Tobey Karen Scharding, a visiting professor and fellow at Rutgers Business School’s Institute of Ethical Leadership, has carved out an area of academic research that raises questions about the ethical nature of new financial instruments. Her latest research takes a look at bitcoin, an intriguing cryptocurrency that Scharding describes as having this “odd staying power.”

There are 21 million bitcoins in circulation. In 2017, a single bitcoin was worth nearly $20,000. During the past year, Bitcoin’s value bounced up and down in the fashion of a pogo stick. These days, the value for one bitcoin is about $6,000. In a new paper, which will be published in Business and Society Review early next year, Scharding takes a look at whether bitcoin is an ethical currency.

When did you first become interested in Bitcoin?

“I got interested in finance ethics during the aftermath of the financial crisis which was the same time I was writing my dissertation about an ethical topic in Kantian ethics. Kantian ethics is very good at examining systemic issues about how people should treat each other across wide systems. So I’m writing my dissertation and watching the news about the breakdown of the world economy. I was really interested in what brought about the financial crisis and that led me to look at different novel financial instruments, the mortgage-backed securities and the credit default obligations. I just became interested in, are these financial instruments ethical? Is it ethical to buy a mortgage-backed security? We know the consequences of all of these people buying mortgage-backed securities was catastrophic but just for each person to buy a mortgage-backed security, is that something wrong to do? My first paper in finance ethics was about mortgage-backed securities and that was published in 2015. I take an interest in new financial instruments so when people started talking about cryptocurrencies, I was naturally inclined to be interested in those as well.”

How did you evaluate bitcoin from the perspective of an ethicist?

“My question was, is Bitcoin an ethical currency not is it ethical to use bitcoin or is it ethical to trade some dollars for bitcoin. So, I investigated this problem through an account of ethical currency that was offered by Johann Gottlieb Fichte in the early 1800s. Fichte was a follower of Kant. Kantian ethics are very pure. He wants to know what is the good and the right thing to do. Fichte is much more applied. He takes a more practical approach. One of the things that he did was to discuss the value of currency for a society. I became interested in applying his account to bitcoin both because I happen to be familiar with it through my philosophical research, but I was also interested in using it because bitcoin is so new. It’s murky and there are so many questions about it and so much uncertainty that I felt actually uncomfortable applying some of the other ethical theories that I would regularly turn to. The main resources I have are ethical theories – Kantian ethics, utilitarianism, virtue ethics, these are well-developed theories that will give an evaluation of what is the right thing to do. With bitcoin, I felt there were too many uncertainties. I felt the evaluations they give would not be very strong. I thought that combining the novelty and uncertainties of crypto currencies with this really interesting older account of what makes a currency ethical would be a good way to get started in understanding cryptocurrencies."