Is Cryptocurrency like Bitcoin halal or haram? This question concerns many Muslims today as digital currencies grow rapidly. Let’s discuss an Islamic economic perspective on cryptocurrencies.

Is Cryptocurrency like Bitcoin halal or haram?

In recent years, many Muslims have asked whether cryptocurrency like Bitcoin is halal or haram. Moreover, as digital currencies continue to grow worldwide, understanding their nature and rulings in Islam is essential for any Muslim finance and ethical investing.

What is Cryptocurrency and how does it work?

Cryptocurrencies are digital or virtual currencies that use blockchain technology to record transactions. Unlike traditional money issued by governments, cryptocurrencies don’t have a physical form or a central authority controlling them. In addition, people buy, sell, and trade them through digital wallets on the internet.

Lack of physical backing and economic risks, Cryptocurrency like Bitcoin halal or haram

One of the major concerns in Islamic finance is that cryptocurrencies lack tangible backing like gold, silver, or national economic value. In addition, their prices fluctuate rapidly, which may lead to speculation and financial loss. Islam encourages financial stability and warns against excessive uncertainty (gharar).

Allah says in the Qur’an:

Surah Al-Baqarah (188):

“And do not consume one another’s wealth unjustly or send it [in bribery] to the rulers so that they might aid you to consume a portion of the wealth of the people in sin, while you know it is unlawful.”

This verse reminds Muslims to avoid unfair or harmful financial practices.

Islamic economic perspective on cryptocurrencies, Scholarly opinions

Islamic scholars have different views regarding cryptocurrencies:

Cryptocurrency like Bitcoin halal or haram

1- Some scholars say halal

If you use cryptocurrencies as a medium of exchange, similar to money, and transactions are transparent and lawful, then they may be permissible.

2- Some scholars say haram

They argue that cryptocurrencies involve high speculation, making them similar to gambling (maysir), which Islam prohibits.

3- The Prophet Muhammad (peace be upon him)

“What is lawful is clear, and what is unlawful is clear, but between them are doubtful matters that many people do not know. Whoever avoids doubtful matters clears himself in regard to his religion and his honor. But whoever falls into doubtful matters falls into the unlawful.”

Sahih al-Bukhari & Sahih Muslim

This hadith teaches avoiding doubtful matters to protect one’s faith, choosing only clear lawful actions and avoiding potential harm or sin.

Sharia principles in wealth and fair trade, Cryptocurrency like Bitcoin halal or haram

Islam teaches that you should earn wealth through honest work, real value, and fair exchange. Besides, the objective of Sharia in financial matters is to protect wealth, prevent harm, and ensure fairness. If cryptocurrency trading under responsibly, transparently, and without gambling-like behaviour, some scholars consider it permissible.

Using Cryptocurrencies for Zakat or Charity

If a Muslim owns cryptocurrency and its value reaches the nisab (minimum amount of wealth for zakat), then he must pay zakat, just as with any other form of wealth.

Related post: What is Islamic finance?

Conclusion: Is cryptocurrency, such as Bitcoin, halal or haram? It depends on how you use it, but it’s better to avoid doubt. Using it responsibly as a medium of exchange can be halal, while speculative or gambling-style trading is haram.

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