Technology is a never-ending pathway that keeps advancing minute by minute. While that is a good thing as it helps us immensely with our day-to-day lives, a part of it becomes incredibly controversial when viewing it from a religious point of view.
The same goes in the case of Cryptocurrency!
Cryptocurrency is basically a digital channel of currency exchange and digital payments platform that utilizes blockchain technology. The digital and technological revolution in the past decade has meant that innovative payments have been utilized and created, and crypto is one of the major payment systems for business and personal use.
Numerous examples of technology bring up debates in Islam, and crypto is no exception. Usually, scholars turn to the Holy Book, The Quran, for answers to the debates.
All good about crypto. However, the question that comes to the mind of the Muslims before investing in this digital currency is whether it is Halal or Haram?
In this article, we’ll discuss this topic briefly to get the utmost clarification on this topic.
How Does The Quran help?
The Holy Book, The Quran, is a document about 1400 years old read by Muslims in the Islamic religion throughout the world. It is pretty apparent that a book that old may not have direct answers to the problems and controversies coming up in recent days; however, the Last Prophet, Prophet Muhammad (SAW), promised that since the Quran is the last book to be revealed till the Day Of Judgement, it has the answers to all the questions that will potentially rise till the last day.
The Quran conveys a set of highlighted boundaries when it comes to earning and taking risks with money. According to the research held by Science Direct, one of the straightforward guidelines in the Quran states that stability depends on assets. While assets are physical and tangible, crypto is quite the opposite. The entire point of cryptocurrencies is that they are not retrievable and are entirely digital, even though there are coins representing your investment. All transactions made through crypto are recorded on a blockchain.
Since the proceedings are online, you can only transfer the funds through a peer-to-peer network because, as mentioned above, the invested amount will not be turned into cash. This way, the invested money cannot be counted as an asset, as once the value of a virtual currency declines, your investments will automatically go into a loss.
Scholastic Views about Cryptocurrency
According to another research, some scholars consider cryptocurrency halal. They argue that crypto is free from interest and that blockchain and cryptocurrency concepts hold no transactions that earn money on money. It is a simple buying, selling and pricing process; hence crypto should not be considered as haram. Due to these views, the influence of crypto has been growing in the Muslim regions of the world. Thinking it is permissible, Muslims are now keen to learn more about cryptocurrencies and invest in them.
On the other hand, some scholars have quite the opposite views arguing that crypto should be considered haram. A report states that the major reason they can be deemed unlawful is that there are risks that come with the investment. There is uncertainty and no guarantee of returns if the currency value decreases.
In simple words, it’s a gambling bet; once you put in your money, there’s no guarantee that you’ll get the investment back. Gambling is considered haram, but uncertainty is mentioned as a dislike in Islam; hence, the scholars debate that people should not use crypto as a form of currency.
Why Is Ethereum Considered Halal?
In the recent past, a few academic experts gathered together and released a white paper stating that Ethereum is halal according to their thorough research. They further clarified that this statement regarding their research was concluded because Ethereum’s major currency is Ether which is used to power the network; hence it is a utility token and doesn’t comply with the currency laws in Islam.
On the contrary, Bitcoin has a very volatile nature. The value of bitcoin is not gradual; hence it fluctuates depending on the market. Neither does crypto benefit a country’s economy nor change the concept of transactions for the better. In addition, it has also not been adopted by an official government entity either.
What Cryptocurrency Facilitates?
Another reason why crypto is deemed on the negative side is that all the transactions are digital. It facilitates crimes and illegal activities like money laundering, drug money, smuggling, etc. All of which are considered haram. However, it is a different case if crypto is being traded as a commodity or a digital asset.
The uses of crypto are pretty vague; some people may just buy or invest in the currency, hoping for it to increase its monetary value until a fixed period of time, after which your investments may be doubled. Still, since crypto money is unretrievable, there is no point in keeping the crypto investment safe for a long time.
After all, cryptocurrencies are accepted by very few companies in the world, and not all businesses operate through currencies like Bitcoin. Most popularly, Tesla accepted Bitcoins as a form of payment, but they have discontinued this fragment as of now.
Overall, this way of using crypto is not really considered unlawful in Islam. However, you have to be very careful where you invest because some currencies use your tangible investments to generate interest for themselves; that’s how they earn and create more customers. Therefore, it is better to consider and rethink all the risks associated with this concept. The crypto dynamics are constantly changing and updating.
You can wait for a better update and a verdict from your Islamic scholar for a clearer view to help in your final decision. Although keep in mind that the primary concept of the currency will remain the same, maybe some rules might differ in the future that might affect the haram prospect.
In Islam, currently, no one has the authority to present a final verdict on whether cryptocurrency is halal or unlawful to influence the entire religion. Islam is divided into different sectors, and people can only follow what scholars of their particular sector preach.
Throughout this article, we have highlighted the benefits and drawbacks of investing in crypto, but this debate is still unresolved at the end of the day, this debate is still unresolved. However, Islamic scholars are gathering more information about the dynamics of crypto to understand it better and relate it with the laws outlined by the Holy Quran.