Is Cryptocurrency Haram? Cryptocurrency, a decentralized digital currency that operates on blockchain technology, has become a popular investment option worldwide.
However, for Muslims, the legality of cryptocurrency is a matter of concern due to its compatibility with Islamic principles.
The Quran and Hadith offer guidance on financial matters, and it is essential to understand whether cryptocurrency aligns with these principles.
This article aims to explore the topic of whether – cryptocurrency is Haram in Islam.
What is cryptocurrency?
Crypto means secret, and currency means currency. Simply put, the secret coin, which cannot be caught, cannot be touched. There is no own worth.
It is called digital currency, virtual currency or online currency. Its transactions do not require any financial institution or controlling organization.
Cryptocurrency is a type of digital currency. Cryptocurrency coins are made in a mining system using the Internet through various robust hardware.
So in this mining process, all the complex algorithms, blocks, and cryptography must be made by making each coin. Efforts to discover cryptocurrency have been going on for a long time.
Researchers knew in the eighties that such a coin could be discovered from signal rituals or cryptography. But they failed to solve a few problems.
An unknown researcher sent a paper to the Internet forum to solve those problems. Surprisingly his solution works. His name is a blockchain.
In the various processes of blockchain algorithm, the time is meagre to generate a coin, but its default is increasing over time.
Once, a coin takes time from the generator to 7 days or more than 3 days. And with this default, the coin rate increases. Examples: Bitcoin, Onecoin, Litecoin, Ripple, Dogecoin, etc.
The Islamic Perspective on Cryptocurrency
Certain principles define the currency system of Islam. In Islam, the currency will be the opposite price paid for any product.
In Islam, the currency was once the gold coin and silver coin. Later, the gold coin occupied the paper note.
The supplier and ownership of the gold coin or the currency were known. But nothing is known about the cryptocurrency supplier or owner, or manager.
That is why Islamic scholars have different views in describing the idea of Islam on cryptocurrency. According to some, the currency is halal in need.
Again, many have said avoiding cryptocurrency is good because the paper notes available as an alternative to cryptocurrency should be used.
Is Cryptocurrency Haram in Islam?
Yes, cryptocurrency is Haram in Islam. A large number of Islamic scholars have given this opinion. Among them are the main muftis of Islamic Research Centers in different countries.
But several Islamic scholars use the cryptocurrency halal or Haram. They have not yet given a specific opinion on this. They say cryptocurrency can be halal, and it may be Haram.
If the world’s powerful states legitimize cryptocurrency, it can be lawful.
So Dr Ahsan H Mansur said, ‘I think Bitcoin is like gambling. And Many people buy them with the mentality that the price will rise.
The maximum use of crypt coins is casino, drug and smuggling.
The Turkish Ministry of Religious Affairs, the Central Fatwa Department of Egypt, and the Central Fatwa Department of Palestine gave the Haram fatwa to Crypt Coin.
An online group of Islamic Economic Forums of the International Islamic Scholars Darul Uloom Deoband and an online group of Islamic Economic Forums gave Bitcoin a haram fatwa.
Because of the publisher’s ignorance of the currency’s currency, its future value, and the lack of any specific responsibility, the state supervision and observation do not have stress at its price.
And in Islam, the currency is worth the value (the Malay Mutakwaim). Based on all this, Islamic scholars have said crypt cards for Haram.
Arguments in Favor of Cryptocurrency Being Halal
Proponents of cryptocurrency argue that it is halal because of the:
- It is a digital asset and not a fiat currency.
- Any central authority does not control it
- It is a medium of exchange and a store of value.
- Be It is transparent, secure, and accessible to all.
- It has the potential to revolutionize the global financial system.
Cryptocurrency Haram and Islamic Financial Principles:
When evaluating whether cryptocurrency is halal or Haram in Islam, it is essential to consider how it aligns with Islamic financial principles.
- Prohibition of Riba (Interest):
One of the fundamental principles of Islamic finance is the prohibition of riba or interest in loans.
So This means that investments that involve interest or usury are considered Haram in Islam.
And Since cryptocurrency does not include interest, it can be argued that it is permissible under this principle.
- Prohibition of Gharar (Uncertainty):
Gharar or uncertainty is another principle of Islamic finance prohibiting investments involving excessive risk or uncertainty.
Since cryptocurrency’s value is highly volatile and subject to market fluctuations, some scholars argue that it is not compliant with this principle and is, therefore, Haram.
- Prohibition of Maisir (Gambling):
So Maisir or gambling is prohibited in Islam, as it involves a transaction where one party gains at the expense of the other without creating any real value.
And Some scholars argue that cryptocurrency, with its speculative nature and high volatility, is akin to gambling and is Haram.
- Prohibition of Haraam (Unlawful) Activities:
Investments in activities considered haram or unlawful in Islam, such as the sale of alcohol or pork, are not permissible.
Since cryptocurrency can be used to facilitate transactions in illegal activities, some scholars argue that it is Haram.
- Social and Ethical Considerations:
In addition to the above financial principles, Islamic finance greatly emphasizes social and ethical considerations.
This means investments that promote social justice, and fairness, while those that harm society or the environment are discouraged.
And Some scholars argue that cryptocurrency’s potential for anonymity and use in illegal activities may not align with these values.
Guidelines for Investing in Cryptocurrency in Islam
To determine whether cryptocurrency is halal or Haram, Islamic scholars have laid down specific guidelines that must be followed while investing in digital currencies. These include:
- Ensuring that the cryptocurrency in question is not used for illicit activities
- Avoiding speculative investments and high-risk ventures
- Investing only in companies that have halal sources of income
- Maintaining transparency and fairness in financial transactions
- Avoiding excessive risk and volatility
Frequently Asked Questions about Cryptocurrency Haram
Q: Is Bitcoin halal or Haram in Islam?
A: The legality of Bitcoin in Islam is a debate among scholars, with some arguing that it is permissible while others deem it Haram.
Q: Can cryptocurrency be perfect for Zakat?
A: Per Islamic principles, Zakat must be physical assets, such as cash, gold, and livestock. Therefore, cryptocurrency cannot be for Zakat.
Q: Is investing in cryptocurrency permissible in Islam?
A: Islamic scholars have differing opinions on whether investing in cryptocurrency is permissible.
However, it is essential to follow the guidelines laid down by Islamic principles while investing in digital currencies.
Are Cryptocurrency Haram and a brief conclusion
In conclusion, whether cryptocurrency is halal or Haram in Islam is complex and subject to varying interpretations.
While some scholars argue that cryptocurrency is permissible, others deem it Haram due to its speculative nature and lack of underlying assets.
However, the guidelines laid down by Islamic principles can help investors navigate the cryptocurrency world and ensure that their investments align with their religious beliefs.
It is important to remember that, ultimately, it is up to the individual to make an informed decision regarding their investments.
One should carefully consider the risks and benefits of cryptocurrency and consult with qualified Islamic scholars before making any investment decisions.
Aas the world of finance and technology continues to evolve, it is essential to keep up with the latest developments and analyze them through Islamic principles.
By doing so, we can ensure that our financial transactions are transparent, fair, and compliant with our religious beliefs.
Hence, whether cryptocurrency is, halal or Haram in Islam is not straightforward.
It depends on how it is excellent, the source of found, and whether it complies with Islamic financial principles.
Ultimately, the individual is responsible for determining whether their investments align with their religious beliefs and values.