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What is Crypto Currency Bit Coin
Bitcoin Crypto Currency Islamic Perspective
What is Bitcoin, Crypto Currency
Today everyone is talking about Bitcoin and Crypto Currency. Investors are discussing how to Invest and Why to Invest in Crypto Currency.
Even Government, and Central Banks are talking about Crypto Currency.
Let us try to understand
How safe it is for common man to Invest or Work on Crypto Currency?
Bitcoin/Crypto Currency can be Freely said as Medium of Exchange for Commodities and Services, they can be earned to brought through work of solving mathematical equations.
They are Privately Owned; they are trading through online Privately owned Exchanges. They are least governed or not governed at all.
They are just promise of an individual, accepted by few more against products and services.
They are few Real Questions
After going through all available literature and market transactions, I came to conclusion that they are nothing Casino Coin, you can trade or bet on it.
Why are Bitcoin Crypto Currency Not Shariah Compliant or Trading in them is not Halal.
When we talked trading is Islamic Finance, it is governed by different laws. The laws are separate for trading in Currency, commodity and Agriculture. There are different contracts for each different activity, depending upon their purpose and utility.
Bit Coin Crypto Currency not Halal
Currency in Islam
What is Currency as per Islam?
The Currency can be defined as medium of exchange agreed mutually and generally accepted in the society. The law of generally accepted is important law when it comes to currency, masses must accept it. The second important point is, the value of the currency must be stable, and non-fluctuating or very less.
Even though it is well established, currency in Islam is backed by Gold and Silver, but there is enough evidence to show that other mediums are also used as currency. These coins are issued by Kings or Government and are well accepted by Masses and their People. Acceptance is very important. Acceptance comes from the authority they have; this is the same principle used to approve Fiat Currency.
The Trading of the Currency is Governed by Currency Trading in Islam ( Sarrafa), it is called Dinar for Dinar, Dirham for Dirham, it must be spot transaction. This is the reason by Futures or Trading Currency in Future is not Shariah Compliant and not Halal.
Under both Rules Crypto Currency, Bitcoin is cannot be called Currency and Cannot be Traded the way it is being traded today.
Commodity Trading in Islam
Metal and Commodities can be traded and Shariah Compliant. The basic rules are.
- It must be Physical available, existed.
- Ownership must be established and transferable.
- It must have use.
- It must be Transportable.
The Commodities Trading is well established and anything which has use and Physical existence can be traded under this rule.
Cryptocurrency, is virtual, mean does not exist Physically and has no use per say, cannot be called Commodity and cannot be traded with Commodities Contracts.
Trading in Agriculture Commodities
Agriculture Commodities can be traded as per Salam Contracts, which allows Future Contract of the agriculture Commodities. These contracts are issued to producers, Farmers/agriculturist to produce the commodity at fixed rate and deliver. Here rates are fixed and even quantity can also be fixed. So that there will not be any confusion.
Only Agriculture Commodities can be traded under this law.
This contract remains least used presently.
The Changing Value of Crypto Currency and Trading
The valuation of Crypto Currency and Bitcoin is highly volatile. In last one year it has increased from 8,000 USD to 39,000 USD, the prices have sky rocket in December 2020 and Jan 2021, in just one month. The trading platform and global investors are promoting Bitcoin heavily. They have entered at much lower value and need to exit at very high.
The change in valuations and without transparency and governance makes Crypto Currency and Bitcoin a no goes for Investors, because they are nothing but Casino’s.
Gharar Uncertainty - What makes Bitcoin Not Halal
Why Bitcoin Crypto Currency is Not Halal
Gharar is what explains Trading in Bitcoin, Crypto currency.
It is Uncertainty, it is Risk, Deception, it is also called as Selling something which does not exist.
Many Crypto Exchanges are busted or gone bankrupt or some of them has security breach where Currency is stolen.
Other Important Issues Which Makes Crypto Exchanges Risky and Not Halal
Ownership – In history, the currency is issued by the authority/government which make it well accepted by the masses. Absence of authority make Crypto Currency less acceptable.
Governance and Control – There are not enough regulation and control on the crypto exchanges. The investors are vulnerable to fraud and cheating. Even though every government is talking about giving control and governance mechanism and regulation to safeguard the interest of investors, not much has been done and achieved in this regards.
There is long road before proper control mechanism can be established and investors are protected against fraud and cheating.
Transparency – It remains very hazy and opaque how trading happens, how the Crypto Currency is produced and how it traded. Even though there are guideline but no independent third party audit, there is control and no regulations. The Guidelines can be changed and ownership can also be changed. Without third party in depended scrutiny of whole process, its integrity and audit, Crypto Currency remains, Casino of Rich, which become big.
Even there are Government Control and Regulation for Lottery, Casino’s and other medium of Gambling, unfortunately there is none for Crypto Currency.
It is very risky for common investor to go for it.
Bitcoin is worst than Casino's
Fraud and Cheating In Crypto Currency Exchanges
Fraud and Cheating in Crypto Currency
The Crypto Currency Exchanges are Full of Fraud. Many exchanges are gone burst and money of vanished and peoples has lost everything.
Some of the Famous cases and Numbers are as below.
- 2014 Mt. Gox filled for bankruptcy. It has lost 850,000 coins, it has claimed it was stolen, without any trace who did it. It lost more than 450 million dollars.
- 43 Crypto Exchanges gone burst over the period of last 7 years.
- Some of Famous Busts are,
- Mt. Gox
- Cointed GmbH
- BitGrail Srl
The other Big Frauds
Hackers stole 4 billion USD in 2019 from Crypto Exchanges.
The Projects Started in 2016 are dead now.
Only 8% of analyzed exchanges use a custody provider to store user assets, and only 4% of exchanges offer third-party insurance against hacks
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