What is the Shariah View of Money and Cryptocurrency
What is the Sharia View of Money and Cryptocurrency
Let's look at the background of money from an Islamic point of view, what is money, and what is the Sharia view on money and cryptocurrency? The first time that coins were used was in 600 BC by King Alyattes of Lydia based in Turkey so the modern form of turkey in the Eastern region of Turkey that King Alade started to use coins in 9000 BC you had a battle trade that was being conducted in one 118 BC that the Chinese started to use banknotes official banknotes in the 1950s we had Western Union that developed the use of electronic money or e-money.
There are three different views when it comes to cryptocurrency according to the modern contemporary Scholars the first view is that it can be considered to be a valid form of currency or a medium of Exchange in other words that it is it is a valid form of summon the second view is that we can consider it to be we can consider it to be an asset of value only in other words that it is not a currency but it is valid to trade the crypto because it is a it is a valid Sharia compliant asset of value the third view according to the scholars is that the cryptocurrency is impermissible so there are three views in terms of cryptocurrency according to the scholars now what is defined as currency in Islam so before we go there that there are two important points to note first is that an item could could be mobile and from a Shetty perspective we say everything in Sharia is permitted as long as we can prove that it is not impermissible so if we're saying that the crypto is permitted then we say that the general view is that it is committed so Allah that the original matter regarding this is that it is promoted then we find that those items which are merged in other words that it is considered to be a store of value it has other it is considered to be a store of value and money means that it is also recognized by Sharia as having a as having value from an Islamic perspective so an item for example that is traded for example weed Bali Etc or an item in this in the supermarket store that is considered to be malabutakawa because it has value and it can be exchanged in Sharia for a legitimate profit but let's say for example a person wishes to sell pork for example now although it is Mal although it is wealth but the Sharia doesn't recognize it as well so therefore it's not considered to become so when we look at the cryptocurrency we need to look at it from a not only from an outward perspective but we also need to delve deep into the white paper as to what the funds are being used for ETC to ensure that when we say something is an asset of value a legitimate asset or value that it can be traded it must be legitimate from the front in and from the back end it appears in one in in fact that ashay with us that when something is established it is also established what is with its subsidiaries in other words that if we're saying the crypto is permitted that it means the underlying activities also of the crypto must also be Sharia compliant.
We have established now that the crypto for example Bitcoin is a counter or an item of value that is recognized in Sharia in other words that it is it is an asset of value now when it comes to something to be considered a summon or a valid medium of exchange according to the preferred view of Imam Muhammad Rahim Allah in other words it must be something which is commonly used as a valid value or medium of exchange.
When we look at Bitcoin Bitcoin is generally used as a valid medium of exchange it has value so, therefore, Bitcoin can be considered to be a summon it can be considered to be a valid medium of exchange and it has generally gained widespread acceptance it has reached over the trillion dollars you know market value and it is used by the likes of PayPal Tesla and large other large corporations as a valid medium of exchange so this is in relation to bitcoin when it comes to other cryptos like ethereum Ripple Etc then we need to look at that more carefully and much more investigation needs to be done.
When we look at money in Sharia that there are two forms of money one is summer nationality and the other is someone else now refers to money such as gold and silver which has been prescribed in Sharia related to money that has been recognized as per the norm which is Fiat money for example we have dollars Rands pounds etc e-money for example through Western Union a person sends money you make an EFT Etc fiduciary money and commodity money so basically the preferred view is the view regarding whether crypto can be or whether an item or an asset can be a good medium of exchange.
We know that in the markets of Baghdad they used to use what is called follow which was a form of tender which was not legal tender it was not recognized by the state yet it was a valid medium of exchange and the fokaha and the jurors of the time permitted that so therefore we can apply the similar rationale to say that if it is accepted by Norm that for example Bitcoin or some other crypto is used as a medium of exchange then we can say that it can also be considered as a medium of exchange but nevertheless we need to also consider the issue of Bitcoin cryptocurrency in light of the massage in other words that what are the main objectives of sharia when it comes to Islamic Finance business and economics we have to protect the economic interests of the masses to ensure that they don't get involved in something where they could potentially lose money or they could be a scam or something of that sort so we need to be very clear in that something can be Sharia compliant but it doesn't necessarily mean that you need to invest your money in that thing and we also make the same disclaimer when we when we certify products Etc we say that yesterday are compliant according to our knowledge according to our understanding but whether you should invest in the product whether you should buy the solution that is a separate matter you should make your own investigation
So likewise here although we're saying that the Bitcoin is is a valid medium of exchange we're not necessarily saying that you should also invest in the Bitcoin.
What are some of the fundamental properties of a cryptocurrency so firstly is that you know the transaction is ill irreversible in other words that it is irreversible once a transaction has occurred then you can retrace or you can't recheck the money so from a security perspective it is extremely secure it is pseudonymous in other words that it is very difficult for identity theft security to be hacked Etc.
It is fast and secure it is permissionless and there are different forms of ledgers you have a public Ledger a private Ledger and a hybrid Ledger the number of cryptocurrencies you have cryptocurrencies like Bitcoin ethereum Ripple Litecoin cardano xrp Dodge Coin now I hear the new one is called Shiba Inu so the number of cryptos that have been established.
What are some of the benefits of crypto is that it prevents fraud identity theft the settlement happens almost immediately the fees are also reduced and you as the owner of the crypto will have immediate ownership access so these there are a number of benefits of this new medium of exchange or this new asset of value called cryptocurrency.
Disclaimer: The following article is prepared by TAIF with the help of the video available on its YouTube Channel of TAIF. The editing of this article is done by a human after carefully reading and listening to the recorded program, in case of any mistakes and errors we apologize in advance, please write to us at firstname.lastname@example.org