Crypto, blockchain, web 3.0: what Catholics need to know

Matthew Pinto remembers well the early to mid-1990s when something called the internet was about to change everyone’s lives.
 
At the time, the Philadelphia legate was in his 20s and too busy with life to become more than a user of the new technology as it was developing. Now, however, as he sees another wave of technological change coming with the advent of cryptocurrency, blockchain, and Web 3.0, he is sounding the call for Catholics to engage the change rather than sit on the sidelines and wait to see how it will turn out.

Pinto said the term “crypto” has become the catchall phrase for several different disciplines and topics within the category of these new technologies.
 
Cryptocurrency is the digital and decentralized alternative to currency issued and backed by the state, although when people hear it, he said, they often reduce it to Bitcoin, which was the original crypto. Blockchain, the undergirding technology of crypto, is an online distributive ledger that allows many users to follow and verify transactions that can include crypto but also documents such as title insurance. Together, some believe, crypto and blockchain could lead to a new decentralized internet called Web 3.0.
 
Blockchain, Pinto said, should be on the radar of every Catholic business leader. “Just like the technological development of the internet or something like Microsoft Office, blockchain as a technology is foundational,” Pinto said.
 
Furthermore, he added, the combination of crypto and blockchain is spawning other things like nonfungible tokens (NFTs), which allow for the tokenization of intellectual and other property. Catholics in business also need to be aware of the movement toward tokenization along with Web 3.0 and the metaverse, a virtual world where people gather to socialize, play, and work.

The industry is growing very quickly, Pinto said, faster even than the pace of the internet itself, and is attracting substantial funding. “This should really cause any Catholic who’s immersed in business or cares about the trajectory of the culture to perk up and wonder whether there is something really new and substantial here,” he affirmed.

Setting off sparks

To those who are hesitant about the coming change, Pinto likened it to the advent of electricity, which was feared by some because it could cause fires. Yet, as has been seen, it also had the ability to power a city. Although there is always uncertainty about change, and it’s easy to take a shot at something in its nascent stage, “We should also be careful not to short-circuit something many believe has extraordinary potential,” he said.

Pinto, whose background spans business and Church ministry, believes these new technologies have far-reaching ramifications for both spheres just as the internet did. Yet, he recalled, “I think few of us could have comprehended what the internet could have meant in the early 1990s.”

That’s why, when it comes to business and finance, he believes new developments like the metaverse and Web 3.0 should occupy some of the brain space of anyone in those fields, simply because of the possibilities they could present for expanding reach. “Naturally, we should always exhibit caution,” he said, “but it can’t result in putting up a ‘no’ or a block before we know what it is.” As with any technological change, those who continue with business-as-usual risk falling behind the competition and failing to leverage resources, he warned.
 
Brantly Millegan agreed. “Insofar as blockchain technology is the future, you’re going to have to learn it eventually anyway,” said Millegan, the founder of ChurchPOP and former operations director for Ethereum Name Services (ENS), a virtual community of cryptocurrency users. “The questions are when and how far behind you’ll be. Others may be skeptical, but I think blockchain technology is not only here to stay but is one of the most important innovations of the last 15 years.”
 
Getting started in learning about it can be tough, however. “Blockchain technology is very different from other technology we’re used to using, and so has its own unique concepts and terms,” said Millegan. “These can seem opaque at first, but after you learn them are fairly straightforward.” 
Anyone who works in finance, domain names, or art knows that people in those industries are already talking about blockchain, Millegan said, although that doesn’t mean that most businesses need to start using it right now.
 
“Currently, blockchain technology is mostly creating a parallel internet world rather than ‘upgrading’ existing businesses,” he explained. “This is not unusual with new paradigms. But eventually, I believe blockchain technology will become something used by the entire world, on the order of something like the World Wide Web. Early on, you had ’dot com’ businesses, but now every company is a ‘dot com’ insofar as everyone uses the internet to some degree.”

Key for financial sector

Stephen Barrows, chief operating officer at the Acton Institute, said that those in the finance industry should be paying the most attention to these new technological developments, although it’s something that will have an impact throughout the world of commerce. “Eventually, any business is going to have to think about new payment systems and how they will affect business,” he said.

The technology itself is revolutionary, Barrows said, because it will reduce friction in the financial world and enable trust and exchange in ways not seen before, reducing transaction costs, which will help business and make exchanges more efficient. Even though other forms of electronic money, such as Paypal, now exist, the new technology will take things to the next level, especially as it pertains to international exchange. “It’s that enabling of trust and instant verification that various forms of distributive ledger technology can provide that will be an important development in the financial world,” Barrows said.

As an economist, Barrows said the idea of reducing friction in the financial system is most appealing to him, especially in international exchange. From a human-centric perspective, he also finds encouraging the potential such technology has for bringing the unbanked into the financial world. 
However, the new technologies are not without risks, including the possible loss of privacy for parties engaging in financial exchanges, the potential for criminal activity, and — as has been seen with China — their use as tools for social engineering. “In the wrong hands,” he pointed out, “they could be a threat.”

Additionally, Barrows said, although people in business need to keep apprised of technological change, they also will have to wait to see how the regulatory landscape develops under President Biden’s March 9 executive order on ensuring responsible innovation in digital assets. Barrows said this can be challenging because technology and innovation are moving faster than the ground rules for how to approach them.
 
Blockchain for Church use

Pinto said the new technology also presents possibilities for the Church — including, for example, the use of blockchain to store and access parish sacramental records.
 
Millegan added that because both the Church and the blockchain world exist globally across many jurisdictions, they go together well. He said he could foresee the Church employing cryptocurrency for payments, providing better financial transparency, and helping the poor around the world gain access to better financial services. Some Catholic entities already have begun accepting crypto contributions.

Because the new technology helps verify trust, Barrows said he could envision the Church using it in a situation where someone was interfering with Church teaching as a way of validating particular documents as having come from the Vatican.
 
Pinto said he would like to see the Church get on board now with the new technology by seeking to understand what it means for the institution as well as individual Catholics. Had that been done in the internet’s early days, he said, “I think it’s a safe bet to assume the Church would have embraced the internet sooner, seen its potential, and dedicated time, energy, and resources to it so we’d be farther along than we are now.”

Furthermore, by getting out in front with the technology, Catholics can help ensure it evolves and is used according to sound ethics, Millegan said.

“The blockchain industry is creating new protocols, institutions, and norms that could end up affecting the whole world,” he explained. “We need Catholics involved to help shape those things with Catholic values. Don’t stay on the sidelines and then complain that other people built things in ways you don’t like. The world goes to those who show up.” 

JUDY ROBERTS is a contributing writer for Legatus magazine.