Is cryptocurrency investing halal or haram?


#1

It is important for investors to understand the basic concept of cryptocurrency. Cryptocurrencies are recognized as a medium of exchange within a community and are identified as tokens with digital signatures, instead of banknotes or physical coins. It requires some effort to solve the ‘crypto’ or a puzzle to identify the digital signature. If there is no puzzle, then anyone can make currencies and sell them, which has happened before in Islamic history. If the currencies are unsecured, then anyone can create and trade them. What is required is something called istilah, which means social concurrence (or mutual agreement). It is determined using a concept called ta‘amul, which means exchange activity. To explain further, there are two main aspects of using cryptocurrency; 1. As a medium of exchange (currency) where shariah has no issues with as long as people recognize it as a currency. 2. Use as an investment vehicle, if we consider a crypto token as a currency then it should remain as a currency. It should not be an investment vehicle because shariah does not recognize currencies as an investment commodity. Currencies stay currencies they cannot be used in an investment contract. However, investments are still fine but when someone is speculating through this investment meaning that they are purchasing the currency in order to profit overtime this is to many scholars considered as gambling or kimar. In summary, if a cryptocurrency is considered a currency it should not be a vehicle of investment. However, if a crypto token is represented as a real asset/ fixed asset and it follows all shariah laws then investing in it as share { 1 crypto token = 1 stock} then it is recognized by shariah. Which can be held for future dividend or future profits. But for speculation shariah has prohibited it. The ‘digital cash’ philosophy and usage of cryptocurrency are halal while buying and ‘holding’ Bitcoin as an investment may not be.

Source: theedgemarkets