Islamic Viewpoint Toward Purification of Transaction With Cryptocurrency

The global surge in interest in bitcoin, Ethereum, and other cryptocurrencies has spread to the Gulf and Southeast Asia, the main centers of Islamic finance.

 

On the other hand, cryptocurrencies are uneasy with Islam because they are the result of financial engineering and are the subject of speculation. In addition to prohibiting interest payments, Islamic law principles emphasize actual economic activity based on physical assets and frown on pure monetary speculation. This article will explain everything about Transaction With Cryptocurrency according to sharia and Islamic rules.

 

Cryptocurrency – Halal or haram?

The speculative nature of cryptocurrencies has sparked debate among Islamic scholars about whether they are religiously permissible. As a result, cryptocurrency companies attempt to sway the debate by launching instruments based on physical assets and certified as valid by Islamic advisors.

 

Each OneGram cryptocurrency unit is backed by at least one gram of physical gold kept in a vault. The goal is to keep speculation to a minimum.

 

“Gold was one of the first forms of money in Islamic societies, so this is appropriate,” said Ibrahim Mohammed, the British investor who co-founded the firm last year with other investors.

 

“We are attempting to demonstrate that Sharia rules and regulations are fully compatible with digital blockchain technology.”

 

So far, the currency has been worth tens of millions of dollars. However, around 60% of the planned number of coins have yet to be sold; OneGram hopes to issue them all before listing them on exchanges.

 

OneGram obtained a ruling that its cryptocurrency conforms with Islamic principles from Dubai-based Al Maali Consulting.

 

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Manuel Ho, HelloGold’s chief marketing officer, said its coin was Islamic as transactions occurred within a defined period, making them less volatile and addressing the ambiguity of pricing.

 

Among other experiments, United Arab Emirates-based Halal Chain conducted an initial coin offer in December linked to data on Islamically permissible goods.

How do you make Transaction With Cryptocurrency?

To conduct a transaction with cryptocurrency, you’ll need to use a cryptocurrency wallet, a secure digital wallet used to store, send, and receive virtual currencies such as Bitcoin. Most virtual currencies, such as bitcoin, have an official wallet. This wallet includes two keys: the public key address and the private key address.

 

These addresses can be used to send or receive a specific type of cryptocurrency (for example, a Bitcoin address is required to accept Bitcoin) and can be shared publicly. However, you must use the private key, the secret key used to make transactions on the Bitcoin blockchain, to gain access to your wallet.

 

There are various wallets to deal with, including online, offline, mobile, hardware, desktop, and paper wallets. A smartphone app, for example, is used to run a mobile wallet. There are numerous types of mobile wallet apps available, including (Cryptopay, Jaxx, Blockchain, Coinbasem, GreenAddress). The GreenAddress wallet, one of the most well-known Bitcoin cryptocurrency wallets, is a multi-signature wallet available on the web, desktop, Android, and iOS.

 

Transactions With Cryptocurrency According To Different Scholars

When it comes to sharia, cryptocurrency has sparked a lot of debate. Examine Muslim scholars’ perspectives on the legality of bitcoin:

 

The Shariah-related conclusion claims that transactions with cryptocurrency may be exchanged with other currencies subject to some conditions applicable in currency exchange from a Shariah standpoint, as it is similar to fiat money and thus shares the same currency exchange conditions as provided by Shariah.

 

Haq and Ali discuss how the cryptocurrency phenomenon, with its radical new capabilities, may hold a significant opportunity that warrants further investigation. They see Bitcoin as an entirely new type of money with distinct properties and compelling advantages over commodity and fiat money, and they believe that the moneyness of cryptocurrencies is critical to their utility in Islamic economics.

 

According to Kameel and Meera, a gold-based cryptocurrency such as one gram is acceptable as an Islamic cryptocurrency. According to Oziev and Yandiev, with a few modifications, cryptocurrencies may prove to be a more appropriate medium of exchange from an Islamic standpoint than existing fiat currency.

 

Yuneline Examine the state of cryptocurrency from four different perspectives. “Money,” “Legal,” “Economy,” and “Sharia.” Lawal contends that cryptocurrency is compatible with Islamic banking and finance because it fits significant money qualities in Islam, and the principles, when compared to fiat money, recommend that standards guiding its operations be developed.

 

The discovery demonstrates that cryptocurrency is acceptable in terms of monetary characteristics. However, from a legal standpoint, cryptocurrency does not meet the criteria for currency. Due to the high volatility of price, cryptocurrency does not fully meet the characteristics of money from an economic standpoint, and from a Sharia perspective, cryptocurrency can be considered property (mal) but not as a monetary value (thamanniyah).

 

Teichmann investigates how terrorists use cryptocurrencies to fund their operations. The discovery reveals that terrorists may be able to use Bitcoin to receive donations from their supporters. Finally, Miglietti, Kubosova, and Skulanova investigate Bitcoin, Litecoin, and Euro volatility. According to the studies, Litecoin is more volatile than Bitcoin and the Euro, and Bitcoin is more volatile than the Euro, based on the statistical measures used, including the standard deviation of selected currencies and annualized volatility.

 

Is it permissible in Islam?

The belief is that cryptocurrency is a newly evolved tool used in the global business system that is implemented using blockchain technology and allows people to connect with each other and perform transparent transactions for their orders. As well as transfer specific financial values from their own accounts to other third-party accounts. However, the use of Bitcoin and similar cryptocurrencies is contingent on their acceptance by individuals, businesses, and organizations.

 

“Unlike a normal exchange, whereby, for example, if you want to buy a flight ticket, you go to the airline’s website, follow the processing system they have in the website, fill in the details,” an Islamic scholar says explained. 

 

You also include your ATM card number or whatever method they want you to use. Then you click. The transaction is completed.” indicating the belief that cryptocurrency can be used to make life easier and financial transactions to be completed faster without having to go through the usual bureaucratic procedures. Cryptocurrency is a novel and unexplored component of traditional finance.

 

The Islamic/Muslims’ willingness to adopt cryptocurrencies has been investigated. It has been stated that people are not currently using Bitcoin in the market. Only about three percent of the market share (is) Bitcoin, and seven percent uses ether or other currencies, but overall, global crypto currency usage is not at its peak. This reflects the participant’s belief that most people are unaware of cryptocurrency or are hesitant to use it.

 

People are concerned about regulation because they fear that rule will come and render everything illegal one day. Given the general public’s aversion to cryptocurrency, resolving regulatory issues will aid in raising public awareness and readiness to use cryptocurrency. According to the respondents, it is not the high level of technology that is a barrier to cryptocurrency use, but rather the public’s fear that cryptocurrency will one day be subject to government regulation and lose its value.

 

Crypto may become the transaction tool of the future, and he must adapt to and be open to this new development. It was thought of as a way to protect children’s inheritance. Cryptocurrency could assist people in securing funds for their children if they died before they reached the age of maturity. In the case of minors, a guardian would be appointed to manage their inheritance until they come 18.

 

It is feared that most guardians were untrustworthy and stole the children’s assets. Cryptocurrency is a way to keep your money hidden online rather than in a bank.

 

As a result, we must conclude that people choose cryptocurrency as a long-term asset. This is because they hope that their children will be able to convert the cryptocurrency left for them into regular currency in the future, even though its market was highly volatile and its market value unstable.

 

The widely held belief is that cryptocurrency is helpful as a long-term asset, even though trading in it is difficult due to the many speculators it has attracted. It is regarded as more valuable as a transaction tool, particularly for buying and selling in installments, because it saves time and money on the regular bank or international transfers, which incur numerous extra charges.

Conclusion

The use of cryptocurrency as a legitimate payment method is the same way any other payment method is. It is also argued that it facilitated transactions and reduced the standard cost of international money transfers, and some Muslim countries actively encourage the use of cryptocurrency due to its ease of use and transparency. This is also supported by “hadith.” Finally, it has been confirmed that cryptocurrencies are Shari’ah-compliant as fiat money and should be accepted as another mode of payment used in transactions because their value can be measured and quantified. Therefore, according to sharia, transactions with cryptocurrency are permissible but under some specific obligations applied by Islamic rules and regulations.

 

FAQ’s

Is it permissible for Muslims to invest in cryptocurrency?

OneGram, a local start-up founded last year, is issuing a gold-backed cryptocurrency as part of efforts to persuade Muslims that investing in cryptocurrencies is permissible under Islamic law. The global surge in interest in bitcoin, Ethereum, and other cryptocurrencies has spread to the Gulf and Southeast Asia, the leading Islamic finance centers.

Is the cryptocurrency onegram Islamic?

Al Maali Consulting in Dubai issued a ruling that OneGram’s cryptocurrency complies with Islamic principles. It is one of dozens of advisory firms around the world that provide advice on whether financial instruments comply with Islamic law standards.

Is cryptocurrency prohibited in Islam?

Because of their speculative nature, cryptocurrencies have sparked debate among Islamic scholars about whether they are religiously permissible. Cryptocurrency companies are attempting to sway the debate by releasing instruments based on physical assets that have been certified as valid by Islamic advisors.

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