According to Jewish law, if something has value it can be considered currency. The Talmud defines currency as any legal tender accepted by the government or generally accepted by the locale where it’s used for transactions.
The Torah says Jews can’t borrow or lend money or merchandise from other Jews with interest, also called usury. You can only borrow and return the same amount of merchandise, but often rabbis prohibited that as well because the value of the merchandise may have gone up or down since the original borrow.
If merchandise is borrowed, the amount returned needs to be equivalent to the value of the merchandise when it was initially borrowed — so for instance, if you borrowed five pounds of apples worth $5, that $5 may now only be worth four pounds of apples, or six pounds of apples.
“When it comes to currency, however, one can simply borrow and return the same amount of money”.
However, according to Jewish law, bitcoin, like foreign money, is more of a commodity than a currency.
Since Jewish law defines currency as “something that the sovereign government declared is the legal tender of the country and/or is the generally accepted currency used in that locale for transactions”, bitcoin does not qualify. It is neither accepted by the government as the currency nor is it generally used in locales (and the internet does not qualify as a locale).
“Practically, that means if you borrow bitcoins from someone, you need to return the value of the bitcoins you borrowed, not actual bitcoins”.
Therefore, it seems as if bitcoin is more akin to merchandise, where the issue of usury comes up. Since historically the rabbis have prohibited usury between Jews, the same may apply to bitcoins.
While the Talmudic detail may be hard to grasp, seculars need not worry at all. For plenty of Jews and non-Jews alike, bitcoin is still a more or less kosher way to exchange money.