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Digital Currency-Bitcoin

Question

Assalam o Alaikum,

 

I want to know nowadays digital currencies are booming and everyone is investing and earning from it. I feel that it is not Halal as it has uncertainity and it is not a physical currency. Many members of my maternal family have invested their money and trading in BitCoin and they are insisting me to start investing in BitCoin. Can you please research on these type of digital currencies / crypto currencies and let me know if it is permissible to trade in BitCoin or any other digital currency?

 

JazakAllah.

( Question posted as received )

 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Kindly find attached the Darul Iftaa’s position on bitcoin and cryptocurrency.

http://www.askimam.org/public/question_detail/38905

 

Hereunder is Mufti Ebrahim Desai (Hafidhahullah) Saheb’s summary on bitcoin and cryptocurrency. This is extracted from the discourse on Islamic finance held in Mallinson Masjid-e-Noor every Monday after the Esha Salaah.

Mufti Saheb explained the various types of currencies.

There are two types of currencies  

1)     Natural currency- Currencies which have intrinsic value such as gold and silver

2)    Artificial currency- All types of currencies-besides natural currency. There are many types of artificial currency which are mentioned below

a)   Commodity currency

b)   Fiat currency (Rands, Dollars etc.)

c)    Fiduciary currency (chequebooks etc.)

d)   Electronic currency (card)

e)   Digital currency (bit coins and all cryptocurrencies)

Mufti Saheb briefly explained the concept of Bitcoins and stated that in investments one does not only look at permissibility. One also observes expediency of the invested items. He stated that there are conflicting reports about the viability of investing in Bitcoins.

Hereunder are some concerns on Bitcoins,

Bitcoins not to be used for payments and settlements for now: RBI

The Reserve Bank of India (RBI) today reiterated its stand on cryptocurrencies saying the bitcoins will not be used for making payments and settlements for now.

http://www.moneycontrol.com/news/business/economy/bitcoins-not-to-be-used-for-payments-and-settlements-for-now-rbi-2431047.html

 

Bitcoin has no future because of its anonymity, SocGen CEO says

Societe Generale CEO Frederic Oudea: Virtual currencies carry too much risk due to their anonymity.

“The benefit so far is it provides anonymity to the people who are making the transactions,” he told CNBC

He joins a long list of bank executives to criticize bitcoin and cryptocurrencies

https://www.cnbc.com/2017/11/07/socgen-ceo-frederic-oudea-says-he-cant-see-a-future-for-bitcoin.html

 

Vietnam bans Bitcoin as payment for anything

What is it with (mostly) single party states and crimps on cryptocurrency?

https://www.theregister.co.uk/2017/10/30/vietnam_bans_bitcoin_as_payment_for_anything/

 

Bitcoin Isn’t a Currency, It’s Just an Asset – Shark Tank’s O’Leary

Nov 14, 2017

Bitcoin and cryptocurrencies have broken records this year as more investors, particularly millennials, flock into the market. The leading digital currency bitcoin has managed to rally significantly this, rising to an all-time high of nearly $8,000 and up over 500% year to date. But, one famed investor remains a little skeptical about the future of bitcoin. “Bitcoin to me isn’t a currency, it’s an asset,” Kevin O’Leary, chairman of O’Shares ETF Investments and star … (read more)

http://www.kitco.com/news/video/show/Kitco-News/1760/2017-11-14/Bitcoin-Isnt-a-Currency-Its-Just-an-Asset—Shark-Tanks-OLeary

CNBC.com

 

One of Asia’s largest banks says bitcoin is ‘a ponzi scheme’

David Gledhill, group chief information officer at DBS, one of Asia’s largest banks, said he believes bitcoin is a ponzi scheme

One of Asia’s largest banks is of the opinion that bitcoin is currently a financial scam.

“We see bitcoin as a bit of a ponzi scheme,” David Gledhill, group chief information officer and head of group technology and operations at DBS, told CNBC on Wednesday.

Bitcoin transactions are “incredibly expensive” and “all the fees are hidden through the crypto-mechanisms,” he said on the side-lines of the Singapore Fintech Festival. “We don’t think DBS being in that game right now is going to create a competitive advantage for us.”

Instead, Gledhill said, it currently makes more sense for the bank to focus on its electronic transactions of government-backed currencies.

https://www.cnbc.com/2017/11/14/dbs-groups-david-gledhill-bitcoin-is-a-ponzi-scheme.html

 

You can listen to the full discourse on Islamic finance through the link below:

http://daruliftaa.net/index.php/resources/downloads/finish/87-discourses-on-kitabul-buyoo/1218-discourses-on-islamic-finance-part-37

And Allah Ta’āla Knows Best

 


Mufti Ebrahim Desai.

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