There has been great and bizarre attempts by Muslim authorities in recent times to offer a ruling on bitcoin and crypto currencies in general. For future reference, we shall identify this community as the “bitcoin is haram” fuqaha. After having examined the various rulings, expressions, or commentary by these authorities that have commented, there are several attributes that they all share.
- None of these Bitcoin is haram fuqaha whom the common laity have resorted to ask these questions are scholars of their own right. Most of them being students of knowledge at most, they dont have solid juristic foundations from which to answer properly, even just from within the Islamic standpoint on economics, irrespective of cryptocurrencies. The basis for this lies in point number four below.
- Even among the scholars of them, the next reality that was easily detectable is their lack of knowing through actual research what is the blockchain, the technology behind it, and the mechanics of its operation, how it is actually issued, in whose hands does it actually lie within, concepts of decentralization, mining, proof of work, proof of stake, and other sub categories that make up the entire science of blockchain.
- None of these authorities are experts in Islamic economics specifically, which makes commenting on how to correctly juxtapose the issue of cryptocutrencies into a proper hukm shar’i as severely handicapped to say the least. In this regard, the only five Islamic authorities that are able to correctly assess the proper Islamic ruling on cryptocurrencies. They are shaykh Ustadh Abdu-Shakur, Shaykh Joe Bradford, and shaykh Majid Jarar and shaykh Musa Furber. As with any prerequisite for offering any ruling on Islam regarding new issues, one has to have detailed knowledge of a specific field of the shariah as well as having in-depth research into the novelties that have been developed among the culture. Shaykh Abdu-Shakur and Shaykh Joe Bradford have excelled in the shariah and shaykh Joe Bradford has specifically gained his degree in Islamic economics and is thus more than qualified to offer an Islamic perspective on the Islamic conception of what is currency, monetary matters and policy. Moreover, these two, specifically with shaykh Abdu-Shakur have studied in-depth the nature of cryptocurrencies and the block chain and knows the mechanics and nature of cryptocurrencies thus giving them an advantage of understanding the topic from angles that the bitcoin is haram fuqaha fail miserably in educating their audience with proper analysis. Shaykh Musa Furber is also undertaking extensive research into crypto currencies and has already contributed several writings on the topic and will produce more material.
- The commonalities of these faulty answers that have emerged about cryptocurrencies from the bitcoin is haram fuqaha share a specific point of conception. They all have a western ideological conception of currency in general that does not match the historical narrative of Islam’s actual conception of currency from the standpoint of the Messenger of Allah ﷺ and the companions رضي الله عنهم.
- Another common feature among today’s bitcoin is haram fuqaha is their mythical conceptions of the current monetary systems that do not match the reality of the modern world or even the centralized systems of the past.
- The last of the core features among the “bitcoin is haram” fuqaha is that they are easily prone to conflate two unrelated realities together and perform fallacious qiyas. The objective of this series is to expose this!
For those interested, you can review the second article of this series Cryptocurrencies in Light of Islam: Addressing the Bitcoin Is Haram Fuqaha: Part 2-Shaykh Monawwar Ateeq
Addressing Shaykh Sulayman ar-Ruhayli
The shaykh was asked the following question
His response to this question was the following
- All money belongs to individuals. This has nothing to do with imposing the ruling of tahrim on an actually currency!
- Fiat money is created by individuals and it is not subject to government regulations. Rather government regulations regulate fiat currencies for the interest of these select few individuals.
- Government regulations is not a shart (condition) for imposing the ruling of ibaha (permissibility) upon a currency. There is no precedent in the sunnah Muhammadiya and to suggest such an idea is a deviation from the sunnah and the way of the salaf!
- It has value in and of itself. Its values have a number of factors calculated into it which range from Limited Supply and supply/demand. •Energy put in in the form of electricity to secure the blockchain. •Blockchain difficulty level. •The utility of the currency, and how easy it is to use and store. •Perceptions on its value by the public. •Price of Bitcoin. •Media. •Investors. •Market dilution. •Innovation. •Confidence in traditional systems. •Legal/Governmental issues. All of these issues factor into the overall value of the currency.
- It is based on its own merit. It is a store of value and a unit of measure by its own self. People trade, sell, and buy in the coin on its own accord and worth.
- The economic strength that gives it value is all the details mentions in point 4 and in today’s world, its strength is derived from the lack of confidence (belief) in the current fiat systems. Fiat systems are also based on “belief”. If everyone on earth agreed to disregard fiat currencies and resorted to a local material of their own local regions, the entire monetary fiat system will collapse. All banking institutions and the shayateen who operate them know this and have stated this by their own mouths.
- Returning to an origin, like gold or silver, is an old method used by Muslims of the past, but it is NOT a basis from which it grants the hukm shar’i (Islamic declarative ruling) to ibaha (permissibility) or tahrim (prohibition) onto the currency because the shariah is silent and neutral on the matter and the practice of the Messenger of Allah ﷺ and the Companions رضي الله عنهم was a decentralized system with no government oversight and they had a couple commodities from which they used as a medium of exchange. Secondly, there is no current monetary fiat system today that is based on gold. The US dollar ceased to be based on gold after the collapse of the Bretton Woods system and likewise the Saudi economy is based on absolutely nothing, no gold or silver.
- The current fiat system you are defending is beholden to the “fluctuations of the market”.
Shaykh Ruhayli’s arguments are apples and oranges and simply don’t match reality in today’s world.
Next, shaykh Ruhayli continues
- A governing body to oversee it or to ensure its circulation is NOT necessary for the ruling of ibaha to be nullified by way of tahrim. To believe that this idea is the sunnah is a bid’a in Islam and opposes the way of the salaf. The Messenger ﷺ and the companions رضي الله عنهم اجمهين •had no central authority which oversaw their dirhams or dinars and there was no body that oversaw its circulation •salaf used the money of the mushrikin (Sasanid pagans) and the kuffar (Roman disbelievers). So according to your bid’a theory, all the Muslims including the companions and the Messenger of Allah wa iyadhubillah are guilty of dealing with unregulated money until the time of Abdul-Malik bin Marwan who was the FIRST khalifa to institute a global monetary mint for the khilafa with the power of enforcement. Up until his time, there was no central authority in Islam overseeing monetary policy or distribution.
- Your asinine and laughable theory that “the owner may shut is down” is only applicable to your bid’a theory of governmental CENTRALIZED systems. Nobody can “shut down” bitcoin because it is a decentralized network of thousands of people across hundreds of countries who act autonomously on their own accord. The very threat of “shut down” as you are claiming only exist for your governmental centralized systems you are ignorantly defending against the people and the Muslims.
- Its affair, meaning bitcoin, is NOT as you have mentioned rather its reality is opposite of you’ve mentioned. Thus it remains permissible and will remain permissible until a proper ijtihad can properly render an entire currency to be haram. With the case of bitcoin. That would never happen, could never happen, and will never happen and to Allah lies all success.
- It has value and tangibility is not a shart (condition) to being a valid medium of exchange in Islam. If that were the case, then we would have to nullify your direct deposit checks that go directly from your employer to your bank. And when you pay your bills or rent with that paperless intangible imaginary made up money on a screen that you receive from your employer, you are likewise dealing in haram for not dealing in a “tangible” currency. No proper mujtahid (a true Islamic legal scholar) will ever pass off such a ruling as this idea violates vital usul in fiqh and qawa’id in Islamic economics.
- There is plenty of guarantee. In fact the security of bitcoins guarantee OVERPOWERS the guarantee of your fiat centralized systems. Unlike the current structure, transactions are performed securely, based on a peer to peer basis WITH NO MIDDLE MAN, and are IRREVOCABLE. Meaning they cannot be reversed in the way that modern systems can block, stop, or reverse a transaction you made or a transaction of funds you have received.
- Investing money in bitcoin (or any altcoin) is not a waste of wealth and your theory is based on ignorance and delusion
- Is it a bubble? Well how do you explain the bubbles of your saudi or American dollars. They have proven to be bubbles and have burst. There goes your theory down the drain and into the gutter where it belongs. Bubbles or the atmosphere of a bubbled market is firstly a conjectural matter based on people’e ideas, not rooted in any solid facts. Firstly, if bubbles was a primary indicator in making a currency haram, then the ruling of tahrim would have to be passed on gold, silver, USD, the saudi currency, and every currency in existence in the known world for centuries back. Because every currency is liable to develop a bubble. So a bubble has no shred of a connection in declaring a currency with the hukm shar’i of tahrim. Secondly, bitcoin has already had three bubbles and they all popped. Yet we are still here, just like the dollar has had bubbles and it is still here. There was a 2011 crash that dropped to 85% of the market. Then there were two crashes in 2013. So it is fine to consider the current rise as a bubble if you want, but declaring it is a bubble means nothing with regards to permissibility or prohibition of an entire currency and only an ignorant of the shariah could suggest this!!!
Next, shaykh Rubayli goes on to say
To conclude, this is a great deduction IF the reality is as you have outlined. However its reality is not as you have outlined and thus your conclusion is faulty and to be discarded as erroneous until a proper assessment is made on your part with thorough peer reviewed research.