What are Crypto Assets and the Views of Scholars on Crypto Assets
What are Crypto Assets and the Views of Scholars on Crypto Assets
It is seen historically money should be based on physical assets to be a coin paper money, gold, silver or we can say exchange of goods. But now we see that everyone is talking about CRYPTO CURRENCY. What are the crypto assets and what are the views of Scholars on it?
The kind of understanding that we've had previously is money currency has to have physical nature and really the whole discussion on what is money in Islam and what is currently in Islam it's actually a very lengthy discussion it's a very vital and pertinent discussion because many assume that gold is the currency of Islam which is not true.
Misunderstanding about Gold as the currency of Islam
Gold is not the currency of Islam but gold was used as a currency reason means because of its properties gold in and of itself you know it doesn't have to be the currency but it's the properties of gold that make gold really appealing as a currency and that's why I was used as a currency for you know thousands of years and it's a property wherever we can find those properties that the new item can be a means of payment because money or currency is just that it's a medium exchange it's all about transferring value.
Crypto or Cryptocurrency
When we talk about cryptocurrencies, cryptocurrency is probably not the right term to use because cryptocurrencies in the industry anyway is a subset of the word crypto assets, crypto assets is this you could say the umbrella term and it's more commonly used nowadays to refer to all the different types of cryptos that are out there because there are many forms of cryptos with different utility so if we say crypto assets is the umbrella term cryptocurrency is a type of crypto asset.
What are Crypto Assets
When we talk about crypto assets what are we talking about crypto assets is simply a digital representation of value so it is crypto assets are a digital representation of value that uses cryptographic techniques to transfer to work you know function simple as that so could talk assets is all about using cryptographic techniques to transfer value or transfer something or to record something.
Example of Crypto Assets
If we have for example a database and I want to represent that I own one pound on a database my crypto can represent that value and I can send that value to you on this database and it is database now it's called blockchain then I'll be transferring my value or my input of 1 to you my unit to you that's what crypto assets are really and as I said they can represent many things crypto asks are not just about money crypto assets can can represent money on this digital space they can represent Assets in this digital space they can represent title Deeds for example our one of our founder brother Mohamed Zia Allah reward him he mentioned about himself as an example that he's aware of how title Deeds are being issued on the blockchain so somebody can have record and have evidence on the blockchain of their ownership of something so that now title is a piece of paper traditionally but now it's become a digital token it's become a digitized paper which is now on the blockchain it's immutable nobody can change the Kinder everybody can see it so nobody can mess around with his ownership nobody can manipulate the data there and that's the beauty of it so it's very secure so crypto assets can represent assets right where crypto assets can represent Commodities he can represent Securities and Investments crypto assets can represent services and utility they can be a a ticket to access things.
Types of Crypto Assets
There are many types of crypto assets so when it comes to a scholarly opinion in crypto assets as most people can appreciate it's a completely new area so many scholars have been researching writing and alhamdulillah I was very fortunate in the sense that when I was doing my master's program in designing finance and banking in the UK my dissertation was on crypto crypto assets and that's I think it's from that time from 2016 when Bitcoin was really booming you know the Bitcoin prices begin to inflate and so I just happened because of Allah's will I happen to be there at that time from Allah's kind of here's Allah's planning and my dissertation was on bitcoin at the time and that really allowed me to see the views and research Bitcoin much more and understand this whole area because I could dedicate you know months and months on this as part of my thesis and Scholars have deferred in cryptocurrencies and again it's because it's a new area a new area it's a new discussion it's a new issue.
If we were to categorize the opinion we could say there are three opinions among Scholars broadly and it's perfectly fine because it's a form of ijtihad because cryptocurrencies and new Scholars will differ but this shouldn't be a means of confusing yourselves rather you should follow any scholar you refer to you genuinely refer to your trust in the knowledge you ask them and take their opinion is no problem but it's perfectly fine to have an alternative opinion because this the issue is new it's going to have multiple opinions so if we were to outline the different views we could say;
1. Crypto Assets are not Shariah-compliant at all
The first view is that crypto assets are not Shariah-compliant at all but the reason these Scholars say they need some Scholars who are in this view you see that crypto assets are things that are not recognized as property in Islam it's nothing you know they just you know it's just something digitally has no value whatsoever meaning from an Islamic perspective it's not recognized as something which is existing okay that's their view the day of the view that really there's no entity there it's almost gambling you're just playing around with numbers and that's the view of some Scholars and they, therefore, they say Bitcoin is not shariah complaint this view has been seen in potentially Scholars from India in the subcontinent other Scholars have refrained from issuing an opinion and so these you could say probably in a subcontinent area this kind of opinion is prevalent where they say that crypto assets are not recognized anything whatsoever
2. Crypto Assets can never be used as a currency but they can be used to store data
The second opinion of crypto assets is that crypto-assets do exist they are something it is recorded it is retrievable a person can own them but they can never be used as a currency they can be used to store data they can't be used to transfer certificates or tokenize assets but they cannot be used as currency, currency can only be issued by a government or an authority currency cannot be digitized in this manner in a loose space which is privatized or decentralized and completely cryptographic it cannot be the role of currency is far greater than this so this is the second View.
3. Cryptocurrencies or Crypto assets can be used for anything and everything including cryptocurrencies
The third view of scholars is that cryptocurrencies or crypto assets can be used for anything and everything including cryptocurrencies meaning that those Scholars who are on the third view say you can get a cryptocurrency to develop a new currency you don't need authority or a government to tell you what's a currency you can transfer value amongst people in a network even without the government Authority and of course this is depending on where people are contextual realities challenges and the regulatory environment so that's why these look you could say these are like the three key areas majority of Scholars.
I would say or what I've noticed now anyway if they are somewhere between two and three where they are accepting that cryptocurrencies and crypto assets are a reality they can be traded they're all being traded but can they work independently can they function is there a risk is there governance risk is there Sharia risk is there a regulatory risk these are the questions now that the Islamic fintech industry is having and Regulators are having and I think when The Regulators come to a position that will really shape the industry and will have a much clearer position as many of you might be aware many governments are not talking about using crypto as a form of currency the idea is being discussed and reviewed so definitely it's something which we will see much more movement on in the near future.
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