Published in  
Fiqh
 on  
October 12, 2020

Bitcoin! Let’s Talk!

Since the last few months I have been kept busy with questions about cryptocurrencies in general and bitcoin in particular.

The correspondence regarding this matter was further hiked with the passing of a few fatwas concerning these currencies with a strong airing of these currencies being forbidden (Haraam).

Furthermore, some of you came across a couple of twitter posts of mine related to Bitcoin, and an understanding in some circles was formulated stating that I have passed a fatwa stating it to be permissible (halal).

Given the sensitive nature of the topic and its questions; I quickly share the following points with the objective of covering the answers to the questions being asked.

Disclaimer: This is not an article nor a detailed response.

  1. Irrespective of any private advice I have provided regarding Bitcoin; I have not passed a fatwa stating that Bitcoin buying/selling is impermissible, nor have I said it is permissible. I promote this stance currently due to the sensitive nature of the currency and the fact that more time, research and deliberation regarding the topic are required before an absolute view can be taken by myself. There are so many technicalities regarding its trade as well, especially given that it is considered a new concept. These technical issues pertaining to Bitcoin and it’s exchange will be looked at and refined over time which will have a bearing on any fatwa considerations, which makes it especially difficult to develop a well rounded conclusive fatwa at this moment in time.
  2. I respect the fatwa of the scholars and duaat who have come out stating the purchase/sale of the currency to be impermissible, and believe they have made some valid points in their reasoning. That said; I also disagree with some of the reasoning’s offered in substantiation of their concluded views, and my agreement and disagreement with them in these matters is part of a natural discourse with regards to matters of this nature.
  3. I believe the discussion in terms of whether Bitcoin is a currency or a commodity is a non-bearing one in terms of the considerations required to pass a fatwa on Bitcoin.
  4. In terms of my current contemplation’s; I consider Bitcoin to be a currency as it does facilitate trade, and is considered a currency by many a norm in our age today.
  5. That said; I also agree that Bitcoin does not hold any intrinsic value; however it is enough for it to be a means of exchange to be considered a form of currency from a fiqh perspective in my current view.
  6. Point 5 would entail that the rules and regulations of trading currencies in Islamic fiqh would apply when moving these currencies, and Zakah must be paid on them. This point is a way forward for those already holding Bitcoin.
  7. I believe when researching this topic, it is more conducive to ask the following question.
    “Are there any issues from a fiqh perspective that make Bitcoin haram”,

    rather than asking:

    “Is Bitcoin Halal”.

    The reason being that from a fiqh perspective; everything not related to worship is considered permissible until proven otherwise.

  8. I believe that the block-chain technology carries the objective of preventing the double spending of money, which is an objective not enjoyed by fiat money today or its regulations. This objective is no doubt useful in terms of fixing many of the ills of modern day financial practices.
  9. I believe Bitcoin aims to decentralize the means of exchange by making every individual a central bank essentially. This objective is no doubt useful in terms of fixing many of the ills of modern day financial practices.
  10. For those viewing it’s trade as permissible; I do not believe that Bitcoin should be used as an investment, just like how it is never encouraged to invest in fiat money. It should be used as a medium of exchange as was intended in terms of its objectives. Perhaps doing so will allow it to develop in a more natural manner and achieve some of its intended objectives.

    Based on this, I do not advise you to invest your student grants in Bitcoin.

  11. It is forbidden to use Bitcoin for any impermissible activity, and this includes using Bitcoin for speculatory purposes and betting on it’s price fluctuation. This advice would be the same for any currency or commodity, shares or otherwise, experiencing the same practices.

    Refraining from doing so will allow it to develop in a more natural manner and allow it to achieve some of its intended objectives, which will in turn allow it to provide a greater clarity for a more definite fatwa to be passed regarding it by the scholars who have held back from issuing a fatwa about Bitcoin to day.

  12. It is not permissible to purchase Bitcoin during any of its bubble phases due to the presence of a high chance of loss. This advice would be the same for any currency or commodity, shares or otherwise, experiencing the same symptoms.

    Refraining from doing so will allow it to develop in a more natural manner and allow it to achieve some of its intended objectives, which will in turn allow it to provide a greater clarity for a more definite fatwa to be passed regarding it by the scholars who have held back from issuing a fatwa about Bitcoin to day.

  13. For those who are convinced by the fatwa regarding Bitcoin being impermissible, which is a respected stance; it would be permissible for you to liquidate the coins purchased before the passing of the fatwa. You are also entitled to keep any profits received from the sale of the coins.
  14. I believe cypto-currencies to be the future and something which will remain a topic of discussion. Currently it is a topic that does require time and further research, contemplation and discussion, as said earlier; so please do not become disrespectful of the scholars and duaat offering their respected positions.
  15. In terms of differences of opinion regarding Bitcoin and other similar currencies; your responsibility is to follow the stance of your sheikh responsible for your Islam related matters.

I pray these 15 points offer some guidance and provide answers to the questions being asked. I will endeavor to update you all as my own development regarding these currencies develop, InShaAllah.

And in Allah Almighty is all trust placed, and Allah knows best.

Your brother,
Sajid Umar

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