Recently, I got involved in an argument with a few of my friends about whether cryptocurrency is Halal (or not). Being someone who writes mostly about cryptocurrency, these friends of mine thought it good to speak to me about this controversial subject. I participated in the argument because I thought it would make an interesting discussion for everyone involved. This article is an account of both sides of the argument. The conclusion is personal.
In the interest of full disclosure, I am not a Muslim. However, I grew up in and around the Islamic culture. I know this doesn’t make me a scholar. But, I believe I know enough to have an opinion about whether Cryptocurrency is Halal or not. With that said, let’s get on with it.
Through the argument, I observed something unique (perhaps). I observed that the two sides of the argument agreed on a few things. Let’s start with the things they agree on.
The pro and anti cryptocurrency brothers agreed that the “issue” of cryptocurrency in the Islamic world is recent. By being recent it means that the subject has not been discussed by Islamic scholars in the past. This, unfortunately, makes the topic “Is cryptocurrency Haram/Halal or not” subject to personal interpretations. They also agreed that, for Muslims to have a clearer insight into whether cryptocurrency is Halal or not. There have to be collaborations between Islamic scholars, economists, and people involved in such issues to deliberate and come up with a clear conclusion.
For those who are new to cryptocurrency or Bitcoin. Here’s a short history.
The first-ever cryptocurrency, Bitcoin was founded between 2007 and 2008. It was established by an unknown entity that goes by a Japanese alias, Satoshi Nakamoto. The name Satoshi Nakamoto is shrouded in mystery because no one knows where or who originated it. Not only that, when it started, it was in pennies and cents. A negligible figure. And after a couple of years, it jumped to 60,000 dollars. This has made a lot of Muslims wary of the currency.
Why Cryptocurrency is Haram
In the eyes of my anti-crypto brothers, There are serious concerns when it comes to dealing with cryptocurrency. These concerns begin from the origin of cryptocurrency. Also, they think the cryptocurrency mode is not sustainable and secure. The fact cryptocurrency /Bitcoin is not physical. That is, you cannot see and touch it like banknotes, deeds, certificates, etc. Makes cryptocurrency more complex to understand. My Anti cryptocurrency brothers believe that because cryptocurrency depends on the peer-to-peer, the blockchain and the algorithms that govern it, which is known to only a handful of people who control it and who are anonymous and no one knows who they are. People cannot seek justice when something goes “wrong”. So, to them, it is as if dealing with cryptocurrency is throwing your money in a vacuum, not knowing whether it will increase or decrease. Again, they believe most people do not care because all what they’re looking for is quick profit and gain. Which is haram. They compared cryptocurrency to a Pyramid Scheme that sells you hope and massive profit when someone buys. The anti-crypto brothers believe it is all bogus. It is all a hoax, and they consume people’s money because man by nature likes quick profit. According to them, the fact that crypto price is always fluctuating is not logical. Another point in the argument about whether cryptocurrency is a currency or a commodity? According to them, Bitcoin and other cryptocurrencies is not a currency because it is not backed by people. It’s not backed by governments. It’s not backed by central banks or normal banks. So people cannot argue whether it’s a currency. Another one of their argument is that their biggest with cryptocurrency is that the price goes way up and it can also come way down. This makes them perceive cryptocurrency to be a bubble waiting to be inflated and deflated.
They argued that there is a lot of ambiguity. They used this example to buttress their points.
“If I have dollars and you have euros, we would like to exchange. This is permissible in Islam with one condition, and that is that it has to be hand to hand. It has to be physical. I cannot say, OK, I accept this transaction. I’ll give you the money in half an hour. This is haram. The transaction is void. It has to be simultaneous. Give and take and virtual currencies. You don’t have this. The transfer is not simultaneous and you don’t have anything physical to hold onto.”
Why Cryptocurrency is not Haram
The few people (I am/was the pro cryptocurrency, so I’d write this passage in a first-person pronoun) that argued in favor of cryptocurrency had a lot to say. The controversy surrounding the origin is a masterstroke. Imagine, the inventor was known to all. The innovation would have been dead by now. This is because various governments would have taken him into their custody and tried to destroy or control his invention. Blockchain technology is one of the most secure inventions ever created. The folks that think and say that cryptocurrency is not secure are very ignorant about the technology. And those who are worried about its sustainability are even more clueless. The truth is that Bitcoin adopts and operates a very simple economic model. The natural law of supply and demand. Let me use my experience to explain this point. I went to buy a mobile phone recently. On my way to the shop, it began to rain seriously. It rained for about 6 hours. Everyone had to pause whatever they were doing. By the time the rain subsided, it was already dark. So, I aborted my mission and decided to go back home. However, I faced a problem. Like me, many people who had come to the market for various reasons were going back home, but the folks transporting people to their homes were few. Because of this, the price of getting home doubled. Demand went up (because it was late and busy) but supply was small, so the price skyrocketed. This is how Bitcoin works. Bitcoin over the years has grown from being a mere cryptocurrency to a store of value. Like Gold, Land, or house. This is because of the deflationary limited supply. Bitcoin is backed by millions of people around the world. If not, it would not have gained acceptance and mass following. Even now, many nations are beginning to legalize it. Like other currencies, bitcoin can be used for negative things too. It can also be used to do positive. The currency in itself is neutral. However, it is the person that uses the currency that directs whether it can use for good or bad stuff. For example, millions of donors are using cryptocurrencies to help Ukraine and Ukrainians who are currently involved in an unequal war with Russia. And the truth is, transactions done with cryptocurrencies can be instant. It all depends on the speed of the blockchain.
In conclusion, for most people, bitcoin and other cryptocurrencies mean freedom from the control or tyranny of government and their corrupt and manipulative financial systems. For others, it is a hedge against inflation. A tool for wealth preservation. While for some others, who I think do not understand the technology, it is haram and anti-Islam. Whatever, side you are on. Your belief in bitcoin or not, is the product of the type of person you are, at the end of the day.
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