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Author: Admin | 2025-04-28
Islam is the world’s second-largest religious group. As of 2020, Islam makes up around 24.7% of the world population, with 1.9 billion adherents. Whether bitcoin is halal and how Islam and Muslims see bitcoin and cryptocurrencies, in general, can have a huge impact on their future.However, being written 1400 years ago, Islam doesn’t clearly state whether bitcoin is halal or haram. It is up to Islamic scholars now to interpret Sharia laws about finance and money and decide whether the community should use the new-age currency.This article will explore where different scholars from around the world stand on cryptocurrencies, whether bitcoin is halal or it is permissible for Muslims to engage in crypto trading, lending, borrowing, and yield farming, among others.In this guide:What constitutes money in Islam?What about cryptocurrencies?Is bitcoin halal? Sharia law and Islamic financeWhat are the key principles of Islamic finance?Is bitcoin halal? What scholars favoring it say?Is bitcoin haram? What scholars opposing it say?Is bitcoin halal or haram? — the final verdictFrequently asked questionsWhat constitutes money in Islam? According to early Islamic laws, currency is anything that has worth built into it. Its value doesn’t ideally fluctuate rapidly. This is because, as per Sharia law, the exchange of currencies implies the exchange of items of similar worth.Primarily, the dinar and dirham are the two currencies that were popular in Islam-dominated areas. The Byzantine dinar is a gold coin that roughly weighs 5 grams. On the other hand, dirham is a Persian currency made from silver. The metallic content determined their value.However, the value of the dinar and dirham changed from time to time owing to the variations in the supply, as well as the demand for silver and gold. Despite this, Islamic countries used the currencies, holding onto the anti-interest policy of Islam. With time, they had to make the move to fiat currencies, even though they were just papers and didn’t have any intrinsic value. Due to their social acceptance, scholars sanctioned fiat currencies, and they went mainstream in Islamic countries.What about cryptocurrencies?Cryptocurrencies are simply a digitized form of currency. Built on blockchain technology, it encrypts data to facilitate value transactions without incurring forgeries and double-spending. This is in line with the Islamic view about currencies in general. Only that, here instead of a paper, a decentralized digital ledger stores the data.There is a catch, though.According to Imam Ibn Taymiyyah,‘’When currencies and money are inter-traded with the intention of investment and profit, it opposes the very purposes of money and Thamaniyyah.’’Islam prohibits interest due to this reason. This is also the logic why many argue that bitcoin goes against the principles of Islamic finance.As we know, bitcoin, like most cryptocurrencies, is highly volatile. This generates exorbitant profits as well as losses for the holder. It acts as an investment tool rather than a currency under present circumstances, giving momentum to the counter-narrative.Let’s take a better look at what Islamic finance is and whether bitcoin is compatible with it.Is bitcoin halal? Sharia law and Islamic finance As
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