Ruling on bitcoin islam

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The one who says it's wrong. The one who says is halal does not need to prove anything. Everything is valid, unless the evidence is that it is haram Is that clear? So we looked at every single criticism of cryptocurrency.

Is Bitcoin halal?

And we looked at a number of fatawa committees around the globe. Some of them said it is how long some of them said it is Hello. And we looked at this in detail. And from us in North America, we concluded that none of them raised objections to the level that it makes it home. So they said for example, there is no value to cryptocurrency. And the response to this is value is relative value is relative. And you Subhanallah you asked me yesterday I saw in my newsfeed. You look at it, my nose would wrinkle up.

Why would you want to buy this? But it's a collector's item. Because it's the original made by the guy in Whatever, right? It's a collector's item. I don't see any value in an old shoe. And they think it's an investment to make.

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This claimed robustness against the potential ubiquitous advance of software robots in applied ethics may not be considered an important issue today, but it may become critical in a not so distant future. Islamic Logic, however, seems not to embody or to incorporate any restrictive rules of conduct that are supposedly specific to an Islamic context.

When contemplating RIL, I have made an attempt to reconcile an external perspective that from a religiously indifferent external observer and a hypothesized internal perspective from an observer who tries to feel convinced by core principles of the religious ideology at hand. This thought experiment is highly problematic from a methodological viewpoint, but I hold that only by performing such thought experiments one may gain access to the mechanics of said common reasoning patterns assuming that such patterns can be reliably determined.

Needless to say this thought experiment may have different outcomes for different persons and even for the same person in different circumstances and for that reason I do not claim in any manner that the outcome reported in [2] should be predictive for outcomes arrived at by other individuals when attempting to carry out a corresponding thought experiment. This contribution is visible already from the ongoing debate concerning its moneyness. In [14] the proposal was made to classify Bitcoin in such a way that the question whether or not it constitutes a money need not be settled in advance.

By labeling typing, classifying Bitcoin as a money-like informational commodity MLIC a significant flexibility is obtained. One may consider the development of Bitcoin a step forward in the development of information see [17] as a core philosophical concept, or as an exotic chapter in the history of information security see [20] , or as a system in need of further improvement see [1, 16] , or as a contribution to the philosophy of money see [21] , or in any other manner.

Its mere existence justifies writing about Bitcoin.

In [5] I have made an attempt to survey the vast and heterogeneous volume of viewpoints on money. I summarize some conclusions from that paper: 1. The main conclusion from [5] which has some bearing on issues around Bitcoin is that I prefer to reserve the phrase virtual money for a concept not remotely similar to Bitcoin. The mere existence in the digital world is not a sufficient criterion for virtuality. Bitcoin seems not to be a virtualized form of any non-virtual money-like commodity.

It is far too innovative. Another conclusion of [5] is that in order to write about any any existing money or near-money in theoretical terms one needs some formal counterpart to the units of that particular money.

Is the cryptocurrency halal?

Unfortunately the methodology of having a formal substitute for a money as a vehicle for theoretical discussions is not without its own complications. Money as featuring inside an organization may differ subtly from money carrying the same name outside that organization. Virtual currency is used to refer to an adapted perception of money within an organization from the perspective of an employee or a category of employees. Yet another way to look at Bitcoin, admittedly quite remote from an ordinary monetary perspective, is that it constitutes a step forward in the development of the non-negative rational numbers rather than natural numbers towards being the preferred datatype of for the quantification of monies of exchange.

With exclusively informational money EXIM the proposal of [8] is to denote an informational money for which ownership of a quantity is identical to control or access to that quantity. With exclusiveness the absence of any other title than the availability of information is meant. In particular the possibility of existence of legally backed titles of ownership of EXIM quantities is refuted. The counterintuitive implication of the notion of an EXIM is that an amount of an informational money when viewed as an EXIM cannot be stolen by definition. Change of control access is the only way of transfer for an EXIM quantity and a change of control is only problematic if it was effected as a consequence of unacceptable force imposed on the agent who lost control.

Using the terminology of [14] it is systematic to speak of an exclusively informational commodity EXIC , and of a money-like exclusively informational commodity MLEXIC if one intends not to commit tot the moneyness of an informational commodity while claiming its exclusively informational status. Circulation theory has a neo- Marxist background but its modern shape is rather mathematical in style. Simply told the story is this: suppose all BTC holders hold equal amounts. Now they all lend that amount to other holders in a cyclic fashion.

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After that step all holders have the same amount but now each of them must pay interest to the previous holder of the amount. Now the means to pay interest must come from somewhere and using new that is freshly created money is demonstrably the only available option. On the basis of such arguments, though more sophisticated, circulation theory demonstrates that interest payment and inflation caused by monetary expansion go hand in hand, which then is construed as a weakness of the underlying financial system.

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Now circulation theorists have to demonstrate that monetary expansion cannot be accounted for by economic growth in order to predict inflation and so on, 6 This viewpoint connects well to my personal long standing interest for the specification and use of the rational numbers as an abstract datatype starting with [13].

Notably the use rational numbers as quantifies come into play only in a context of informational monies. The closed circulation of BTC in the Bitcoin environment seems to provide an argument in circulation theory style against the plausibility of interest payments on large debt positions.

It is pointless to qualify the transfer of quantity for an EXIM as borrowing because all transfers of access have the same status. This state of affairs is different from the common case for so-called tangible commodities, but it is well-conceivable for informational commodities. In [8] care is taken not to classify Bitcoin as an EXIM in order to imply that BTCs cannot be stolen which might be misconstrued as a viewpoint that stealing Bitcoin should be permitted.

Thinking of Bitcoin as a potential money-like exclusively informational commodity MLEXIC rather than as an informational money will not change the picture concerning either the im plausibility of lending or the im plausibility of interest payment. Doing so merely introduces increased resilience against doubts about the moneyness of the informational commodity at hand.

Is the cryptocurrency halal?

Fractional reserve banking may be considered a major mechanism in conventional finance for creating money that may eventually be used for interest payment. In many cases that growth of volume of the amount of money may also be justified by economic growth. That dynamics, with constant prices could be called inflation an expansion of the economic universe , but instead inflation is used only if the financial universe grows faster than the underlying economic universe, that is the growth of the volume of money cannot be completely justified by a growth of the economy.

These considerations become far more complex if changes in the technology of money such as a gradual transition to the use of informational money have effects on the speed of circulation of money which are not correlated to dynamics in the size of the economy. In other words one may imagine a growth of the use of Bitcoin through an initial phase where interest payment-like transactions occur while Bitcoin is considered a non-money MLIC awaiting to become an informational money, or informational currency if one prefers the use of the term currency over the use of the term money.

After that transition has been made further evolution of Bitcoin to moneyness informational money instead of MLIC can be promoted, thus ending in an IFR compliant status without moving through an non-IFR compliant stage. Some remarks on the remaining rules of behavior for IFR compliant finance in connection with Bitcoin or Bitcoin-like technologies under an EXIM perspective are in order.

Bitcoin is a technology geared towards realizing donations. After effecting a donation the amount has been fully transferred, no strings attached. This limitation is insufficient to eliminate gambling but it significantly reduces opportunities for gambling. The irreversible nature of transactions seems to go well with the true entity requirement.

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That requirement, however, may constitute a significant impediment for the promotion of Islamic Finance in its own right which needs to be compromised in various ways by introducing flexible views on what constitutes a true entity. What would require rather immediate attention is the trustworthiness of the mining system as well as its compliance with the five principles mentioned above.

Before discussing that mater I will first provide some discussion of writing about IFR compliance from an external position. If the underlying MLIC were in fact an information money which by assumption it is not then the transaction model at hand would be IFR compliant. Such judgments carry authority by definition which is not to say that judgements of a particular Shariah Board cannot be challenged and changed in the course of negotiation and deliberation.

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  • I assume that me or anyone else from outside Islam writing from an external position about these matters, and about a specific question in particular, constitutes an attempt to predict rather than to prescribe the outcome of the judgment of a relevant Shariah Board when faced with precisely that question.

    This form of writing about particular questions cannot possibly become authoritative in a normative manner, however. That status requires either Shariah Board status, or some other Islamic role permitting the issuing of judgements relevant for other Muslims, of the judgement issuing agent. Nevertheless I conclude that there is room for conceptualization and contemplation of specific questions regarding IFR compliance by non-Islamic authors, provided one accepts the distinction between predictive judgements, which must comply with rules of scientific integrity and the assessment of which is a matter of non-religious social science, and normative judgements which essential require the assumption of certain roles by the issuer s , the assessment of which essentially involves Islamic scholarly competence.

    Thus, if one considers Bitcoin to be a non-money MLIC its IFR compliance comes for free assuming metrical implication, but with the counterfactual interpretation relevant implication that is not so and its IFR compliance becomes a meaningful assertion which may be in principle considered false rather than true. Then a risk analysis must look into the risk of misjudgments of modular parts and use cases in terms of their IFR compliance and into the risk of oversight, 10 The line of argument used for such predictions may involve quoting previous judgments about comparable issues by the same or by other Shariah Boards.

    No argument is binding for subsequent judgements by any Shariah Board, however. At this stage I work under the assumption that except for the mining subsystem counterfactual IFR-compliance of Bitcoin is unproblematic.