Quick answer: No. Block Chain Mining is making money from money with no real economic activity, while its value keeps rising with the rising greed of the public, all of this violates the spirit of Islamic economic principles. According to Shaykh Sulaymān Salīmullāh ar-Ruḥāylī:
Cryptocurrency is a currency that belongs to individuals. It is created by individuals and so is not subject to any government regulation. It has no value in and of its self and thus is not based upon anything. It has no economic strength that gives it value nor an origin of some sort that it returns to e.g. gold, silver or the likes which would then give it value. Rather, its value is based on the fluctuation of the market.
More and more is becoming clear that Bitcoin is vulnerable agains miners who collude. For example, this is from Cornell University study about it. I would like to add few points about the bitcoin SCAM, so maybe it becomes clear for people:
- 1% of bitcoin owners have around 90% of the total bitcoin in the market
- 88% of the miners are in China, only 5 companies hold more than half the mining power
These BTC owners and miners are controlling the bitcoin. There is no decentralization.
The following video is by Almir Colan who is director of Australian Centre of Islamic Finance:
Each stock has some intrinsic value. But Butcoin has none. Based on such a principle I can say we are indulging in a trade which can cause serious loss to people just because of speculation. If that’s the case then whole stock market is about a fatwa which declares it haram due to speculative nature of the investment. Especially, with the virtual currencies there also is no real asset at the back of it.
Related: What are the Economies of Scale?
Why do you need a Fatwa on Trading?
What has not been termed Haram by the religion which was completed on Mohammad (PBUH) does not require a Fatwa unless you need to use it for Marketing. There is no governing body overseeing BitCoin or a country that ensures the circulation of it as a currency. Meaning, it is possible that the owner may shut down the website and that would be the end of it. So as long as its affair is as we ave mentioned, it is not permissible to use it. It has no value such that it can be bought or sold tangibly and there is no guarantee. Therefore, investing money in it is a waste of wealth. It is like a bubble, you become amazed by it the more it grows, but it may burst at any time, and of a surety it will burst. Islamically Gold/Silver backed currency is better and more ethical but this is a new format of exchange which we all - not just Muslims in Pakistan should learn about and see how best it can be developed.
BTC will collapse but when?
In the 1600’s during the tulipe mania in Netherland, 1 tulipe was worth 200,000$ (equivalent of that time). In the Islamic perspective it is not allowed for a Muslim to participate to any speculative trading. Increase of wealth should come from real work and added value. Due to this, I see – and Allāh ﷻ knows best – that it is not permissible to trade with it. Yes, its thriving right now and its value has reached thousands of dollars after having no value. However, reality is the determining factor, and upon us is to rule with its impermissibility so long as its affair is as mentioned. I think fatwa/rulling from mufti Taqi Usmani will be more authenticated as he has his work on modern financial instruments. Crypto is not a simple concept and I guess we are going through the phase which many went thru many decades back when loud speakers and cameras were invented and declared haram. Now both are Halal once the idea was grasped by scholars. It will take for commons and religious scholars to grasp the idea of it. Rest, Allah knows the best.
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