Is Cryptocurrency Halal or Haram? Is Bitcoin Halal?

After the introduction of Bitcoin, the biggest debate raised in Islamic banks, financial institutes, investors, and individuals is that, whether cryptocurrency is halal or haram.

This topic requires a high level of attention as a lot of people are getting into it.

The Bitcoin price has been zooming and zooming off just like this guy’s cryptocurrency and Bitcoin has had a lot of hype. Businesses are now accepting cryptocurrencies in return for their products and/or services.

Here is a true fatwa on Cryptocurrency:

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Is Cryptocurrency Halal or Haram? – Is Bitcoin Halal?

Yes, Cryptocurrency is halal and permitted in Islam. Trading and investing in cryptocurrencies like Bitcoin is halal, according to Islamic scholars. Cryptocurrencies benefit people and could be traded as a commodity or as digital assets.

This topic is still under discussion among Islamic scholars whether trading or investing in cryptocurrency is permissible under Sharia law.

The issue of Cryptocurrencies like Bitcoin, Ethereum, and other coins is a recent one which means that it has not been found or discussed by scholars in the past. Although there is still an ongoing debate about the investing and trading of crypto, we can take out a result from different fatwas available from authentic scholars.

Scholar’s Opinion on Legitimacy of Cryptocurrencies

Everyone wants to know the true fatwa on cryptocurrencies, so they can consider using them. So many people are getting hyped about it and cryptocurrency as a whole has been going through the roof.

There is a difference of opinion about the halal or haram of Bitcoin and cryptocurrency among Islamic scholars. Like, many things in Islamic scholarship the vast majority of people that I’ve talked to who are knowledgeable about the affair consider that it is permissible.

There are two schools of thought. Some say, cryptocurrencies are prohibited, as they are comparable to gambling and trading goods, both of which are prohibited under Islam. They claim it hasn’t been adopted by any legitimate government entity and that its value is only determined by the fluctuation of the market.

On the other hand, some scholars say that crypto trading is halal and should be legal to trade.

Here I’m going to share the latest debates and Fatwas of Muslim scholars on Bitcoin and other cryptocurrencies.

Scholars Who Believe Cryptocurrency Is Haram

According to certain Muslim scholars, trading in cryptocurrency is forbidden since it has no intrinsic value. There is no economic value to it, nor does it return any sort of origin.

“use of Bitcoin posed a risk of fraudulence, lack of understanding, and dishonesty.” Sheikh Shawki Allam – Mufti Of Egypt

“Cryptocurrency as currency is forbidden because it has elements of uncertainty, harm and doesn’t meet the Islamic requirement according to Shariah [law],” KH Asrorun Niam Sholeh

“Currencies are originally a medium of exchange, and making them a tradable commodity for profit earning is against the philosophy of Islamic economics. 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”. Mufti Taqi Usmani

Scholars Who Believe Cryptocurrency Halal

Several Muslim Scholars on the other hand believe that Crypto trading is halal and legal with certain conditions.

“Bitcoin and other cryptocurrencies are not a part of the real economy as they do not contribute anything beneficial to society. He said that Bitcoin does not play a role in promoting labor, production of goods, or services.” Maulana Jamal Ahmed – Scholar at Islamqa.org

“cryptocurrencies can be used as a supporting instrument for making great developments in the field of Islamic finance.” Mufti Abdul Qadir Barakatullah

“Although cryptocurrencies as a currency are forbidden, they could be traded as a commodity or digital assets if they meet requirements. As stocks had a clear value and the price increased or decreased depending on the company’s performance.” Mr. Sholeh

The Islamic Canonical Law referred to as Sharia, is a comprehensive law that is based on the teachings of the Qur’an and forbids certain practices. For instance, the acknowledgment of certain premiums which are viewed as usury (Riba), or interests in organizations that are against Islamic values, such as liquor.

Several conclusions emerged from the Muslim scholar discussion, attended by expert crypto and Islamic legal advisers, that crypto trading tends to use “fraudulent practices and gambling, but it can be considered halal and allowed if certain conditions are met.

Cryptocurrencies Can Be Halal, If

As an example, grapes sold for consumption and for sale are halal. According to Islamic law, they are permissible. In contrast, using grapes to make and drink wine is haram.

There is no problem with drinking coffee from an earthenware cup. But to drink wine in the same cup is Haram. This practice is forbidden. The cup is halal, but in some cases the use of the cup is haram.

Using crypto for fraudulent purposes and for gambling activities or for any other indirectly illegal act is haram. But if we use it for investment purposes or we trade with crypto where there is no bet, future Speculation, or liquidation of your assets, then Crypto is purely halal and legal.

Here are the three conditions, if met, we can use cryptocurrencies like Bitcoin for trading or investing:

There must be a central authority that tracks the transactions. In Islam, this is crucial to prevent the spread of illicit activities, like money laundering, drug trafficking, and other heinous crimes.
The coin’s value must be dependent on the stability and economy of the country’s government and the national economy. If possible, it should be backed by a real asset, such as gold, silver, etc.
A cryptocurrency should be removed from its speculative nature or at least mitigated. In Islam, saving capital is important since it stresses the importance of preventing losses for all people. Lastly, the volatility of cryptocurrencies must be controlled.

Ultimate Advice for Using Cryptocurrency for Muslims

Now, I want to cover three things. Firstly, what is a cryptocurrency, Secondly, is it actually a good idea to invest in this cryptocurrency? And thirdly, if you do invest what’s the best way to do that?

Firstly

Cryptocurrency is a type of digital currency. It’s based on decentralized where there can’t be any singular authority making decisions and there is almost 0 percent chance of scamming with money.

Cryptocurrency is protected by blockchain technology. Information is recorded in blockchains in such a way that hackers cannot change, hack, or cheat the system. There are many independent networks connected to multiple computers that record and duplicate transactions so cheating is virtually impossible.

Bitcoin could be created by mining. Mining is the process of creating new coins. It involves computers attempting to solve a complex mathematical algorithm. Anyone who solves the algorithm receives a crypto coin.

Secondly

Should you actually be investing and thinking about investing in Bitcoin? there are a few key considerations.

To think about here firstly is bitcoin and other cryptocurrencies a profitable potentially lucrative investment, the answer to this question is probably yes.

When it comes to investing generally, is this investment actually going to add real value to the world? I know that’s not always a big concern for everyone but for me, it is a big concern and I think for most Muslims it should be a big concern.

Because your money is going to have an impact on the world regardless of whether or not you want it to.

So, I would want it to be doing good stuff rather than you know not doing anything at all and I think with cryptocurrency and bitcoin and even gold or assets.

Literally speaking, Bitcoin is something that is a recent invention of the 21st century and there are a lot of serious concerns. When it comes to dealing with it whether it is from the origin where it came from or from the aspect of sustainability and security.

Thirdly

There are many ways of trading and investing in cryptocurrencies. But not all are if you want to invest or trade with crypto.

You can trade in the spot option. It means buying crypto at a low price and selling it when its price goes high. In this way, you can earn a lot. Buy and hold crypto is also halal and allowed from an Islamic perspective. You can invest your money in crypto as long as you want.

Future trading is haram and forbidden, and all the scholars agreed on this fatwa. Furthermore, Position trading, margin trading, Scalping trading, forex trading or bull trading, and Swing trading are also prohibited.

Conclusion:

While it took a lot of time for the cryptocurrency & Bitcoin to be accepted by the Islamic states, many are still skeptical about investing in BTC and other cryptocurrencies. In all instances, debates, and discussions among Muslim scholars, I got the result that Cryptocurrency is halal when it meets some conditions.

FAQs

Is Spot Trading Halal?

Yes, Spot trading is halal and permissible. Spot trading and Forex trading are the only forms of crypto trading that are considered halal by every Islamic scholar. You can use spot trading on any exchange like Binance.

Is Forex Trading Halal?

Yes, Forex trading is halal and permissible. Spot trading and Forex trading are the only form of trading that is considered halal by every Islamic scholar.

Is Futures Trading Halal or Haram?

Futures trading is haram and prohibited in Islam. It is something like gambling and gambling is categorically prohibited in Islam. In futures trading, the same principle applies. Binance futures or any other is haram.

Allah says in the Quran:

‘’O believers! Intoxicants, gambling, idols, and drawing lots for decisions are all evil of Satan’s handiwork. So shun them so you may be successful.’’ Quran Al-Maidah, Verse: 90

Is Perpetual Future Halal or Haram?

Perpetual trading is haram and prohibited in Islam.

Is Leverage Crypto Trading Halal?

No, Leveraged trading is not halal. It is haram and prohibited in Islam.

Is Cryptocurrency Halal or Haram? Is Bitcoin Halal?

Is Cryptocurrency Halal or Haram? – Is Bitcoin Halal?