The whole world right now has been very excited about a new blockchain technology that has been implemented over 13 years ago. Every single person involved directly or indirectly in this industry talks about how this technology can change the whole current finance system. People are very excited, some of them make money from crypto, and some of them take this advantage to create better technology in the blockchain. But for Muslims, the question that remains until now is can we be involved in this technology, either invest, trade, or for daily transactions?
What are Cryptocurrency and Blockchain?
Cryptocurrency is a digital asset that employs encryption to prevent forgeries and double-spending. Most of the cryptocurrencies are built on blockchain which can give more security, transparency, and decentralized features to the assets itself. While blockchain is a system that can record daily transactions in a very complicated way in order to secure the transactions from hacking and forgeries.
Crypto as Currency
Cryptocurrency can be considered as currency if it complies with Thaman criteria. According to Imam Ahmad, currency and money can be identified by the acceptance of the people. For example, fiat money is accepted by people and used across the world and everyone needs fiat money as a medium of exchange.
Thaman criteria:
- Can be spent by the owner
- Can be used as a standard of pricing
- Medium of exchange to buy any asset
Crypto as Asset
Could crypto be an Asset? Asset in Islamic perspective can be defined as valuable that has intrinsic value (Mal Mutaqawwam). Ibn Abidin defines Mal as what human instinct inclines to and which is capable of being stored for the time of necessity. While Imam Shafie defines Mal as something that is valuable and needs to be replaced or pay compensation if someone damages the asset. Mal has been often mentioned in Quran, one of them is mentioned in Al-Baqarah verse 284:
"Oh you who believe, do not take each other's property by false means, unless it is trade conducted with your mutual consent. Do not kill one another. Indeed, Allah has been Very-Merciful to you."
Mal criteria:
- Can be used and utilized in our daily life
- Can be owned now and in the future
- Exist
- Permissible or Halal according to Shariah ruling
The question is, is cryptocurrency currency or asset?
What did Muftis and Scholars say?
Some of them stated the ruling of crypto trading is permissible and some of them were against crypto trading. There are also some scholars that hold their opinion until the technology is proven with a certain condition.
Grand Mufti of Egypt-Dr. Shawki Ibrahim Abdel-Karim Allam
The Grand Mufti of Egypt clearly stated that digital currency or cryptocurrency is prohibited due to cryptocurrency risk as well as its high-profit potential will undermine Egypt's ability to maintain and stabilize its own currency. This is because cryptocurrencies are not regulated by any country or central body, thus it can be exposed to scams, money laundering, and other unethical activities.
Chairman of Shariah Advisory Council of Securities Commission Malaysia-Dr. Mohd Daud Bakar
Dr. Mohd Daud Bakar stated that cryptocurrency is permissible. He describes cryptocurrency as a tool in blockchain technology that can be beneficial to our society. He opposes the thought that defines cryptocurrency as a currency but it was more than that. Bitcoin in particular can solve many problems that have been faced by the Central Authority. He came with an argument that the transparency of Bitcoin in particular can fight against money laundering. For example, if we pay zakat, everyone can track the record, whether the money was spent well or not. There is no central authority that can manipulate the ledger.
Chairman of AAOFI Shariah Board-Mufti Muhammad Taqi Usmani
Mufti Taqi Usmani when he was asked about his point of view in cryptocurrency said that he worried that cryptocurrency is used for speculative purposes in trading, but declined to give any ruling/hukm on cryptocurrency. He also stated that he will give his opinion and consider it permissible until cryptocurrencies are backed by real assets.
How Cryptocurrency Can Change the World?
Enough with the hype of how we can make money with crypto. We move to the technology itself that probably can change our corrupt financial system. Let's talk about decentralized finance (DeFi) offered in the blockchain. The financial world has been controlled by banks since a long time ago. They provided us with fiat money, loans, and security to facilitate us in our daily life. But with ease comes the hardship, which in this current financial system is open to mistakes of humans, sometimes it can also open to fraud activities among the human in this system. What if our financial systems are not controlled by anyone but controlled by everyone. There comes the Blockchain that at least can reduce the error and corruption while boosting the efficiency and cost of our daily financial activities.
Conclusion
This topic will never end until cryptocurrency is proven as a good tool and technology for us. Our Scholars have tried their best to come out with a good solution for Muslims. It was a very controversial topic to discuss among us, thus as good Muslims we are encouraged to follow the opinion that has been stated by Muftis and Scholars.
*We have been researching Shariah's Status for listed cryptocurrencies in Exchange. May this effort can help Muslims traders to invest ethically. Allah knows better.