Muslims May Use Bitcoin Without Hesitation
There have been a number of Islamic scholars and Muslims who have declared Bitcoin to be haram, or forbidden, in Islam. In December 2017, Muslim scholar Sheikh Assim Al Hakim stated that using Bitcoin is not permissible under Shariah (or Islamic) law. Assim said:
“We know that bitcoins remain anonymous when you deal with it… which means that it’s an open gate for money laundering, drug money and haram money.”
Before I go into what else the Saudi Arabia based cleric said, let’s just examine the above statement he made. Yes, Bitcoin (BTC) transactions have a certain level of anonymity, but does that really make them haram? If we go by this logic, then there are ways fiat currency can and is used anonymously as well.
Fiat Transactions Can Be Anonymous As Well
For instance, you could deal entirely in fiat cash and not go through a bank, which requires proper ID. There are a number of money changers I’ve personally worked with that accepted my fiat currencies without requiring me to provide any ID. These money changers are out here in Pakistan, Kuwait, and Turkey – all Islamic countries. And, of course, they also accept large amounts of fiat money from people without ID throughout the world. So, that can be considered “anonymous“. But, does that make fiat haram? Absolutely not.
Assim also says that Bitcoin can be used in money laundering. That’s true, but is not fiat money used in money laundering as well? It has been used in money laundering ever since it has existed. The point here is that any medium of exchange can be used for good things and bad things. So, it’s how you use a medium of exchange, be it Bitcoin, gold, fiat money, or any other asset that has value. If you use that asset to engage in illicit activities like human trafficking, then that is haram. It’s not only haram, but also immoral and illegal.
Nothing About Bitcoin Itself That’s Haram
Therefore, the claim that Bitcoin itself is haram is absolutely invalid and baseless. There’s no logical argument to support this claim based on what’s written in the Quran (holy book for followers of Islam) nor does it state anywhere in the Quran that it’s forbidden to use a medium of exchange, which is just what Bitcoin (BTC) is.
With all this talk about Bitcoin being permissible in Islam or not, I can tell you what IS probably haram: Bitcoin (BTC) futures contracts. That’s because you’re betting, which is gambling, on the future price of BTC. And, gambling is not permissible for practicing Muslims.
Ramadan – A Great Time to Use Bitcoin
Notably, billions of Muslims worldwide are observing the holy month of Ramadan right now. During this month, followers of Islam must fast from sunrise to sunset. Also, Muslims are required to give zakat throughout the year, or donations to the poor. The amount to be paid in zakat is 2.5% of your income. This is only for those who are financially stable and can afford to do so. If you happen to be searching for articles on crypto at this time, you must have come across a number of trending articles about a mosque (Muslim place of worship) accepting donations in either Bitcoin (BTC) or Ethereum (ETH).
There’s nothing wrong with this at all. In fact, it should be encouraged. These donations are going to a noble cause, which is to make the lives of the less fortunate better. The way I see it, there’s no greater purpose than serving humanity. Before us humans are Muslims, Christians, Buddhists, Hindus, or any other faith / belief, we are humans! So, humans helping other less privileged humans must always be encouraged. Just by using Bitcoin, you are spreading knowledge and awareness of a revolutionary new technology as well.
Seeking Knowledge Is A Must for Muslims
There are many verses in the Holy Quran that explicitly and clearly state that one must seek knowledge. Here are a few:
“And say: My Lord, increase me in knowledge.” (Quran 20:114)
“Allah raises of those who believe and those who have been given knowledge many levels.”(Quran 58:11).
“Read! In the Name of your Lord Who has created (all that exists). He has created man from a clot (a piece of thick coagulated blood). Read! And your Lord is the Most Generous. Who has taught (the writing) by the pen. He has taught man that which he knew not” (Quran, 96: 1-5)
So, above it clearly stresses the importance of seeking knowledge. By seeking knowledge and then gaining knowledge, we make a conscious effort to not be ignorant. Being informed allows us to make better decisions in life. There’s probably no argument against that. Now, if all Muslims would actually open their holy book and adhere to the actual source itself, rather than relying on some “scholar”, then they would realize just how valuable their own brain that God gave them actually is.
So, what does this have to do with using Bitcoin in Ramadan? By using it, you are not only helping the less fortunate, but you are also spreading awareness (knowledge) about a great technology. So, not only Muslims, but every human on this Earth should embrace new technology, learn more about the latest innovations through independent research, and then inform others as well.
Other “Verdicts” From Islamic Scholars About Bitcoin
Now, let’s go over what else Assim said about Bitcoin:
“Bitcoin is something that is recent and new and there are a lot of serious concerns when it comes to dealing with it … whether it’s from the origin or from the aspect of sustainability and security. As of today, one bitcoin that was [worth] 0.1 cents is now equivalent to $11,000 plus. This is ridiculous. This is not something physical you can touch.”
With all due respect, what Mr. Assim fails to realize here is that since Bitcoin is new and recent which he correctly points out, the majority of the world does not know much about it. So, this is not something wrong with Bitcoin itself. However, what needs to be done is do what the Quran itself tells us to do, which is to seek knowledge, as so clearly expressed in the Quranic verses mentioned above. Also, as the world is beginning to learn and appreciate the flagship cryptocurrency, its value is being understood and so it’s rising. There’s absolutely nothing illogical about that.
Bitcoin (BTC) was worth practically nothing at one point only because the world knew nothing about it. How ignorant can one be to think that if he or she does not know about something, then that something is worthless? There’s no shortage of rulings by Islamic scholars that are not based on sound logic or the fundamental teachings of Islam. Notably, here’s a statement from the Turkish Directorate of Religious Affairs:
“Buying and selling virtual currencies is not compatible with religion at this time because of the fact that their valuation is open to speculation.”
Bitcoin, Just Like Anything, Can Be Misused
The key words to note here are “at this time”. Yes, the Bitcoin and other cryptocurrencies market is driven a lot by speculation right now. However, that’s not the fault of cryptocurrencies themselves. There’s nothing inherently wrong with them. It is us, the users, who are abusing them. Ethereum founder Vitalik Buterin has said on many occasions that we should learn more about the technology behind cryptocurrencies instead of thinking of them as a “get rich quick” scheme. And, he’s absolutely right.
It’s us humans who orchestrate pump and dump schemes. It’s us humans that decide to scam people by misusing cryptocurrencies. Similarly, scams run rampant with fiat money or just about anything. This does not mean we stop using Bitcoin, traditional money, or any other valuable asset. All Islam and other religions teach us is to exercise good moral judgement and a responsible attitude. Although I could go on more on this topic, I will end it here and perhaps in a future article, I will address some of the other misconceptions about Islam, Muslims, and Bitcoin.