Cryptocurrencies in Islam: Halal or Haram?
Islam has formulated certain rules regarding banking and finance. The emergence of cryptocurrencies could not avoid the representatives of Muslims. In this article, we will talk about how cryptocurrencies are perceived in Islam and how permissible they are in terms of Shariah.
- CRYPTOCURRENCIES IN ISLAM: CAN MUSLIMS USE DIGITAL CURRENCIES?
If we turn to the text of Shariah, we come to the conclusion that cryptocurrencies have two unacceptable features at once:
Uncertainty of transactions. Such a feature is considered an element of gharar. Cryptocurrency transactions are completely anonymous, so neither the sender nor the recipient can know who is on the other side of the monitor.
High degree of risk. This feature can be considered maysir. In the Islamic religion, this concept describes gambling. Actually, it becomes applicable to cryptocurrencies because of their high volatility and the risks that are directly related to their use.
In addition, in Islam it is believed that any money can only be issued by the state. It is true that there are still no specific bans on cryptocurrencies in the Shariah standard.
- WHAT REQUIREMENTS DOES SHARIA LAW IMPOSE ON CURRENCIES?
Sharia law requires that currencies meet the following criteria:
Tangibility or proof of existence. According to Shariah, every currency must be tangible or have proof of its actual existence. For a currency to be recognized, it must be low volatility, that is, its exchange rate must not jump, like Bitcoin, by tens of percent per day. In addition, historically, Islam has only recognized value for real objects: gold, silver, barley, salt, etc.
Rarity. What can be easily mined or obtained by anyone is not money. Accordingly, cryptocurrencies that are mined using video cards and can be namain without any effort are clearly not Shariah compliant.
State position. It is the state authorities that define currencies - withdraw them from circulation, introduce them into circulation, and manage them. In addition, the government supports currencies and implements various measures to reduce their volatility.
Thus, it is impossible to consider cryptocurrencies in Islam as allowed. Despite the lack of official prohibitions, they contradict important requirements prescribed in Shariah.
Interestingly, halal cryptocurrency itcoin was created in Tatarstan. Behind each coin is the meat of breeding steers, which is the basis for providing the asset. For 1 itcoin you can get 10 kg of meat. Thus, the cryptocurrency complies with the Shariah requirement to provide currency with a natural equivalent.
- MUSLIMS' POSITION ON CRYPTOCURRENCIES
Not all Muslims share the opinion that bitcoin and other cryptocurrencies in Islam are against the religion itself. For example, the creator of Blossom Finance, Matthew Martin, who himself is a Muslim, believes that bitcoin represents halal. He argues that cryptocurrencies are secured by mathematical algorithms and software codes.
Turkish authorities, on the contrary, believe that cryptocurrencies go against Islamic ideology. They explain that digital currencies can engage in speculation and are far from government oversight.
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