So it’s Cryptocurrency Season again. We all have one question in our minds: is it okay to buy Bitcoin in Islam? Is it gambling or just a regular currency? And how does Bitcoin have its value? How is the value of Bitcoin created? These questions seem really straightforward but are actually hard to answer. So today, I will break it down for you to understand how the value of Bitcoin is created and whether you should buy it or not. Shall we begin?
Why do people think it’s haram?
Well, most people think Bitcoin is haram due to the nature of its existence. People argue that if we can’t see or touch something, it doesn’t have value. But is that true? First, let me try to explain how Bitcoin is actually created. In fiat currency (paper currency), paper is printed with special security features so it would be hard to copy. Basically, fiat currency only has value because we all agree upon it. In reality, it has no intrinsic value at all. Fiat currency can be printed endlessly.
Let me explain how Bitcoin works and how Bitcoin solves this infinite supply issue. I will explain it to you like a 10-year-old so everyone can understand with this analogy:
Imagine you have a giant puzzle that needs to be solved, and solving it earns you a shiny prize, like a rare sticker. Now, to solve this puzzle, you need to use a computer that works super hard and fast—kind of like running a race over and over until it finds the answer.
The computer needs energy to work, just like you need food to run around. This energy comes from electricity. So, the computer uses electricity to solve the puzzle. When it finally solves it, it gets a “Bitcoin” as the reward.
This process is called mining, like digging for treasure. The electricity helps the computer “dig” and find Bitcoins. The harder the puzzle gets, the more electricity the computer needs to solve it!
So with that example, it becomes harder for anyone to print, so it’s completely decentralized, which means no single person has control over the Bitcoin network. So the question still remains: if it’s not tangible, is it haram or halal? In that case, all the e-currency wallets are also haram to use since you can only see the digits and can’t touch the money.
Bitcoin vs Fiat Currency – What is the difference ?
Due to Bitcoin’s nature, your money is safer when stored inside Bitcoin than trusting these banks, so-called Islamic banks. They envy Bitcoin because they know if everyone starts using cryptocurrency, they will be doomed because they can no longer make a profit with your money. Do you know when you deposit money in your bank, they instantly use your money to make a profit? They can lose your money, and that’s how banks go bankrupt.
Fiat Currency is always on free fall. The value of fiat currency is falling since its creation. Take a look how USD is losing its value overtime.
Look at the following graph how USD is losing its value, while people do think that USD is one of the most powerful currency in the world. its losing its purchasing power. 99% of its value is gone and its not going to stop. its almost the same case with other fiat currency as well including Afghan Afghani, Albanian Lek, Algerian Dinar, Azerbaijani Manat, Bahraini Dinar, Bangladeshi Taka
So now take a look at bitcoin, bitcoin is scarce it means there will never be more than 21 million bitcoins in the world. over the time it the value of bitcoin will go up, its because bitcoin is still young if you look at bigger picture. So bitcoin supply is limited and can not be created out of thin air, while fiat currency / paper currency has unlimited supply and can be printed out of thin air. government can print tons of money out of thin air and they will release the currency to the public through banks and other channel. which will make the currency slightly less valuable.
Conclusion
So without wasting time, lets come to the conclusion bitcoin is not haram in islam only future trading is haram. future trading is like gambling where you have to bet on the market on either side. So while bitcoin itself is not haram. Also people do think bitcoin is used for extortions etc that’s not totally true because bitcoin is more traceable than regular fiat currency.
So its still not to late if you are looking to buy bitcoin, take a look at bigger picture within next few years bitcoin value will go up.
