Investigating Cryptocurrency as Shari’ah-Compliant Money by Critically Analyzing Arguments of the Opponent Scholars
Keywords:
Cryptocurrency, Shari’ah, Medium of exchange, Unit of account, Store of value, Gharar, MaysirAbstract
This paper aims to investigate whether cryptocurrency serves as Shari’ah-compliant money through critically analyzing arguments of the opponent Islamic scholars. Generally, something is referred to as money if it is used as a medium of exchange, unit of account, and store of value. Cryptocurrency such as bitcoin is māl because it is a valuable thing, it has uses and benefits, and it can be stored and presented electronically. Presently, it unsatisfactorily meets the functions of money such as medium of exchange, unit of account, and store of value. Bitcoin also fails to fulfill maqāṣid al-shariʿah at this stage. It must not necessarily have an intrinsic value. Volatility, speculation, and chance of being used in illegal activities are external factors and have no direct concern with regards to determining something as a valid currency.
References
Nakamoto, Satoshi. "Bitcoin: A peer-to-peer electronic cash system." Decentralized Business Review (2008): 21260.
Higgins, Stan. “From $900 to $20,000: Bitcoin’s Historic 2017 Price Run Revisited,” Coindesk, December 29, 2017, https://www.coindesk.com/900-20000-bitcoins-historic-2017-price-run-revisited
Thompson, Patrick. “Bitcoin Adoption by Businesses in 2017,” Cointelegraph, January 1, 2018, https://cointelegraph.com/news/bitcoin-adoption-by-businesses-in-2017
Meera, Ahmad Kameel Mydin. "Cryptocurrencies from islamic perspectives: The case of bitcoin." Buletin Ekonomi Moneter Dan Perbankan 20, no. 4 (2018): 475-492.
Bakar, Nashirah Abu, Sofian Rosbi, and Kiyotaka Uzaki. "Cryptocurrency framework diagnostics from Islamic finance perspective: a new insight of Bitcoin system transaction." International Journal of Management Science and Business Administration 4, no. 1 (2017): 19-28.
Bakar, Nashirah Abu, and Sofian Rosbi. "Robust framework diagnostics of Blockchain for bitcoin transaction system: A technical analysis from Islamic Financial Technology (i-FinTech) perspective." International Journal of Business and Management 2, no. 3 (2018): 22-29.
Adam, Mufti Faraz. "Bitcoin: Shari’ah compliant." Amanah Finance Consultancy 2017 (2017): 1-54.
Nurhisam, Luqman. "Bitcoin: Islamic law perspective." QIJIS (Qudus International Journal of Islamic Studies) 5, no. 2 (2017).
Mazahiri, Mufti Salman. “بٹ کوئن کی حقیقت اور اس کا شرعی حکم (in Urdu). International Centre for Education in Islamic Finance (2018). Available at https://ia800105.us.archive.org/0/items/BestUrduBooks218B/BITCOIN_KI_HAQIQAT_AUR_USKA_SHARI_HUKUM.pdf
BBC News. “Egypt's Grand Mufti endorses Bitcoin trading ban,” Januray 2, 2018, https://www.bbc.com/news/world-middle-east-42541270
Kahf, Monzer. “Fatawa money, currencies, gold, sarf 2017” (2017). Available at http://monzer.kahf.com/fatawa/FATAWA_CURRENCIES_GOLD_COMMODITIES.pdf
Egypt Today. “Bitcoin is forbidden in Islam: Mufti's counsellor,” December 31, 2017, https://www.egypttoday.com/Article/1/38992/Bitcoin-is-forbidden-in-Islam-Mufti-s-counsellor
Hurriyet Daily News. “Turkey’s top religious body declares Bitcoin ‘inappropriate’,” November 29, 2017, https://www.hurriyetdailynews.com/turkeys-top-religious-body-declares-bitcoin-inappropriate-123243
The New Arab. “Digital currency bitcoin 'forbidden in Islam', rules Saudi cleric,” December 6, 2017, https://english.alaraby.co.uk/opinion/digital-currency-bitcoin-forbidden-islam-rules-saudi-cleric
Abu-Bakar, Mufti Muhammad. "Shari’ah analysis of bitcoin, cryptocurrency, and blockchain." Shari’ah Analysis in Light of Fatwas and Scholars’ Opinions (2018).
Naz, Samina, and Naila Nazir. “Exploring Acceptability and Legitimacy of Bitcoin in Islamic Financial System.” Journal of Islamic Civilization and Culture 1 no.1 (2018): 35-53.
Az-Zuhaili, Wahbah. "Fiqih Islam wa adillatuhu, terj." Abdul Hayyie al-Kattani, dkk. Jakarta (ID): Gema Insani (2011).
Usmani, Mufti Taqi. “Fiqh al-Buyu.” (2015) Damascus, Syria: Dar al-Qalam.
Rahmani, Khalid Saifullah. “Jadeed Fiqhi Masail.” (2010). Zam Zam Publishers, Karachi
Kelion, Leo. “Bitcoin: Experts clash over the crypto-currency,” BBC News, November 28, 2013, https://www.bbc.com/news/technology-25130261
Kelly, Brian. The Bitcoin big bang: how alternative currencies are about to change the world. John Wiley & Sons, 2014.
Paracha, Muhammad Owais. ” ورچوئل کرنسیوں کی شرعی حیثیت (in Urdu)”. (2018) Jamiatur Rasheed Karachi. Pakistan
Valdes-Benavides, Ruy Alberto, and Paula Lourdes Hernandez-Verme. "Virtual currencies, micropayments and monetary policy: Where are we coming from and where does the industry stand?." In Handbook on 3D3C Platforms, pp. 123-159. Springer, Cham, 2016.
Sorge, Artus Krohn-Grimberghe Christoph. "Practical Aspects of the Bitcoin System." arXiv preprint arXiv:1308.6760 (2013).
Yermack, David. "Is Bitcoin a real currency? An economic appraisal." In Handbook of digital currency, pp. 31-43. Academic Press, 2015.
Krawisz, Daniel. “Bitcoin as a Store of Value, Unit of Account, and Medium of Exchange,” January 12, 2015. https://nakamotoinstitute.org/mempool/bitcoin-as-a-store-of-value-unit-of-account-and-medium-of-exchange/
Lo, Stephanie, and J. Christina Wang. "Bitcoin as money? Current policy perspectives." Federal Reserve Bank of Boston (2014).Retrieved from https://bitcoinwallets.com/bitcoin-as-money.pdf
Wolla, Scott A. "Bitcoin: Money or Financial Investment?." Page One Economics® (2018).
Baur, Aaron W., Julian Bühler, Markus Bick, and Charlotte S. Bonorden. "Cryptocurrencies as a disruption? Empirical findings on user adoption and future potential of bitcoin and co." In Conference on e-Business, e-Services and e-Society, pp. 63-80. Springer, Cham, 2015.
Johnson, Grahame, and Lukasz Pomorski. "Briefing on digital currencies." Briefing to the Senate of Canada (2014). Retrieved from https://www.bankofcanada.ca/wp-content/uploads/2014/04/Senate_statement.pdf
Claeys, Grégory, Maria Demertzis, and Konstantinos Efstathiou. Cryptocurrencies and monetary policy. No. 2018/10. Bruegel Policy Contribution, 2018.
Gaffey, Conor. “Why Zambia's Kwacha is the World's Best-Performing Currency,” News Week, April 15, 2016, https://www.newsweek.com/why-zambias-kwacha-worlds-best-performing-currency-448266
BBC News. “Brazilian real weakens to nearly 4 reais to the dollar,” December 30, 2015, https://www.bbc.com/news/business-35202212
Mohammad, Omar. “Mozambique has suffered a brutal drop in its currency,” Qartz Africa, October 30, 2015, https://qz.com/africa/537510/mozambique-has-suffered-a-brutal-drop-in-its-currency/
Hanke, Steve. “Zimbabwe Hyperinflates Again, Entering the Record Books for A Second Time in Less than a Decade,” Forbes, October 28, 2017, https://www.forbes.com/sites/stevehanke/2017/10/28/zimbabwe-hyperinflates-again-entering-the-record-books-for-a-second-time-in-less-than-a-decade/#6d51ac743eed
King, Ritchie. S. “By reading this article, you‟re mining bitcoins,” Quartz, December 17, 2013, http://qz.com/154877/by-reading-this-page-you-are-mining-bitcoins/
Magro, Pablo. “What Greece can learn from bitcoin adoption in Latin America,” International Business time, July 16, 2016, http://www.ibtimes.co.uk/what-greece-can-learn-bitcoinadoption-latin-america-1511183
Evans, Charles. "Bitcoin in Islamic banking and finance." Journal of Islamic Banking and Finance 3, no. 1 (2015): 1-11.
Reilly, Caitlin. “Venezuelans use cryptocurrency to bypass corruption, inflation,” Roll Call, September 10, 2019, https://www.rollcall.com/news/policy/venezuelans-use-cryptocurrency-to-bypass-corruption-inflation
O’Hagan, Brian. “How Donald Trump is helping Bitcoin grow in Iran,” Heckernoon, July 26, 2018, https://hackernoon.com/how-donald-trump-is-helping-bitcoin-grow-in-iran-331ee7445bd
Javaid, Omar. "Historical and Ideological Peculiarity of the Monetary Institutions: Islamic and Austrian School’s Perspectives." Islamic Monetary Economics and Institutions (2019): 65-85.
Glaser, Florian, Kai Zimmermann, Martin Haferkorn, Moritz Christian Weber, and Michael Siering. "Bitcoin-asset or currency? Revealing users' hidden intentions." Revealing Users' Hidden Intentions (April 15, 2014). ECIS (2014).
Al-Qaradawi, Yusuf. "The lawful and the prohibited in Islam (K. El-Helbawy, MM Siddiqui & S. Shukry, Trans.)." Plainfield, IN: American Trust Publications (1999).
El-Gamal, Mahmoud. "An economic explication of the prohibition of gharar in classical Islamic jurisprudence." Islamic Economic Studies 8, no. 2 (2001).
Al-Zuhayli, Wahbah. "Financial transactions in Islamic jurisprudence, Vol. 1." Damascus, Syria: Dar al-Fikr (2003).
Al-Suwailem, Sami. "Towards an objective measure of gharar in exchange." Islamic Economic Studies 7, no. 1 (2000).
