Bitcoin is halal according to the opinion of the greatest experts on the issue

In this month of Ramadan, many of our Muslim readers are wondering whether cryptos are “haram” (prohibited by religion). It is time to shed some light on this delicate issue.

That said, we remind you that we are not theologians and that only the opinion of an expert on the religious question will be able to decide.

Also, to make the article more understandable, we will use words specific to the Muslim religion:

Haram: means sin, contrary to good religious practice.
Halal: Complies with Muslim rites.

What is Islamic finance?

As is the case with all holy books, there is no direct mention of bitcoin or cryptocurrencies. We must then interpret what we can read and transpose it to current reality.

That said, in the Quran, the mention of money as currency is present. Money serves as a medium of exchange between objects of similar value.

That said, knowing whether buying or owning bitcoin would be prohibited is nothing less certain. If we take bitcoin as virtual gold, and if gold is not prohibited, then inevitably, owning bitcoin would not be prohibited either... However, if we consider bitcoin as a volatile financial asset, then , the perspective changes…

Let's see what Islamic finance prohibits within the framework of strict finance.

The prohibitions of Islamic finance

You should know that Islamic finance follows the principles of Sharia law. So, countries where the government opts for an Islamic policy, they then apply the rules of Islamic finance.

Here are the big prohibitions:

1/ Usury: Interest from loans is unfair. They harm the borrower who is in need. The lender enriches himself on the poverty of some.

2/ The financing of amoral activities such as those linked to the consumption of alcohol or those linked to games of chance. Thus, gambling in general like gambling sites bitcoin sports betting or games bitcoin casinos are then prohibited…

3/ Speculation (Qimar et Maysir) and gambling is prohibited. If the Muslim risks money for easy gain and risks losing the hard-earned money, then it is sin.

4/ High-risk investments. In Islamic finance, this is what we call “gharar” and it is everything that refers to the idea of uncertainty, luck or risk. Thus, risky investments in derivative products or short sales are prohibited by Islamic finance.

Concretely, what is “Haram” in DeFi?

The main “law” found in the Koran (as in the Bible, moreover) is that which prohibits usury and interest.

Islam prohibits interest that a person might earn by lending to someone necessarily in need.

👉Thus, we could conclude that the practice of lending would be prohibited for practicing Muslims.

👉Similarly, some activities of Yield farming (not all?!) would also be excluded.

Experts agree that Bitcoin is “halal”.

It is not easy to decide on the question of Bitcoin because it would depend on the considerations we bring to Bitcoin. Many Muslims then asked the questions to the “ulama” who are the most learned people on the religion of Islam.

Some have spoken out in favor of the adoption of bitcoin by Muslims. This is particularly the case of Mufti Mohammed Abou-Bakr. He also advised the Pakistani bank SilkBank Limited so that it remains within the sacred principles of Sharia law. According to this mufti recognized by the community, Bitcoin is halal. It is a store of value in the same way as gold is. Likewise, he specifies that if bitcoin is used as “currency” and serves as a means of transaction, then it remains a currency like any other.

He recalls that all currencies have a speculative bias. This does not make these currencies haram elements however. It's the same thing for Bitcoin according to the mufti.

Other Islamic finance experts have reached the same conclusion. We can cite the Dr. Ziyaad Mohammed (who chaired the Sharia committee at HSBC in Malaysia). However, the latter warns against trading Bitcoin, because given the volatility of prices, he specifies that the degree of uncertainty makes it a dangerous element, close to gambling.

That said, let us remember that Muslim traders are authorized and that the practice must be done within the rules of Sharia. THE halal trading is quite relevant and very common among traders in Muslim countries. Bitcoin is halal for the majority of experts on the issue.

Among the most critical scholars are Mulana Jamal Ahmed and Mufti Faraz Adam. The latter warned that cryptocurrencies do not bring added value to society. The concentration of wealth in certain hands could even be harmful to society. That said, despite their doubts, they nevertheless conclude by saying that bitcoin is halal.

The criticisms against Bitcoin are the same as those who are against bitcoin in general

Obviously, no opinion is clear-cut. Among the expert opinions, we also find those who assert that bitcoin and cryptocurrencies are haram.

The most resistant to cryptocurrencies is certainly Sheikh Haitham who declared that bitcoin has no intrinsic value and that as such, it is a speculative and prohibited asset. Let us point out, however, that for Sheikh Haithman, fiat currencies (since the end of the Bretton Woods agreements in 71 by Richard Nixon) are not considered currencies in the Islamic sense of the term. These are not indexed to real values like gold. So, he is as opposed to bitcoin as he is to dollars, for example.

couple in dubai bitcoin — Muslim populations – in Africa – also as in Nigeria, are buying more and more bitcoin.

For the mufti of Egypt, for example, Sheikh Shawki Allam, bitcoin is too risky. The fact that cryptocurrencies are also used for criminal activities also poses a problem.

Cheikh's argument is in fact similar to the criticisms brought by anti-crypto people as was the case with Warren Buffet for example.

Other governments like Turkey or Algeria which have decided to ban cryptocurrencies, it is more for political or economic reasons more than for religious reasons.

Indeed, the anonymity of transactions and the volatility make them financial assets to be treated with caution.

Thus, Sharia experts who declare that cryptocurrencies are not halal are rather rare. The most recognized experts have rather declared the opposite. This is also what explains why many Muslim countries are seeing their populations buying more and more bitcoin (and other cryptos).

Moreover, Dubai has become a stronghold of cryptocurrencies…

Final word: Do Muslims have the right to use cryptocurrencies?

We have given you a quick overview of the question. We ultimately saw that experts on the issue lean on the side of bitcoin as being halal to the practice of Islam. Halal bitcoin is therefore tolerated for Muslims interested in crypto investment.

So this is good news, we want to say.

Now, as we have seen, Muslims can engage in halal trading (but within limited rules) just as they “cannot” be satisfied with the gains from usury specific to lending (crypto loan) for example.

That said, buy bitcoin or possessing it is not Haram in absolute terms.

Obviously, you can give us references or sources in the comments section if this is relevant.

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Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.

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