This is a cryptocurrency used for a digital currency exchange and a platform to make payments on blockchain technology. The technological and digital revolution that has taken place over the past few decades has enabled many kinds of innovative payment systems to be created and used. The cryptocurrency is one of the most revolutionary payment systems in the world for businesses and personal use.

Although there are more than 2,000 different types of cryptocurrency, Bitcoin is definitely still the most well-known form of cryptocurrency on the market. It was the first cryptocurrency coin that became mainstream. There is a question for Muslims, that is why certain crypto payment platforms are not considered to be halal in the eyes of Allah and to conform with Shariah principles. The guide will provide an outline on how to use the cryptocurrency market. Will it be allowed under Islamic laws?

ISLAMIC INTERPRETATION

A comprehensive Islamic interpretation, one that sparked a massive rise in Muslim investment in Bitcoin and Ethereum in 2018, was provided by Sharia advisor Mufti Muhammad Abu-Bakar (former advisor to Blossom Finance) who argued that Bitcoin is permissible under Shariah law. He considered some of the arguments that the origin of cryptocurrency was speculative, but he felt that all currencies have some element of speculative behaviour and that it did not automatically render crypto as haram.

Another reason why Muslim scholars say that crypto is not halal is because the idea of blockchain and cryptocurrency is very anti-thetical. That is the reason Islamic laws are anti-interference, and that blockchain technology, the price of bitcoin, and buying and selling of cryptocurrency are considered halal by many Islamic scholars.

CRYPTO BLOCKCHAINS AND ISLAMIC PRINCIPLES

Blockchains refer to the blocks of technology used to record digital cryptocurrency transactions. Blockchains act like a system of record. One of the most important reasons that this technology is so important is that it is virtually impossible for hackers to hack, change or cheat the Blockchain platform or marketplace. By using blockchain technology, no need for centralised financial institutions or establishments, because no need for central control is necessary.

In spite of many Islamic scholars confirming that cryptocurrency is acceptable and halal under Islamic Sharia law, the cryptocurrency investment market is now widely accessible. As a result, more and more Muslims are wanting to buy crypto and use it as a form of currency.

CONSIDERATION AND COMMERCIAL VALUE

From the perspective of Islamic contract rules, there must be an element of consideration – Mal. If you possess and store a lot of money, cryptocurrencies meet the criteria as well. You can have them and store them, and they also have a commercial value. When it comes to crypto, it is a real, valuable digital asset, its price and value are determined by the amount of money that is paid for it, and it is able to be owned and traded in order that the shariah requirements are satisfied.

The Shacklewell Lane mosque in East London is one of the first mosques in the United Kingdom to accept cryptocurrency donations and zakat donations during Ramadan.

DIGITAL CURRENCIES AND SHARIAH LAW

Islamic finance principles dictates that in order for income, or investing in any product or asset, to be deemed halal it has to meet certain criteria. It is necessary for Shariah law to be applied to the financial systems that we operate in, and some people have questioned whether rules that were devised centuries ago can still be applied to a very modern, technologically advanced digital financial marketplace.

If you answered this question, yes, you can apply the principles of the Sharah to your modern crypto analysis. They are based on social justice, accountability, and ethics. They transcend all types of financial transactions. As long as there is no illegal activity in the financial sector, trading and investing in crypto should not be considered to be contrary to Shariah principles.

INVESTMENTS AND ILLEGAL ACTIVITIES

There has been some discussion around the use of cryptocurrencies for illegal activities such as gambling, drugs, and money laundering. Also, those who are against bitcoin say that bitcoin is not legal tender because it is not backed by a central government that determines the value of the currency and maintains regulatory standards. So it is considered to be speculation and trading. Legally, use of things considered halal for an unlawful purpose does not imply that the original item was halal.

The owner of the currency remains responsible, and the coins and tokens are kept in an electronic wallet. That way investors are allowed to participate in the trading as and when they wish. They remain in control of their assets.

As far as I know, the publication of the working paper by Mufti-Muhammad-Abubakr clearly stated that cryptocurrency is permitted under the shariah rules. The result could be devastating for Muslims around the world who are paying out zakat money to poor people and charities in this country. Muslims make up 25% of the world’s population. They hold approximately £1.04 billion in Bitcoins, that means that a total of £26 million in Zakat contributions will need to be paid to them. [1]

MEDIUM OF EXCHANGE

Cryptocurrency operates as a medium of exchange across the globe. It is possible for it to operate in a wide range of legally diverse and unpredictable environments. It is generally more accessible than most mainstream finance options.

While it is possible that crypto currencies like bitcoin and ethereum will be used as legitimate modes of exchange, for making transactions and for trading.

By introducing shariah-compliant cryptocurrency guidelines, Muslims now have the opportunity to invest in ethical investments. Islamic charities could immensely benefit from receiving zakat and other donations from crypto investing and trading. Many banks and financial institutions around the world accept Bitcoin as a currency that is economically viable. In the following case, it will be easier for investors to trade, buy, and sell Bitcoin. When determining whether contracts relating to crypto are shariah compliant, because the contractual relationships in crypto are based on smart contracts that are powered by blockchain technology, that means that the process can be made increasingly secure and automated. You are attempting to reduce the complexity, confusion, and errors that can occur, as well as to ensure that banks are more likely to accept the terms of the agreements that you have created. 
By showing that people abide by the shariah rules, cryptocurrency is earning legitimacy in the Islamic finance world. In the Muslim world, there are numerous cryptocurrency agencies, among them One Gram in Dubai and Hello Gold in Malaysia. It gives legitimacy to the ruling that all cryptocurrency is acceptable to be used by Muslims and Islamic financial institutions.