Events in Shakespeare's The Merchant of Venice ultimately become tragic for Shylock the father, Shylock the usurer, and Shylock the Jew.
--Shylock the father
Shylock's tragic losses, which are due mostly to his selfishness, begin with the betrayal of his daughter Jessica. She steals much of the family jewels, runs off with a Christian who is a close friend of his enemy Antonio, and even converts to Christianity because she hates her father's conduct and associates much of his behavior and attitudes to his being a Jew:
Alack, what heinous sin is it in me
To be ashamed to be my father's child?
But though I am a daughter to his blood,
I am not to his manners. O Lorenzo,
If thou keep promise, I shall end this strife,
Become a Christian and thy loving wife. (2.3.16-21)
Further, Jessica squanders the family heirlooms on frivolous things, such as trading her mother's turquoise ring for a monkey, an act which adds "insult to injury" for her father when he is informed of his daughter's betrayal and actions.
--Shylock the usurer
During the time of the setting of the drama, the Catholic Church forbids usury, so none of the Venetian merchants or moneylenders are allowed to practice this form of lending. On the other hand, Shylock's greed for money motivates his usury, and, as a Jew, he can charge interest. Therefore, in his avarice, he loans his mortal enemy money with the diabolical scheme of extracting flesh in payment, a scheme which backfires on him. For, Portia, who is disguised as a doctor of law, points out that the agreement between Antonio and Shylock does not allow for the spilling of blood in the extraction of payment if the loan is not met. Therefore, Shylock cannot collect on the debt, and is later punished for his usury.
--Shylock the Jew
Considered a heathen by the Venetians, Shylock is reviled and when the opportunity presents itself, the Duke punishes him severely, according to the Venetian law:
If Shylock takes a drop of Christian blood from Antonio, then the law of Venice states that the Republic of Venice can confiscate his land and goods because he is a foreign national. According to another Venetian law, if a foreign national such as Shylock seeks the life of a Venetian citizen, whether directly or indirectly, and is found guilty, he then forfeits half of his wealth to his intended victim, with the other half going to the state (4.1.344-359). The personal fate of the guilty national then is up to the ruler.
If Shylock were a Venetian and not a Jew and a foreign national, the tragic results of the trial would not have occurred as they do.