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What is the islamic ruling on cryptocurrency

What is the Islamic Ruling on Cryptocurrency?

In today's digital age, the intersection of technology and finance has led to the emergence of cryptocurrencies. However, for individuals adhering to the Islamic faith, it is crucial to understand the Islamic ruling on cryptocurrency. This article aims to provide a brief review of the topic, highlighting its positive aspects, benefits, and conditions for usage.

I. Understanding the Islamic Perspective on Cryptocurrency:

  1. Cryptocurrency Defined:

    • Cryptocurrency refers to digital or virtual currencies that utilize cryptography for security.
    • It operates independently of any central authority, making it decentralized.
  2. Islamic Financial Principles:

    • Islamic finance is guided by principles derived from the Quran and Sunnah.
    • Core principles include avoiding Riba (usury/interest), Gharar (uncertainty), and Haram (prohibited) activities.

II. Positive Aspects of Islamic Ruling on Cryptocurrency:

  1. Potential for Financial Inclusion:

    • Cryptocurrency can provide financial services to the unbanked and underbanked Muslim communities.
    • It offers the opportunity for individuals to access banking services without compromising Islamic principles.
  2. Decentralization and Transparency:

    • Cryptocurrencies operate on decentralized networks, reducing the risk
Individuals are usually interested in cryptocurrencies to earn profit. They can buy, hold, sell, or make short-term trades (e.g., minutes, hours, or days). Sharia does not consider crypto Haram unless it deals with impermissible activities related to Riba, Maysir, and Gharar.

What makes a crypto halal?

The consensus among experts suggests that for a cryptocurrency to be deemed halal, it must possess inherent value, serve a real-world purpose, and not be associated with illegal activities or excessive risk.


Why Bitcoin is not halal?

“In Shariah, there is no valid reason to accept bitcoin or other cryptocurrencies as a currency. It is just an imaginary number, which is generated through a complex mathematical process. It is purchased for gambling or speculations, and used in illegal or unlawful transactions”.

Is crypto a form of gambling?

The Committee concludes that cryptocurrencies pose significant risks to consumers, given their price volatility and the risk of losses. Given retail trading in unbacked crypto more closely resembles gambling than a financial service, the MPs call on the Government to regulate it as such.


Can Muslims do crypto?

What do Islamic scholars say about crypto? Many Islamic scholars seem to agree that, as it stands, cryptocurrency is haram, and should be avoided by Muslims.

Is cryptocurrency allowed in Islam?

“In Shariah, there is no valid reason to accept bitcoin or other cryptocurrencies as a currency. It is just an imaginary number, which is generated through a complex mathematical process. It is purchased for gambling or speculations, and used in illegal or unlawful transactions”.

What is Shariah compliant cryptocurrency?

Sharia-compliant cryptocurrencies are digital currencies designed and developed to comply with Islamic financial principles, specifically those related to prohibiting usury (riba) and uncertainty (gharar). There are blockchain networks that are being built with sharia compliance in mind.

Frequently Asked Questions

Is the crypto market halal?

Trading futures in cryptocurrency is generally considered haram in Islamic finance. This is due to its speculative nature, likened to gambling, and the involvement of uncertainty and risk, which contradict Islamic principles emphasizing risk-sharing and avoiding speculation.

Which Bitcoins are halal?

Among the major cryptocurrencies, Bitcoin, Ethereum, and Dogecoin come under the halal category, while Shiba Inu (SHIB) token, Alpha, and PancakeSwap (CAKE) are labelled haram. To use CryptoHalal, a user must enter the name of the cryptocurrency.

Why is Bitcoin used for illegal purposes?

Cryptocurrency is not only restricted to cybercrime but is used for all types of crimes that involve the transmission of monetary value. This includes money laundering, financial sanctions evasions and other corruption related crimes such as bribery and embezzlement.

Is Bitcoin is haram in Islam?

What do Islamic scholars say about crypto? Many Islamic scholars seem to agree that, as it stands, cryptocurrency is haram, and should be avoided by Muslims. Indonesia, the world's largest Muslim-majority country, has banned cryptocurrency trading.

FAQ

Is online trading Haram in Islam?
Any profit earned from such trade is permissible. online forex exchange where people buy and sell different currencies online without actually acquiring physical possession is not allowed and is called as haram by many scholars.
Can Muslims invest in Bitcoin?
Individuals are usually interested in cryptocurrencies to earn profit. They can buy, hold, sell, or make short-term trades (e.g., minutes, hours, or days). Sharia does not consider crypto Haram unless it deals with impermissible activities related to Riba, Maysir, and Gharar.
Is crypto trading halal in Islam?
The Islamic Finance Guru believes that cryptocurrency is Sharia-compliant, in principle. According to their Sharia policy, they view crypto as a true currency, or as a digital asset. They also recommend that Muslim crypto traders check each crypto purchase or project individually to decide whether it's halal or haram.

What is the islamic ruling on cryptocurrency

Why is crypto mining haram? In conclusion, the question of whether Bitcoin mining is Haram in Islam remains a topic of debate. While some argue that it violates the principles of Islamic finance due to its association with uncertainty, others contend that it is a legitimate activity that contributes to the functioning of the blockchain network.
Can Muslims invest in crypto? Individuals are usually interested in cryptocurrencies to earn profit. They can buy, hold, sell, or make short-term trades (e.g., minutes, hours, or days). Sharia does not consider crypto Haram unless it deals with impermissible activities related to Riba, Maysir, and Gharar.
What does Islam say about Bitcoin? What do Islamic scholars say about crypto? Many Islamic scholars seem to agree that, as it stands, cryptocurrency is haram, and should be avoided by Muslims. Indonesia, the world's largest Muslim-majority country, has banned cryptocurrency trading.
  • Why is Bitcoin mining haram?
    • Critics argue that the volatile nature of cryptocurrencies, including Bitcoin, makes it akin to gambling. They contend that since the value of Bitcoin fluctuates greatly, mining it involves an element of uncertainty, which is prohibited in Islamic finance.
  • Are Muslims allowed to invest in Bitcoin?
    • Individuals are usually interested in cryptocurrencies to earn profit. They can buy, hold, sell, or make short-term trades (e.g., minutes, hours, or days). Sharia does not consider crypto Haram unless it deals with impermissible activities related to Riba, Maysir, and Gharar.
  • Why cryptocurrency is haram
    • Since cryptos are real digital assets that can be owned, possesed, and stored on wallets and traded on exchanges, some Islamic scholars consider them halal.