Is Bitcoin Halal or Haram?

While Bitcoin has been an active hot topic in the tech industry for over a year, its popularity has spilled over to the mainstream in the past month with even my Careem and Uber drivers extolling the virtues of the blockchain technology.

It seems like a lucrative investment if you look at it from a layman’s perspective. Going that way, let’s say you buy Bitcoin. If it continues on its current trajectory you could double or triple your assets or maybe even more by the end of 2018. You could even become a millionaire by doing nothing.

That begs the question, should you buy Bitcoin? Is it permissible in Islam?

We conducted a poll on our website asking the readers about this. Here are the results:

Let’s take a closer look at Bitcoin with respect to being Halal or Haram.

Bitcoin’s Value

Anything that holds intrinsic value, provided that its value does not shift haphazardly or unpredictably is liable to be used as a currency in Islam.

The Holy Prophet (S.A.W) was narrated by Hazrat Ubida b. al-Simit, in Sahih Muslim Kitab-ul-Buyu’ saying,

I heard Allah’s Messenger (may peace be upon him) forbidding the sale of gold by gold, and silver by silver, and wheat by wheat, and barley by barley, and dates by dates, and salt by salt, except like for like and equal for equal.

As such, any commodity which can be exchanged for something of equal value, without addition of anything, is deemed legal in Islam.

Bitcoin can be exchanged for a commodity of given value and is also used in some countries to pay for them.

Another aspect that gives it value is that people are willing to buy it. For something to have value, it should be in demand by the people. Think of gemstones or gold.

As there is a limited supply of Bitcoin, it’s value also increases or decreases based on the number of people that buy them. It has a market cap, or maximum number of 21,000,000, with 16,775,350 in circulating supply.

A Gamble?

This brings us to the other aspect of Bitcoin, is it based on chance or guessing? Meaning is its value stable or at least predictable?

In the Holy Quran it is mentioned that,

O ye who believe! Intoxicants and gambling, (dedication of) stones, and (divination by) arrows, are an abomination― of Satan’s handiwork: eschew such (abomination), that ye may prosper. (Al-Maida 5/90)

As Islam forbids any and all kinds of chance based exchange of currency or commodities, Bitcoin needs to conform to that if it is to be considered Halal.

Bitcoin’s value has risen or dropped by more than $200 within the span of a few minutes at times which makes it hard to predict its value.

If you were trying to sell 1 Bitcoin for USD and during your transaction the value drops by $100 due to various unforeseen and unpredictable circumstances, you will incur a loss. This would make it similar to a gamble.

But considering Bitcoin’s value, which is over $13,000 at the time of writing, $100 is even less than 1% of one Bitcoin’s value. We see similarly small changes all across the industry, i.e. in stocks, gold prices, stocks, currency values etc. Larger rises or falls are rare even for Bitcoin, once again similar to other commodities we normally use for trading.

Predictable to a Certain Extent

That doesn’t mean that it’s value is completely unpredictable. Certain events and happenings often have the effect of shifting value in the stock market. In a similar way, cryptocurrency’s value depends on its ICO, investor interest etc.

For example, let’s say a cryptocurrency expert says Bitcoin’s value will fall tomorrow. This will make Bitcoin owners sell them, as they don’t want to lose money, thereby causing its value to drop.

So once the news about the expert’s prediction makes the round, you can safely predict it’s value to fall, with no chance or gambling involved.

Over time, Bitcoin’s value has risen above the $10,000 mark albeit with occasional spikes and sharp drops here and there. Interest in Cryptocurrency is on the rise so you can safely assume that Bitcoin’s value will also rise over the next year.

What Do The Religious Authorities Say?

Ultimately it all boils down to religious authorities being the deciding factor on these matters.

A Jeddah based cleric, Assim al-Hakeem has declared Bitcoin to be Haram. He said,

We know that bitcoins remain anonymous when you deal with it… which means that it’s an open gate for money laundering, drug money and haram money. Bitcoin is something that is recent and new and there are a lot of serious concerns when it comes to dealing with it … whether it’s from the origin or from the aspect of sustainability and security. As of today, one Bitcoin that was [worth] 0.1 cents is now equivalent to $11,000 plus. This is ridiculous. This is not something physical you can touch.

Turkish religious authorities have deemed Bitcoin Haram as well. Diyanet (Turkish Directorate of Religious Affairs) stated that,

Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation, they can be easily used in illegal activities like money laundering and they are not under the state’s audit and surveillance.

Note the use of “at this time”. Currently its valuation has shifted unpredictably, “open to speculation”. If at some point in the future, Bitcoin’s value stabilizes, it might be deemed permissible to trade in.

Pakistani religious authorities haven’t given their judgement on cryptocurrencies in general or Bitcoin specifically. As such, Bitcoin being Halal or Haram is an open debate in Pakistan, until a fatwa is levied on it.

What do you think? Is Bitcoin Haram or is it Halal? Sound off in the comments.

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A techie, gamer, and Senior Editor at ProPakistani.

  • A fatwa is issued by binori town. stating it Najaiz. Whereas from darul uloom and jamia rasheed, they are doing research on it and have not issued any fatwa yet.

  • بٹ کوائن کے بارے میں دارالعلوم دیوبند کا فتویٰ۔۔۔۔۔

    سوال # 155068

    بٹ کوئین (BITCOIN ) کی تجارت کررہاہوں، کیا یہ جائز ہے؟میں بت کوئین میں پیسے لگا رہوں، کیا اس کی اجازت ہے؟

    جواب # 155068

    بسم الله الرحمن الرحيم

    Fatwa: 1420-1399/N=1/1439

    بٹ کوئن یا کوئی بھی ڈیجیٹل کرنسی ، محض فرضی کرنسی ہے، اس میں حقیقی کرنسی کے بنیادی اوصاف وشرائط بالکل نہیں پائی جاتیں۔اور آج کل بٹ کوئن یا ڈیجیٹل کرنسی کی خرید وفروخت کے نام سے نیٹ پر جو کاروبار چل رہا ہے ، وہ محض دھوکہ ہے، اس میں حقیقت میں کوئی مبیع وغیرہ نہیں ہوتی اور نہ ہی اس کاروبار میں بیع کے جواز کی شرعی شرطیں پائی جاتی ہیں؛ بلکہ در حقیقت یہ فاریکس ٹریڈنگ کی طرح سود اور جوے کی شکل ہے ؛ اس لیے بٹ کوئن یا کسی بھی ڈیجیٹل کرنسی کی خرید وفروخت کی شکل میں انٹرنیٹ پر چلنے والا کاروبار شرعاًحلال وجائز نہیں ہے؛ لہٰذا آپ بٹ کوئن یا کسی بھی ڈیجیٹل کرنسی کے نام نہاد کاروبار میں پیسے نہ لگائیں۔مزید تفصیل کے لیے سابقہ دو فتوے (۲۳۸/ن، ۸۸۱/ن، ۱۴۳۸ھ۔ ۴۶۰/ن، ۸۹۶/ن، ۱۴۳۸ھ)بھی منسلک ہیں، انھیں بھی ملاحظہ کرلیا جائے۔

    قال اللّٰہ تعالی:وأحل اللہ البیع وحرم الربا الآیة (البقرة: ۲۷۵)،یٰأیھا الذین آمنوا إنما الخمر والمیسر والأنصاب والأزلام رجس من عمل الشیطن فاجتنبوہ لعلکم تفلحون(المائدة، ۹۰)،

    وقال رسول اللہ صلی اللہ علیہ وسلم:إن اللہ حرم علی أمتي الخمر والمیسر(المسند للإمام أحمد،۲: ۳۵۱، رقم الحدیث: ۶۵۱۱)،

    ﴿وَلَا تَأْکُلُوْا أَمْوَالَکُمْ بَیْنَکُمْ بِالْبَاطِلِ﴾ أي بالحرام، یعني بالربا، والقمار، والغصب والسرقة(معالم التنزیل ۲: ۵۰)،

    لأن القمار من القمر الذي یزداد تارةً وینقص أخریٰ۔ وسمی القمار قمارًا؛ لأن کل واحد من المقامرین ممن یجوز أن یذہب مالہ إلی صاحبہ، ویجوز أن یستفید مال صاحبہ، وہو حرام بالنص(رد المحتار، کتاب الحظر والإباحة،باب الاستبراء، فصل في البیع، ۹: ۵۷۷، ط: مکتبة زکریا دیوبند)،
    وقال اللہ تعالی :ولا تعاونوا علی الإثم والعدوان (سورة المائدة، رقم الآیة: ۲)۔

    واللہ تعالیٰ اعلم

    دارالعلوم دیوبند

  • question should be is crypto currency hilal or hiram bitcoin is the USD of crypto and it is not matured 2dnly it is being speculated right now due to high demand. so can some answer about Crypto

    • The article answers your question for the most part. The same thing applies to other cryptocurrencies as well.

  • A question to ponder
    How different a cryptocurrency different as this code is in your wallet ( hard or mobile phone) than having an ATM card and receiving income into bank account and using the amount through ATM card while never seeing the currency.
    In both cases you do not see it. The world is moving from trade of stones to paper currency and now digital currency. Similar words were when first paper note was issued.
    just discussion no personal fatwa

    • ATM Card or any legal digital currency is based on Actual Gold freeze in the Banks, while cryptocurrency does not depends on Gold or its value, unless Govt. legalize it with some value of Gold.

      • Pakistan govt gets USD in reserve that does not mean Pakistan govt uses gold as trade to acquire these dollar. Still assumingly those reserves are backed by gold as mentioned by you.
        Just for information, Saudi Arabia and UAE has already established a mechanism to initiate a digital currency similar to cryptocurrency.
        Yes current cryptocurrency has certain point that do not clearly are black and white but all depends how govts try to adopt digital currency. still China, Russia has banned cryptocurrency as they feel it is not as per regulations.
        My point is just that world dimensions are changing and we shall see digital currency soon only thing will happen that govts will make laws to regularize or monitor to keep within lawful state but you will never be able to block. world could not block digital and paper revolution so will not be able for this type.

        • Unless its regularize with Govt. it will be consider Gambling, and Govt. cannot recognize without any solid base, like International monitoring funds.
          I guess, Govt. of Pakistan already declared it illegal to use the cryptocurrency, that’s another thing they can’t catch the user.

          • yes that is true if govt uses then it is 100% legal.
            Just for information, Pakistan govt has not banned any cryptocurrency yet only FIA is trying to track if anything illegal like money laundering and similar thing happening through it.

          • People often ask if Bitcoin does not include interest rate then how is it multiplying with such a great intensity. The answer to this questions is that the production of it is very rare and earning a single bitcoin takes a lot of hard work as well as you can get it after a huge investment, which can be one of the best forms of trading.

      • Pakistani Rupee uses USD as base. US used gold to back its currency until 1971. Uskay baad say it’s not backed by anything, it’s as valuable as any other piece of paper. The government decides its value.

        • No, any Currency is based on Gold reserved in the State Bank of any Country, We just trade in $$ for everything, that’s why we need $$ reserved, but hey that’s another topic.

    • ATM or banking is an option for you. If you need to receive your income by hand, at least you can get physical receipt (currency) which is by rule generated by gold value. Therefore you have physical currency, but cryptocurrency is somehow confusing. In current situation It might be illegal, as it is not matured, and stable but later it can be legal.
      In short Islam forbid from any trading in which you earn money by shortcuts. Now you can think better by which mean you are applying actual efforts to become truly wealthy.

      • With current advancement AT card is option, before 1960 no ATM card. If after another 20 years everywhere transaction start through card only as it is safer than getting robbed then what will be your option? Such things can be better evaluated if you come out of your current understanding and see the projected progress of anything.
        This is my EMAAN that no Islamic instruction or guideline can be wrong till QIAMAT. it is only interpretation will improve as mankind progress. same is for monetary matters all those who say Islam only allows physical currency have to read more as, after 50 year, govts have their own digital currencies like Saudi Arabia and UAE are already working on, will this be against Islam, NEVER it can NEVER be. Islamic guidelines are forever.

  • ہر چیز کو حرام اور حلال کی نظر سے دیکھنے والو …… کچھ سال پہلے تک تصویر بنوانا بھی حرام تھا اور وڈیو استغفاراللہ اور اب وہی لوگ ٹی وی پر بیٹھ کر درس دے رہے ہوتے ہیں. کسی دور میں مائیک اور سپیکر بھی حرام ہوا کرتے ہیں.

    • Well said. People are often quick to jump to conclusions and declare something right or wrong before thinking about it.

  • Yes, you’re right for the USD and Euro are not based on Gold and Silver (Thanks for that information)

    But the thing is its completely “un-Islamic” we have very straight line for economics rules, which required money/currency should be based on Gold/Silver/Diamond/any valuable or even food or materials.
    Currency such as Bitcoin or USD are baseless you (or Islamic Law) cannot trust it, because its “baseless” its only base is your “Trust” on the authority who gave you.

  • Cryptocurrency mining mein itni electricity use ho rahee hain jitni is waqt 159 countries k log electricity use kertay hain. Electricity ka ye waste apnay aap mein Environment k leeye problematic hai… kisi bhi angle say bitcoin halaal nazzar nahi aati. Waste he waste hai, Gamble hai or real value kuch bhi nahi. Fiat currencies ka bhi kuch yehi haal hai laykin at least unhen goverments tou support kerti hain. Silver, gold or commodities wughaira best hain.

    • oh this guy is genius. He could not find anything but wasted post for electricity.
      how much electricity you expect this consuming mr khan?

      • Assalaam O Alaikum,

        I Provided references but the moderator has removed my answer perhaps because of direct web links mentioned in my reply.

        Search this on google “crypto currencies use electricity more than 159 individual countries”

        According to the Bitcoin Energy Consumption Index (BECI) maintained by Digiconomist, every individual Bitcoin transaction eats up 275 kWh of electricity, and the latest estimate of Bitcoin’s total annual energy consumption is in the vicinity of 29.05 TWh (Yep that’s Tera Watts means a 1000 Giga Watts).

        That is the equivalent of 0.13% of the entire world’s annual energy consumption. And that is more than the individual energy consumption of 159 of the world’s countries.
        Edit: “Bitcoin Will Consume More Power Than the Whole World by 2020”
        Today ProPakistan published this article.

        Assalaam O Alaikum.

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