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Discussion in 'Smalltalk' started by Unbeknown, Jun 22, 2019.
which specific point is this a reference for?
from kifl al-faqeeh:
First and foremost, I’d like to clear the air and say that I too personally think it should be avoided to be on the safe side. But this is about reaching a hukm. In order to do that, one needs to know the chapter of bay' and how exactly cyryptocurrencies work. all irrelevant considerations need to be put to the side and only points that have relevance to the hukm need to be discussed.
I have already highlighted in another post that it is not just about its status as a thaman. There are other considerations to make. There are four types of maal, one of which is thaman. So, even if it does not fall under the category of thaman, can it fall under another category of maal? this is what needs to be looked into.
Is this your definition of 'valuable' or the shar'i definition?
Interesting that you mention this. Again, is this your view or the shar'i view? Fiat currencies are not "akin" to maal, they are maal because they satisfy the conditions of something being maal [see kifl al-faqih].
you missed the point. the conditions of bay' require one majlis. when purchasing or selling online, the majlis element is non-existent, and as such, one of the conditions of bay' is missing. yet, muftis have given the fatwa that due to common adoption, it is is permissible.
bay' is mubadalah al-maal bil maal. hence, it needs to be discussed whether cyrptocurrencies are maal or not. if they are not maal, then the rukn of bay' is missing, and such it is impermissible to trade.
well the point that they are "easily lost" - was made to highlight the virtual - flimsy - nature of crypto-currencies - and therefore questioning their status as "thaman". of-course, all types of wealth is prone to destruction but how many other assets do you know that simply vanish into thin air - at the click of a button?
indeed - but g.f haddad's reply sounds a precautionary note, which is how it should be. It is specifically about Bitcoin - not all cryptocurrencies - and at this point bitcoin is going through a flagrantly obvious bubble - and Muslims should be prevented from imperilling their wealth chasing after the chimera of some unbeatable, de-centralized global currency - beyond the reach of the spidery net of banksters.
how do you define something as "valuable"? you've got two options (afai can see) - something is either intrinsically valuable (gold, silver, ores, coal etc.) or because a large section of people consider is valuable and there is a reasonable amount of certainty about it's value persisting in the long term.
that is why fiat currencies are akin to "maal" - because there is some entity - bank, government etc. - who will accept it even if no one does - the backing of centralized authority is what makes it "valuable". You can always exchange torn or worn out paper notes at the bank.
what happens when bitcoin suddenly falls out of public favor - and you've parked 80% of your wealth in a wallet at coinbase? Who will accept your "immutable secret key" and give a million pounds in return? Nobody.
the lack of centralized backing makes it more vulnerable than any sort of currency out there.
fiat currencies, after having been decoupled from gold/silver, have become similarly susceptible to complete devaluation (as happened with demonetization in India or during recession in Greece) - but that is something which has been imposed upon the world and there's no way out of it. We can't force people to pay zakaat in gold coins anymore.
But with bitcoin we do have a choice, yet.
Bitcoin is not just decentralized and volatile but also shrouded in mystery - how many of the thousands of people investing in Bitcoin and declaiming it's advantages are aware of the details of the algorithm that runs it? Of-course its code is open-source but how many are competent enough to even read that code - let alone understand it?
People are jumping the bandwagon in blind faith and what if the bogeyman of "technical error" or a "secret sink which quietly pilfers away the coins" suddenly pops up ans cries "boo!"?
It's anonymity and mysterious origins can turn out to be it's biggest stealth weapon which can be wielded to suck the wealth out of nations and people. If this sounds like a conspiracy theory, that's because it is - but a global plot to undermine the financial stability of nation-states and push them into a chaotic whirlpool of economic ruin is within the realm of possibilities and finds home in the hearts of many dominion-hungry imperial-wizards - that is no secret.
now, it would be an altogether different ballgame if a different sort of cryptocurrency were adopted by a government with full faith and backing of it's financial institutions - as India is said to have been contemplating - because it will come with it's own safeguards against accidental and permanent loss - something which is missing in case of bitcoin. There will surely be a way to get your lost password or your money in cash from a bank.
While the manner of conducting bay' is "virtual" - what is traded are real products - which can also be returned or exchanged and the sale is covered by at least some policies which assure authenticy and complaints redressal in a reliable manner. Credit card based transactions are routed through trustworthy payment gateways and backed by acceptance of banks - which can be held accountable (at least in principle) in case of fraud.
All these things are absent since bitcoins are the agents of digital anarchy and the first frontier in the battle against centralized rule - it incorporates the philosophy that governments are unnecessary and people can rule themselves with the help of clever algorithms and hack-proof technology - and governments and power hungry megalomaniacs will simply vanish in a puff of smoke, like the millions of dollars worth of bitcoins at mt. gox....
however, no one hordes software programs as "property/asset", it's value doesn't fluctuate and it's origins are known - selling/purchasing programs has become an unavoidable part of our lives - and they serve an immediate purpose - unlike bitcoins which at least at this stage is simply of speculative value and hording it is beset by tonnes of uncertainties.
the only thing their share with software is their virtual nature - but the key difference is that a software can be likened to a service which you pay for (such as a postman or carpenter - their worth arises from the ends they help us achieve - unlike bitcoins which are ends in and of themselves) - while it might not be sufficient to class something un-tradable merely on account of it's intangibility - it is certainly something which must be seen as an impediment to classifying it as "property". That is why "intellectual property" is a concept alien to Islaam and we have to find various sideways to dissuade "piracy" of "intellectual products".
so yes, it is intricate but it's safer to err on the side of caution - we don't want Muslims to risk their wealth in the teeth of such overwhelming uncertainties.
And Allah ta'ala knows best.
oh, futures are there already.
This is not entirely correct. Transactions are submitted to a ledger (or blockchain). The ledger calculates the accurate spendable balance to ensure that every transaction uses only the coins available in the spenders wallet. You can’t just sell millions of a certain cryptocurrency you don’t own, because the ledger will not confirm your transaction, as you don’t have that amount.
add to it the following:-
5. several countries have BANNED its trading - so it becomes against the "law of the land" to actually dabble in it.
6. as brother @ridawi said, "the way it is traded". I believe it is only through online "exchanges", where a seller can sell a million cryptocurrencies, even if he actually owns none. this is pure speculation, a form of gambling. the wild fluctuations in price only go to show that the supply and demand are actually not of a known quantity.
Looking at cryptocurrencies merely from the perspective of 'currency' (ie its status as a currency) is, in my opinion, being naive. When alahazrat (Allah elevate his maqam) was considering the ruling on fiat currency, he first tackled the issue of whether paper notes constitute 'maal' (goods, property, asset) by examining how it fulfils the criteria of being 'maal' according to the shari'ah. After concluding that it is 'maal', he briefly outlined why it is maal e mutaqawwim (has value and is lawful according to the shari'ah). He then proceeded to set out the types of 'maal', and how paper notes constitute thaman e urfi/istilahi (currency as a result of common acceptance and usage). After all these points, alahazrat also explains that a 100 note (of any currency) can be sold for 200 [provided it is not in the form of a debt].
Similarly, cryptocurrencies ought to be examined in this manner. It must first be looked at from the perspective of maal e mutaqawwim before delving into its status as a currency according to the shari'ah. If it is not a currency according to the shari'ah, then this does automatically mean that it is haram, because it may well be considered an asset that can be bought and sold under another category of 'maal'. This is why it is important to look at it from a wider perspective.
As for the tangibility element, software programs are intangible - does this then mean that buying and selling software programs is impermissible? ok, someone may argue that a lot of them come on a cd and, therefore, one is purchasing a cd which is tangible. However, this sort of argument ignores the fact that due to the advancement of technology, many programs can be purchased and downloaded directly online - is the selling and purchasing of such software impermissible?
Likewise, things such as e-commerce (selling goods online), buying goods and services (including gold and silver) online using your credit/debit card etc, do not meet the strict requirements of bay' - yet these things are a common part of our life. Topics such as this have been discussed in fiqhi seminars in india, and the conclusion seems to be that due to common usage and adoption (one of the reasons how something impermissible may become permissible), e-commerce transactions etc. are considered permissible.
There is also the fact that bay'e fasid transactions can be conducted with non-muslims. so even if some of the conditions of bay' are not met when carrying out crypto transactions (hence categorised as a fasid transaction according to the shari'ah), it may still not be regarded as impermissible outright.
In articles i've come across, some of which have been posted here, points such as the fact that it is not controlled by a centralised body have been emphasised. It may be my lack of knowledge, but how does this have relevance when considering its shar'i status?
There is also the mentioning of fraud, risk, speculation etc. - but fiat currency itself is not backed by gold or silver. there is, therefore, with fiat currency, the risk of inflation and hyperinflation (Zimbabwe as a prime example) and financial crashes (2007-08 financial crisis).
it is true that virtual money can be lost very easily. the possibility of that happening is much higher than with fiat currency. but does the possibility of such happening make purchasing such an item impermissible? if someone does their research properly and utilises security measures, the risk of losing their cryptos can be minimised.
many many points need to be considered before a fatwa of outright impressibility is given. it is complex and intricate of course, and therefore requires detailed research from someone with a certain level of expertise in the area of bay'. take for instance the brief answer by gibril haddad posted below, it is too brief and simple for such an intricate matter. many scholars have stated that it should be avoided due to its dubious nature according to the shari'ah, but this is not sufficient enough. research must be conducted to come up with a solid answer.
wa'Allahu ta'ala a'lam
Being virtual is one of the key things to consider as preservation of wealth (taHaffuz e maal) is one of the primary maqaasid of shari'ah and virtual money can be lost very easily - forever.
Nearly a quarter of world’s bitcoins may be lost forever
How to lose $8k worth of bitcoin in 15 minutes
and top-ten ways to lose bitcoin.
*Question on Bitcoin answered by Dr. Shaykh Gibril Fouad Haddad*
Is bitcoin and other crypto currencies halal?
If its characterizations by major economists and central banks as a Ponzi scheme and a collective delusion are to be trusted then no, it is not halal. The fact that it is not halal is further suggested by its being named “virtual” whereas the definition of wealth/property in Islam is that it is tangible (`ayn), not virtual. However, the latter objection can also be applied to paper money which is, today, no longer supported by a gold and silver basis. Yet we continue to use paper money in halal transactions and even in acts of worship like the remittance of zakat. The reply is that the halalness of paper money has long been a matter of practical consensus in Islam, whereas no such consensus exists as to bitcoin and cryptocurrency. At the very least it can be said that bitcoin/cryptocurrency is Islamically dubious and untrustworthy, and Allah knows best.
Hajj Gibril Haddad
I’ve not read the entirety of his answer yet, but from a quick glance, does risk of fraudulence and lack of knowledge make something completely haram according to the shari’ah?
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.