Digital currency trading
Are encrypted digital currencies halal or haram? This issue has caused many Muslims to worry about investing in cryptocurrencies.
Whether cryptocurrencies such as Bitcoin are halal or haram, this topic has sparked controversy for many Muslims as well as many Islamic banks and financial authorities in recent years.
Especially in times of strong growth – for the prices of these currencies.
The issue that has raised the concern of the Muslim community is the uncertainty as to whether the increase is forbidden or permissible according to Islam and Islamic law.
Let’s get acquainted with the topic in a very simple and complete way, without the complicated picture in the books, so that everyone will understand and understand how this issue revolves .
Bitcoin is a digital or encrypted currency in 2009. The beginning of digital currencies was issued, and the bitcoin was the first encrypted digital currency issued in 2009, and accordingly, ideas began. When this currency was issued, religious ideas and people’s ideas began to ask, are digital currencies halal or forbidden, and what is a currency cryptocurrency or cryptocurrency.
Encrypted currency or digital currencies are digital units. These digital units are encrypted with a very strong encryption so that they cannot be hacked or forged, and no one can play in them. These digital units have no physics. In short, they are not like, pound, dollar, sterling, these currencies exist. In your hands, it has a physical presence, but the digital currency does not have a physical presence and has a presence on the Internet only.
These digital currencies or bitcoin units are capable of a currency, for example when you buy 30 bitcoins for 30 pounds, 30 dollars, or 10 thousand dollars. The important thing is that the digital currencies have a fee .
According to these reasons, some jurists and schools of jurisprudence issued a prohibition against it based on the gharar that is present in it and based on the fact that it may be surrounded by a usurious transaction.
Digital currencies do not have a government agency and do not have full supervision from the government, meaning they are not like the pound or dollar currency. They have full supervision of the Central Bank of Egypt or the Central American Bank. These banks are the ones that issue currency based on certain studies and determine the value of the currency based on the volume of trade exchange in the market size But the cryptocurrency was issued by unknown unknown persons and it is said that the unknown persons in 2007 and 2009 began to be known in 2016.
Digital currencies are not popular and are not found in all stores that sell legitimate and halal things, but there are some companies or some places that sell illegal and forbidden things in Islam and deal with these units currencies.
Digital currencies can be used for money laundering and in illegal ways.
Digital currencies contain usury.
Despite the growing popularity and use of cryptocurrencies, most Muslims are hesitant to enter the blockchain world.
The most important reason for this issue is the duty of Muslims to follow religious scholars. These scholars’ opinions and decisions are based on two important sources in Islam: the Qur’an and the Sunnah.
Referring Muslims to religious scholars and extracting their opinions from Islamic law on obscure and unknown issues is common and clear in Islam.
Regarding Bitcoin and other digital currencies, the opinion of Muslim scholars is divided into several categories. Some of them believe that the coins are halal.
Others believe that digital currencies are forbidden. Others have been silent on this matter and deferred commenting on whether encryption is haram or halal for another time.
Instead of deciding whether digital currencies are halal or haram, they preferred to study and research the nature and origin of cryptocurrency.
Let’s get acquainted in the following with the scholars who believe that digital currencies are permissible and the scholars who believe that digital currencies are forbidden.
Scientists who believe that cryptocurrency is forbidden
Sheikh Shawky Allam warned against the use of digital currencies. According to him, the use of bitcoin carries risks of fraud, lack of proper understanding, and lack of honesty.
According to him, the illegality of virtual money and the absence of a responsible central institution make the use of coins dangerous. Also, Bitcoin being haram is due to its harm to society, financial institutions and people .
In the Muslim community, Sheikh Haitham is a well-known scholar. He has done extensive research on cryptocurrencies.
According to him, Bitcoin and other virtual currencies are not halal due to their lack of tangible value.
According to his argument, paper money has also had no real value since the Bretton Woods agreement in 1971 and the abandonment of gold as a backing of the dollar.
But despite this, fiat money, unlike digital currencies, has a central credit institution. This problem makes digital currencies unreliable.
According to Sheikh Haitham, the current form of digital currencies is not halal for investment and use. But if it is backed by commodities like gold, etc., it is possible that digital currencies will become halal.
According to Sheikh Asim, Bitcoin trading is not allowed in Islam due to its ambiguity. According to him, digital currencies are illegal and their uses are obvious.
According to him, the uses of digital currencies are illegal activities, such as money laundering, drug smuggling and theft.
According to this researcher, cryptocurrencies have many unknown aspects such as security and long-term endurance.
The rapid increase in the value of the cryptocurrency market also raises more doubts about this.
According to Imam Abdullah Rushdi, digital currencies do not yet know their source, nor how to evaluate them, and he does not know so far these currencies are judged on the basis that they are commodities or price.
According to Imam Abdullah Rushdi, these currencies are used to launder money in illegal things
He said that until these matters become clear, it is necessary to stay away from them, and in addition, he recommends not trading in them and not owning them, and he recommends further study.
Scientists who believe that cryptocurrency is halal
Maulana Jamal Ahmad is one of the important Hanafi scholars.
According to him, Bitcoin and other digital currencies are not part of the real economy and do not contribute to the benefit of society.
In other words, Bitcoin does not play a role in promoting employment and the production of goods and services.
Mufti Faraz Adam
According to him despite all the existing concerns, cryptocurrencies are eligible for exchange and have value.
According to Islamic principles, Bitcoin is a property and represents a value that can be stored and therefore has legal value.
In general, according to Maulana Jamal Ahmad and Mufti Faraz Adam, although temporary capital in cryptocurrencies is not desirable, it is allowed .
Mufti Abdul Qadir has a long history in Islamic finance. His activities include being a member of Shariah Supervisory Committees and managing important economic institutions.
According to Mufti Abdul Qadir, digital currencies can be used as support tools for the development and advancement of Islamic finance.
According to him, bitcoin and cryptocurrency are halal. The reason is the rule of Islamic law.
According to this rule, any commodity widely used in society as a means of payment can be considered as money in terms of Islamic law.
Mufti Muhammad Abu Bakr has many experiences in the field of studying and applying the perspectives of Islamic economic law in the real world.
He is currently working as a Mufti at Silk Bank Limited.
According to his ideas, if money is considered as a medium of exchange in a country, then that currency becomes legal and legal in the same area in terms of Sharia.
Like Germany, for example. In Germany, Bitcoin has been accepted and legalized by the government.
Therefore, in this country, Muslims are able to buy, sell, exchange and trade bitcoin. In this country, Bitcoin is among the common halal and legal funds in Islam.
Saudi Arabia has also banned Bitcoin
Like Egypt and Palestine, Saudi Arabia has declared that any use of the virtual currency “Bitcoin” is forbidden in transactions.
Quoting Al-Quds Al-Arabi, Sheikh Abdullah Al-Mutlaq, a member of Saudi Arabia’s senior scholars, warned against trading in the virtual and encrypted currency “Bitcoin” because of the great risks it entails.
“We warn against entering into transactions with a virtual currency Bitcoin, because Sharia forbids wasting money and wasting hard-earned money,” he said on a TV show.
Previously, the Mufti of Egypt and the Palestinian Territories declared that any transaction in the virtual currency of Bitcoin is forbidden.
What are the reasons that prompted scholars to consider digital currencies forbidden?
High volatility and instability of cryptocurrencies
One of the reasons that led scholars to consider digital currencies haram is their high degree of volatility and instability. It should be noted that fluctuations as an external factor cannot play a role in the value of money and currency. In addition, for cryptocurrencies, such as other assets, such as fiat currencies, gold or silver, etc., prices change according to supply and demand.
The presence of fluctuations is not considered forbidden for that, so if that is the case, then the dollar, the euro and the like should also be forbidden from the point of view of Sharia because they are fluctuating.
The possibility of using cryptocurrencies for illegal and non-Islamic purposes
There is a common misconception that digital currencies have opened the way for money laundering and fraud. Firstly, all paper money and even ordinary money of the country are used for illegal purposes, fraud, money laundering, etc., and secondly, this has nothing to do with the definition of Islamic money and is considered a foreign factor.
According to Islamic law, because something that is legal is used in other than Islam, that thing cannot be considered illegal and against religion. For example, there is a hadith of the Holy Prophet that states that grapes can be sold for Islamic purposes, but selling them in a condition that we know leads to the preparation of wine is forbidden.
But you are now asking and saying, as a Muslim, what do I do now?
According to Al-Azhar jurists and scholars, this transaction should be avoided and speculation in digital currencies such as Bitcoin and other digital currencies should be avoided until scholars and clerics reach a semi-consensus or unanimous agreement issued by the jurisprudence councils.
Or, in the future, they legalize and show the conditions of digital currencies, and here is the role of fatwas and the official institutions that issued fatwas prohibiting them, perhaps reconsidering themselves.
Or you prefer ongoing accountability over purpose and ignorance. The rules and ambiguity of these currencies are not known and what is going on behind the scenes. So, we will prefer sticking to the saying or doctrine or the opinion issued by some fatwa institutions for the prohibition of dealing with currencies with these digital units.
All Muslims, up to now, must stay away from this matter and should not participate in it, because the severe deception and extreme ignorance that make the currency of trading or speculation in these digital currencies is like gambling is not known.
So far, religious scholars are not able to determine whether usury is taking place or not, and whether it will be considered a price and money, or will it be considered values and offers. If this question is not clear and is surrounded by several hidden issues, and most of the contemporary scholars and jurists warn all Muslims to stay away from trading in digital currencies.