made up of independent entities) rather than the state.

The idea is that Bitcoin isn’t “declared” to be valuable by the state, but that it is “declared” to be valuable by common consent of the community of Bitcoin users. Consider this a kind of communal rather than governmental fiat.

This is why I wondered earlier about Bitcoin as “merely fiat money without the pretensions.”

But then again, isn’t this kind of communal agreement or declaration of value what money has always really been? Isn’t that, as Joe relates, what we learn from the example of the rai of Yap? (Their real innovation seems to be that they anticipated something like the “virtualization” of money exchange.)

Here again I’ll invoke the insight of Richard Whately: “It is not that pearls fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.” People are mining Bitcoins because they fetch a high price…at least for now.