Principles Of Islamic Currency




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The question of trading in Forex and trading crypto currencies such as bitcoin, litcoin, dogecoin or dash coin on exchanges or trading platform being halal has been floated around. Pakistan being an islamic state is now moving up and seeing more acceptability in bitcoin due to the fact that the laws and regulations have prevented services such as Paypal entering Pakistan close to impossible. While I am no expert at the subject a few users have posted some interesting things that I tend to agree upon and would like to post here. Please take note that this is a post from stackexchange.

“Bitcoin is not a traditional notebased currency but similar to commodities like gold, silver etc , some would call it a cryptocommodity which is indeed intrinsically accountable and can be proven to exist if required. Other currencies like notes are impossible to trace intrinsically and are essentially contract papers wheras a bitcoin stores the entire transaction history(under the larger bitcoin framework). Islam requires accountability of the commodity spent , you just cant duplicate currency notes to fulfill demand like how govts do with paper currency.Inbuilt Accountability of bitcoin allows the bitcoin commodity to be traceble and thus cant be duplicated on demand. Far from haram I would say that bitcoin is the currency best suited according to the laws of Islam which required the currency to have intrinsic value, not just a signed piece of paper whose value can be lost due to various circumstances. The best thing about bitcoin is that it is not controlled by central banks and the bitcoin you possess is the actual “coin” which was virtually mined. So it does have an intrinsic value which is nothing but proportional to the difficulty to mine it. This is similar to how difficult it is to mine real gold. Also real currency which Islam allows is deflationary in nature that i.e its value always rises e.g: Gold , the value of gold increases as the resource is limited and is being used up. Whereas in the paper currency its inflationary as more notes are printed to keep up with the demand thus reducing the value per note.The total number of Bitcoins also are limited to a few million hence its value will always rise.

Thus I would even go on to say that using bitcoin is more halal then using currency notes supplied by the reserve banks.” user4841

As I see it bitcoin is not a traditional paper-based currency. You can however carry bitcoin on a paper wallet so you can physically give it shape, while it can be verified by a mathematical formula.

Our current financial system is based on an interest based economy so to compare our own currency such as PKR or Pakistani Rupee would be wrong. Bitcoin and the blockchain (a public ledger that records all transactions) is more then just a currency and can be viewed as a technology, a commodity or a digital asset. I see the current fiat as being more haram then bitcoin as its based on how much a government can print and will print when needed. We have to remember that the ecosystem is only growing, and what will bitcoin end up as is yet not known which is what also makes it exciting.

Trading Forex/commodity/shares is halal as long as you can take physical delivery. While physical delivery is possible in all Forex and commodity its not possible to actually get part of the company, hence you can get a certificate that certifies that you own that much shares in a company. Keeping this in mind I think trading in crypto is fine as long as you dont go into interest based setup. I hope this has cleared up some of the things that might boggle your mind.

 

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