Bitcoin: The Extent of its Usability from the Perspective of Islamic Scholars (original) (raw)

The Legal Status of ‘Bitcoin’ in Islamic Law

Volume 2, Issue 2, December, 2018

This research paper attempts to critically evaluate some of the existing literature on the legal status of Bitcoin in Islamic law and jurisprudence. The questions like what is Bitcoin? How Bitcoin can be earned/acquired? Is Bitcoin treated as currency? Does it function as medium of exchange? Does it correspond to the definition of money in Islamic Law? Is Bit-coin a precious metal or food? Is it abundant in supply and freely available? Is it durable? Does it have intrinsic value or it is valued by commercial customs? These and other relevant questions have been tackled in this research paper. To answer these questions all the basic features of the Bitcoin have been thoroughly analyzed from the perspective of Islamic standards for a currency. The opinions of the contemporary Muslim and Non-Muslim jurists have been thoroughly reviewed in order to formulate a profound concept about the status of Bitcoin in Islamic law. The salient features of currency in Islamic law have been critically evaluated. At the end the paper is concluded with the findings about the issue. The research paper is based on doctrinal method of legal research. Keywords: Crypto-currency, Bitcoin, Legal Status, Islamic Law, Gold, Silver, Fiat Money.

Bitcoin and its Legality from Shariah Point of View

SEISENSE Journal of Management

Bitcoin is a type of cryptocurrency and the most successful in blockchain management. It has become famous in recent years. The critical aspects of cryptocurrency are its legitimacy, source of money laundering, tax evasion, lack of regulation etc. The aim of this study is to explore the view of Muslim scholars on the legality of bitcoin with respect to Shariah. The study adopts doctrinal approach which utilizes descriptive approach of qualitative research methodology which relies on secondary data in form of text books, journals, newspapers, related websites etc. The study found that Muslim scholars are divided on the issue. A part of them completely rejected bitcoin and considered it against Shariah principles. On the other hand, some Muslim scholars believe bitcoin does not contradict Islamic principles and therefore may be used, however with certain conditions. The researchers tend to support the proponents’ view as most of the opponents’ grounds for the rejection are temporary ...

Cryptocurrency from the Perspective of Shariah

Universiti Utara Malaysia, 2018

The purpose of this study is to investigate one of the types in Fintech area, which is cryptocurrency from the perspective of Shariah. Until now, there are around 1,600 types of cryptocurrencies around the world. However, one of the most sought cryptocurrency in Malaysia is Bitcoin. Since it is still a new in Malaysia, the in-depth study on this has not yet been fully completed. By the realization to study this issue, a research has been conducted to become an eye-opener for those who want to dig deeper to gain the knowledge about this especially on the views from Islamic perspective or to be specific, from Shariah views. On the other hand, many issues arise regarding this cryptocurrency especially bitcoin. Therefore, this research will investigate the concept of money with its characteristics, and analyze if cryptocurrency does have all the characteristics of real money in it. Move forward to the next objective, this study will also explain on the Islamic perspective, and to be exact, Shariah views of cryptocurrencies as the currency or as a medium of exchange. Until now, there is still not much current views from the current scholars on this exact matters. Most of the views are regarding on whether their countries accepting it to be used or not, and the majority are the views from the government. Still, there is no specific hukm on the uses of cryptocurrencies. So, the outcome of this study will provide an important insight for potential customers who still want to invest their money in cryptocurrencies.

The requirements of cryptocurrency for money, an Islamic view

Heliyon, 2020

This research aims to evaluate the suitability of cryptocurrency as money from the Islamic perspective. Money, in the Islamic perspective, has specific characteristics and requirements, such as stability and is based on assets. Cryptocurrency may not fulfil this as it has queries as money from the Islamic perspective. The research method applied data of 23 cryptocurrency prices and related information. The result shows that cryptocurrency is hugely volatile and has limits to being called ‘money,’ as it is limited and used for speculation, which is prohibited in Islam. The research implies that Muslims would be reluctant to use cryptocurrency as money, as a currency of transaction. This reason raise an expectation that the cryptocurrency will not develop rapidly in Muslim countries.

A Critical Analysis of Cryptocurrencies from an Islamic Jurisprudence Perspective

Turkish Journal of Islamic Economics, 2021

Money has changed its form many times throughout history and has begun to turn into digital form as an alternative to the current situation. The newest type of money form is a cryptocurrency which has been developed independently of any central authority. The usage areas of cryptocurrencies are increasing day by day. Bitcoin is one of the most accepted crypto-currencies in the world, which was issued in 2009, dominated the cryptocurrency market and attracted the attention of large masses with its rapid rise in value. Cryptocurrency market size exceeded $800 billion in early 2018. Most of the cryptocurrency users want to get a share from value increases of cryptocurrencies. However, these behaviours are not in line with the philosophy of cryptocurrencies. Cryptocurrencies also cause problems of legitimacy for Muslim users in terms of Islamic Jurisprudence (Fiqh). Although many religious institutions and Islamic scholars say that cryptocurrencies are haram, several Islamic scholars co...

An Islamic Approach towards the Nature & Problems of Cryptocurrency

Al-Aijaz Research Journal of Islamic Studies & Humanities (Bi-Annual) Trilingual: Urdu, Arabic and English ISSN: 2707-1200 (Print) 2707-1219 (Electronic), 2020

In an Islamic framework, the scholars need to verify all aspects of the emerging phenomenon known as cryptocurrency. It works as an agent for the prevailing forms of currencies and substitutes the need to carry it everywhere in its physical form which may become a security threat. The theologians have always disapproved what seem to them innovative, alien and working as an agent of change. However, whatever may be their stance about previous innovations, the society had to act otherwise due to the compelling needs that had to be fulfilled. The difference of opinion between the Muslim Scholars about the cryptocurrency has once again divided the Ummah about its acceptance, substituting other forms of currency like fiat currency, plastic currency etc. No doubt these forms of currency have heavily damaged the financial markets due to their speculative nature. It seems that Muslim Ummah is again standing on the cross roads where it is unable to decide its fate. This article presents the basic concept of cryptocurrency & virtual money, its pros & cons, its status regarding Pakistani & Islamic Perspective. At the end, various conclusions and suggestions have been drawn.

An Evaluation of Bitcoin From Shariah Perspective

Review of Applied Management and Social Sciences

Bitcoin is one of the most successful cases of blockchain use. The objective of this paper is to examine the characteristics of cryptocurrencies, with a specific emphasis on bitcoin. The fundamental attributes, features of bitcoin and how they operate on blockchain are evaluated from the Shariah perspective to determine if they are consistent with Shariah principles. To accomplish the objective, the authors adopted a qualitative secondary analysis (QSA) approach by utilizing the existing data.

CRYPTOCURRENCY AS MONEY: Islamic Monetary System Perspective

Al-Tahrir: Jurnal Pemikiran Islam

The existence of cryptocurrencies that have emerged and developed since the last decade is still a debate, both in terms of function, regulation and compliance with Islamic economic principles. Different countries give different attitudes towards cryptocurrencies. Some countries accept its existence, while some other countries reject it. This is inseparable from the question that arises whether cryptocurrencies function as money or commodities. In addition, the absence of an official institution that is responsible for and regulates the circulation of cryptocurrencies and no underlying assets is also another problem. This article aims to see how cryptocurrencies are positioned based on their nature, characteristics and functions using an Islamic finance point of view. The results of the study indicate that cryptocurrencies currently carry out more functions as a store of value that are not in accordance with the Islamic financial system. In addition, the use of cryptocurrencies as m...

Cryptocurrency in Islamic Economic Principles

Dinasti International Journal of Education Management And Social Science, 2022

Islam as a religion that is flexible, dynamic and adaptive to the times. However, this certainly has ethical limitations and has the principle that values ​​in Islamic teachings must be the basis in every human activity, especially in community activities or muamalah. Therefore, this paper aims to critically describe cryptocurrency investment in Islamic economic principles.The method used in this paper is a scientific study approach with literature study, with data collection through the study of books, literature, notes, and various reports related to the problem to be solved. Based on the results of this study, cryptocurrency when viewed in Islamic economic principles does not meet the criteria as a medium of exchange and investment that is permitted in Islam. Cryptocurrencies at the beginning of their creation had a clear goal, a complicated system that was not acceptable to everyone. So that cryptocurrency can be manipulated and monopolized by certain parties. In addition, crypt...

The genesis of Cryptocurrency in Islamic economics: Shariah analysis of HLC tokens

University Journal , 2018

Crypto cash and payment through electronic money has gained popularity after the computer system is adopted by financial industry. Furthermore, the research on application of blockchain technology in the Islamic economy system precisely the potential of Cryptocurrency in providing a better alternative to current fiat money system which will be the scope of this paper. The cryptocurrency system relies on the payment network, the infrastructure required to manage payments and avoid multiple spending using the same funds has always been costly and manage through a centralized banking network. This paper aims of exploring the potential and capability of Cryptocurrency in Islamic economics that fulfils the Shari'ah requirements which will provide financial and stable currency. The paper will adopt the Shariah mind to analyse Shariah experts different opinions on the Crypto currency. The method used for analysing this object includes a library research on related topics that helps understanding the functions of money and Crypto currencies as well as study of several cases that can assist in fulfilling the aims of this paper. Finally, the paper will use analyse the Shariah experts opinions on the Cryptocurrency and the area of Cryptocurrencies and blockchain requires further research from a Shari'ah perspective in order to facilitate a better understanding and create more awareness.