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Discussion in 'Smalltalk' started by Inwardreflection, Oct 15, 2017.
Egypt's Grand Mufti endorses Bitcoin trading ban
from the wired article:
this is wired. not some small town local newspaper:
I think the crux of the matter- one of them anyway lies in whether money has to carry intrinsic value according to the Legal Schools. Can anything be "money" if it is seen as being acceptable on face value?
It is first important to examine the nature of bitcoin and more generally cryptocurrencies before a ruling can be passed on its permissiblility or impermissibility.
Is it maal (property, goods)? If so, which of the four types of maal is it?
This is an important question because if it is not maal then trading it is baatil (void). The second question (which of the four types it falls under) is important as the answer to that question will determine the conditions for its trade.
Maal, according to the shariah, means:
- that which human instinct inclines towards;
- that which is given and taken [as gifts etc] and that which one prohibits/prevents others from using as it is owned by him.
- that which is hoarded for the time of need (ie saved and stored to be spent/used/benefitted from when the need arises).
[These definitions have been gleaned from various major hanafi books like radd al-muhtar, bahr al-rayiq, fath al-qadir etc]
As of recent, it’s clear that people desire purchasing and storing bitcoin and other cryptocurrencies. People store them in online wallets and can transfer them to whom ever they want. People prevent others from being able to use their cryptocurrencies as the wallets are password protected and have private keys only accessible to the owner of the wallet. People are storing them and plan to sell them when the price increases. It appears, therefore, that cryptocurrencies satisfy the general criteria for something to be maal.
Four types of maal:
1. That which is always thaman (monetary payment) regardless of anything. Eg gold and silver (these are thaman e khalqi - as in created to be forms of payment).
2. That which is always mabi’ (object of transaction ie the item being sold in exchange for a price). Eg clothes etc.
3. That which has an intrinsic attribute because of which it can be thaman in some cases and mabi’ in others. Eg someone sells an item of clothing in return for 1kg of wheat. Wheat is generally not a form of payment but here the seller considers it as such. So wheat, though generally mabi’, became thaman as a result of the agreement.
4. That which is in essence a commodity but by convention/custom it is considered thaman. Eg fiat currency (notes, coins etc). For as long as it remains in circulation, it will be considered thaman, otherwise it will return to its original commodity state (eg for paper notes, if they lose all value, they return to their basic state of just paper).
Cryptocurrencies may fall under category 3 or 4.
In terms of category 3: they can be thaman at times, ie when you use one cryptocurrency to buy another cryptocurrency and it can be mabi’ at times, ie when it is being purchased using fiat currency (buying one crypto coin for £10 for example).
In terms of category 4: it can only fall into such a category when the public accept it to be a form of payment. At the moment, this is not the case. Even if it became widely used as a form of payment, if/when it loses its value, what basic ‘commodity’ [sil’ah] will it revert back to?
Requirement of taqwim
Being maal itself is not sufficient for its permissibility. Otherwise, strictly speaking, alcohol is a form of maal as it satisfies the above criteria but despite that it is still haram to trade alcohol. As a result, there is an additional requirement that the maal must be mutaqawwim, which means that to derive benefit from it must be permissible according to the shariah (ie it has value according to the shariah. Pig, alcohol etc are not permissible to derive benefit from and thus trading them is haram - they are ghayr mutaqawwim).
With regards to cryptocurrencies, there doesn’t seem to be any factor indicating it to be haram so it appears to be mutaqawwim too.
There are also other questions about the way it is traded that may influence its permissibility and impermissibility. The fact that it is not tangible but only virtual ought to be considered too. Some other time in sha Allah.
From Mufti Monawwar Ateeq's Facebook page:
Initial Thoughts on Bitcoin
1. The creator of bitcoin is disputed and no one regulates it so there is no one to complain to and hence the risk associated with it is very high due to severe ambiguity (Gharar Shadeed). It will take several years for world economies to accept and regulate it.
2. It is not tangible and is only virtual. Islamically, it’s not a currency backed by any assets and it is not a common medium of exchange in most parts of the world including most western countries nor is it a commodity. World financial authorities are skeptic about bitcoin for obvious reasons including economic interests such as its impact on tangible currency.
3. The bitcoin field is infant and open to many risks like fraud. Some companies have scammed people’s money.
4. Lastly, virtual currency is notoriously used to whiten black money from drugs and to pay illegal ransoms across borders.
My advice to all those asking for advice is: Humans naturally desire generating fast income. Don’t waste your precious and hard earned money on this severely ambiguous and highly risky venture. Remember only that which Allah Almighty has destined for you shall come your way and what was never written will never be yours.
Cryptocurrencies, stocks and shares etc are those types of contemporary issues which only a few muftis would be able to properly answer due to its technical and complex nature. This is similar to what alahazrat wrote in al-muna wa al-durar regarding money order fees.
I know mufti akmal have said, one should avoid it.
But i feel some of our scholars say it due to, not having researched/understood the topic properly.
Not probably. Is.
From what I know, the requirement of one majlis can be fulfilled even through posts and online transactions, so that should not be a problem. However, one thing we know for sure is that benefit coming to us through aqd e fasid is also halal if the other party is not a muslim, which brings me to the question, whether not possessing a thing one is selling makes the sale fasid or batil, and secondly, whether the rule regarding aqd e fasid would also apply with 'bay batil': in fact this is one question I have sent to a sunni darul ifta, and I await its answer.
Lastly, since, as with online commodity and share trading, we don't know who we are selling the thing to, so the question is, as it's possible that the person buying from us is a muslim at the other end, can we still take the benefit from an aqd e fasid? I asked a similar question to a mufti about accepting profit from banks in countries like India, where it is very likely that the 'interest' earned by the bank also consists of muslims making payments on their loans, so how does it remain jayiz to receive benefit from it. He said it's jayiz, as the ruling would be based on majority.
if you listen to borg in this clip - he makes a statement that is very closely the situation a mufti may find himself in.
innovation always outruns regulation. right now there is very little regulation in this entire area. we are waiting to see what happens.
at around 1.00 he says: 'at this point it is not a real commodity'
around 1.28 he says:
'innovation and technology always outrun regulation. that is a given. the technology as it continues to accelerate..it continues to increase..regulators need to understand what it is that the innovation is coming up with. and we are still trying to get educated.'
the mt.gox that he mentions in the clip: https://en.wikipedia.org/wiki/Mt._Gox
An answer to whether it is permissible to invest in the various forms of cryptocurrencies should be sought from a reputable Sunni mufti (or a panel of muftis).
However, the difficulty with that is explaining to them how cryptocurrencies work. Even if you do a great job of explaining, they may not understand fully due to the (sort of) intricate nature of it. In fact, not even many from the laity understand how blockchain and cryptocurrencies work. Maybe we should, together, draft an istifta in English and urdu which can be sent to various reputable dar al-iftas.
Kifl al-Faqih, muna wa al-durar and fatawa ridawiyyah Vol 17 of alahazrat would be a starting point.
Questions to provoke thinking:
Can cryptocurrencies fall under the category of ‘maal’ (property)? Cryptocurrencies are intangible, which is an important aspect when considering whether it can be ‘maal’ or not. There are four types of maal generally, of which one is ‘that which is always thaman’. So the main question to answer is whether cryptocurrencies are a form of maal, and if so, which type of maal is it.
I very much doubt it can fall under the category of ‘currency’ as it is not widely accepted as a form of payment nor used as such by the general population (these are general points mentioned about the nature of thaman e istilahi in fiqh books). However, that begs the question: what are all the requirements for something to become a currency according to the shari’at? The situation may change in the near future, whereby people accept and use cryptocurrencies as an actual form of payment, which also needs to be addressed for when the situation does happen.
If it is deemed to be currency, it would have to be thaman e istilahi/urfi (currency due to public usage and acceptance) of course and not thaman e khalqi (created as currency: eg gold and silver).
Then there is the important fact that crypto trading occurs mainly online. This is important due to the ‘one majlis’ (sitting) requirement for bay’. If it is deemed a currency, then there is also the requirement of gaining control over one (either the cash or the purchased cryptocurrency) within that sitting in which the transaction was agreed.
There are many many important points to consider...
It looks like bitcoin wears two hats- one, currency and the other a commodity which could be invested in. Certainly, the technology that it sits on such as blockchain could be looked at as viable for investment purposes but even then it's use in haraam sectors like riba requirees for it to be properly scrutinized andd Allah Knows Best
speculative purchase / sale of this item would be the basic reason for it to be forbidden (as in other items).
it will probably fall, in the same way it has risen.
looks like you missed the bus! It has bolted.
Have any of our Sunni scholars given a verdict on the use of bitcoin?
Someone needs to look into this and not think that this phenomenon is in some distant future like 200 years from now. In fact, I think the signs point to adoption of crypto currencies to replace paper money as something that is on the verge of becoming a reality in the next few years. The advancement of this new "Tech"era will bring with it a new financial status quo so we need to know from now the rulings related to these things.