Muslims have several questions these days about Bitcoins. These include: Is Bitcoin halal? Is crypto trading halal? Is it acceptable for Muslims to trade in cryptocurrencies? What do the religious scholars state about it? This write-up aims to discuss this issue in detail.
Islamic Scholar opinions about Bitcoin
Below are screenshots of four fatwas about Bitcoin from four different sources. These include fatwas from "Grand Mufti of Egypt", Turkish Government, "Center of Palestine" and from "Shaykh Haitam from the UK" respectively. According to these all sources, Bitcoin is Haram. In simple words, as per these sources, Muslims should not deal with Bitcoin.
Summary of Religion scholar's arguments against Bitcoin and responses to it
Several arguments from the above-quoted sources are used against Bitcoin. These arguments are summarized below, along with my responses to each of these arguments.
- "Bitcoin is used for illegal activities; people use it for non-sharia compliant purpose, and also to hide from the government."
Response: If being intangible is an issue, then the software's that run computers are non-Islamic. It implies not using any computer (as it's impossible to run a computer without the software), internet banking, and many other things would also be not Halal. All computerization and anything that need a computer is not halal as per this argument.
3. "Bitcoin allows for money laundering, fraud and are used for speculations."Response: Paper money is also used for illegal activities, money laundering, and speculation. Does it also imply that the use of paper money is Haram?
4. "Bitcoin has no central authority that monitors its systems, but rather it destroys the central system that controls the money."Response: "Yes, Bitcoin has no central control, but why it is a problem until you support the current "interest-based banking system"? Without any doubt, Islamic scholars do not support interest-based banking as per Islamic teaching. The Bitcoin-based financial transactions remove that "interest-based" banking system, thus making it more "Islamic" than the current traditional banking system.
5. "Buying/selling of Bitcoin is not compatible with religion at this time."Response: Why Bitcoin buying is not compatible with Islam? There is no good rationale for it.
6. "The unknown authority issues it, and nobody has control over it."Response: The issuing authority is unknown, but that unknown has "no control over it now". It is now controlled by millions of computer systems that automatically control its supply. There is a well-known quantity of the Bitcoin in market. It cannot be faked like paper currency, or the existing system allows for any double-spending or fake transactions. Thus, there is no issue of system running or malfunctions.
7. "It is untrustworthy and unreliable."Response: If Bitcoin is unreliable and untrustworthy, then why do so many people want to buy it? Why its volume is increasing with every increasing day?
8. "It is gambling because much money invest in making it without knowing to be successful or not"
Response: As per this argument, every business is gambling because every business can return in profit or loss. No one is 100 per cent sure in advance that a business venture will give a positive return. As per this argument, the government should not spend on Oil, gas or mineral explorations' because it's gambling, and we do not know if it will succeed. The same holds for all scientific research and experiments that use money resources without ensuring all scientific research success.
9. "It is not backed by anything and is created from nothing."
Response: This is a rather interesting comment. It shows that these sources failed to comprehend the understanding of the Bitcoin or current monetary system. The present paper-based money system also has no backing. Every currency note has value because its issuing government guarantee its value. If today every dollar holder asks the USA government to return for their dollar holding, the USA government will collapse. So as per this argument, the use of the dollar or any other currency also is not Halal.
10. "It is not a legal tender."
Response: Yes, it's not legal tender because no government or country has issued it. "Legal" status is given to things that are issued by some authority.
Do our Muslim Scholars are lagging again?
In the past, when television was introduced, our Ulma called it a devil box and called it Haram. The same holds for loudspeakers by the argument that the devil makes the sound more loudly. Today, there are separate religious television channels, and the world best loudspeaker systems are installed in the Grand Mosque of Makah.
The case of Bitcoin does not seem different from the above two quoted well-known examples. Our Ulma is not keeping up with modern technology and declaring it non-Islamic for reasons that do not make sense. It is recommended that these scholars should first understand the entire crypto-based system before issuing any halal/haram fatwas on it.
However, there is one aspect that one has to consider while dealing with crypto trading. Margin trading involves interest, and clearly, it is against the fundamental teaching. Therefore, Muslim traders should avoid margin trading if they want to keep their earnings interest free.
Disclaimer. This article was drafted based on my understanding of Bitcoin, cryptocurrencies and economics. I, while having some background in all that, but still may not have perfect knowledge. Anyone interested in knowing further is strongly recommended to discuss these issues with more learned religious scholars while considering my arguments. Comments, suggestions, guidance are welcome.
Comments
Post a Comment