Sh Dr Haitham al-Haddad summarises his fatwa on Bitcoin and other cryptocurrencies.
For a more detailed explanation click below:
For the research paper (Arabic) click here. An English version will be published soon inshāAllāh
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Physical currency uses the materials of the earth then how do we replace it, yes we grow back but tress are being cut down more, other materials deteriorate and crypto is not harming the dunia, in excavating it in masses, so confusing right?
1) Bitcoin was not created out of nothing. I can’t create bitcoin without investment. To create a bitcoin, i need to spend around $6000 dollar to buy equipment, and to generate the electricity. So telling it is created out of nothing is wrong. If sheikh can create bitcoin without spending $4000-5000 I will accept that it is created out of thin air. This is a misconception by not only islamic scholar but many others.
2) Paper money is issued by government that is true but it is not backed by gold as sheikh says, so is bitcoin. In fact bitcoin is more considered similar to gold rather than paper money. Because bit coin is limited, paper money is unlimited. Bitcoin or cryptocurrency has other use case like gold where paper money has no other use case. Bitcoin is till new technology. Governments are also not sure what to do with it, so there needs more time for governments to accept it. But cryptocurrency is named as currency, but it is not being used like a currency. Rather it is used like value storage. For example a diamond is not a currency. But it is a value storage. As the name is currency and the initial intention was to create a currency, so every one still mistake that it is supposed to replace government currency and thus they oppose it. But the fact is crypto is now being considered like gold, silver, diamond etc.
3) if money creation is haram (which is true) then sheikh has to first oppose the paper money. Because paper money is pure form of creating money out of thin air. This video explains it: https://www.youtube.com/watch?v=wgazsNiu3BA
4) Sheikh properly explains the problem of money creation by using paper money. The video above explains how banks are doing it. On the other hand with crypto you can’t do this type of forgery because, one bitcoin will only exist in one place. I mean if i transfer a bitcoin, i can’t have it, and if i have a bitcoin, everyone can check and verify it. So there is no way anyone can sale a bitcoin twice. That is the invention that made digital currency possible. But banks are issuing paper money 10 times more having no gold baking it.
The sheik says goverment creation, ie currency and tangible asset.
1 Physical money can be manipulated and used for inccorect forms.
2 Governments deal in riba doesnt that make us all deal in riba?
3 Financial institutions, islamic banks etc dont tgey all obide by the leaders of the financial system, i ask dont all the financial systems in the world deal in some way with riba banks ie withdrawal from cash machines, purchases from western countries, etc.
4 why dont these islamic countries help muslims in tge west especially the most unfortunately or struggling, WHY??? Dont they have to eat?
5 Why are islamic countries selling oil to western countries any riba in that transaction?
6 why is a government more trusting in a financial system created by non muslims and we are forced to use it??
7 Dont we use physical materials to use and create coins, the invention maybe digital but the creation is the same, yes sheik is correct but here are my thoughts and questions ?? I tried to register with a Saudi app called Rain, in google store and they told me they dont support a western country so we continue to suffer while there bellies are full????!!
We still use a physical aspect to ceeate, Islamic banks cant register in western countries without obiding by western laws and its financial system ie
Al Ryan bank.
Buying physical trading physical yes, we still can withdraw from a digital but hasnt the digital created from a physical form from this dunia? Everything digital needs something from the earth to creste its use.
Its very confusing whilst islamic countries dont help enough of stressed and suffering muslims in the west.
So confusing and stressed.
Allah is the only true knower pls guide whom you willeth and tge dunia he created all physical materials we use in our luves, phones tablets, computers, app literally everything.
Appologgies for spelling mistakes i got big fingers lolo.
Now western countries are legalising crypto due to its success, so when ist legal by government isnt it legal by sharia or must it still be physical?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Dr. Haitham al-Haddad.
– Before I start, it ‘s my first time I’ve listened to you, and I am impressed with your knowledge of cryptocurrency.
– I am a developer of Bitcoin, I will respect your prohibition against it, and I will conduct in-depth research on the subject of creating money in Islam before stop using Bitcoin.
I will give you more information about the Bitcoin that you will not find on the Internet except someone who has developed it and hoped to provide me an answer to :
1. What is the ruling on Islam in dealing with Tether? “cryptocurrency based on the value of the US dollar.”
2. Most Arab countries are banned from using bank cards, so developers in these countries use programs to infringe an intellectual property “cracking.”What is the ruling on using Bitcoin to pay in that case? You can buy bitcoin using local currency and then pay to buy those programs.
3. What are the limitations of Sharia on the creation of Islamic cryptocurrency “Halal”? We can modify the Bitcoin code to suit the Sharia.
Bitcoin was developed by people mostly unknown to end the banks’ monopoly on the instrument and issue the currency. The most famous of them is a liberal known as Satoshi.
There are some well-known and famous bitcoin developers like Pieter Wuille, Gavin Andresen, and Gregory Maxwell.
About mining, It is the process of showing hidden bitcoins in a decentralized manner. Not the process of creating new currencies from nothing.
Also, the value of the Bitcoin cannot be returned to zero unless the Internet is completely disabled.
Overall the essence of the idea in Bitcoin is dropping the current financial system, and I wish there would be a forum that brings together developers and scientists to issue a collective fatwa about the bitcoin.
And Allah Ta’ālā Alone Knows Best
The electronic money is a way to get rid of the cash and the the army of the devils will have full control over everyone’s money imo and then they will destroy people. They are making the crypto look like something good and then they will make everyone their slaves because they will no longer have any money to live and then they will have total control. This will lead to the Dajjal system coming into play.
As salaamu alaikom,
I feel that there should be a distinction made between blockchain technology and cryptocurreny.
Every crypto currency uses blockchain technology but not every blockchain technology is a crypto currency
there are many crypto tokens that use blockchain technology and are not intended as a currency, for example ethereum is a smart contract platform which other applications can be built on top of, there are many other blockchain technologies out there which are being used with no intention of being a crypto currency
if we are to now say that blockchain technology is haram then we must also say that windows operating system and macintosh operating system is haram, in a few years everything will be using blockchain technology, from the internet web browsers we use to the tv and computers that we use,
Thanks Shaikh! Your views are in my opinion the best out there and you also have the necessary knowledge on the technology behind cryptocurrency.
Just like the Nixon shock in 1971, this will be the next big thing and unfortunately, Muslim nations (or non-muslims) are in no position to stop/halt the technology, which means that this will become adopted in a few years whether we like it or not.
In comparison to post-1971 fiat currencies, bitcoin/cryptocurrencies offer a much better alternative (limited supply so there is no extra money creation, all other cryptocurrencies are like ‘projects/companies’, government crypto-currency tenders are already happening (Petro – Venezuela), less zulm in the sense that governments and leaders who are powerful cannot manipulate and print more bitcoins). Bitcoin at least gives people a fair chance for everyone to safeguard their value of money, for example, if a poor man has $100, that $100 will be less value in 10 years but if he has $100 of bitcoin then in future it might be worth more (or less) and that poor man should not just allow the government/leaders to manipulate the national currency and affect his earning/wealth, doesn’t it make bitcoin a better deal than the fiat-currency of today?
Question 2: If Bitcoin/cryptocurrencies become widely adopted in 20 years, wouldn’t it be a big ‘Zulm’ for someone who had 1000 bitcoins (he bought at $100) and he sold them today because he saw this Fatwa and then after 20 years the price of Bitcoin is $50,000 and widely adopted, even more than fiat? An answer to that might be ‘yes Allah has promised and will give due sustenance’ and ‘Wealth in this world is temporary and Allah will give him Ajar’, but wouldn’t that make Muslims last ones to adopt this technology when we were once pioneers?
Comment will be appreciated, especially for question 1.
Good. People are jumpin.on the bandwagon, with this bitcoin rubbish. They will say its halal if their making good money lol. Same type of people will work in investment banks and eat from riba, because moneys good. People need protection from being foolish and throwing their money away.
There are so many things he said that are at best inaccurate or simply wrong! I believed shaikh haitham to be well grounded in finance and economics.
Creating money from nothing
A part from the fact that only Allah creates from nothing, since when mining, which requires a huge amount of power, men and skills (entire companies are dedicated to this) is nothing?
Cryptos are a digital asset, not currencies ! Definition of a currency : “a system of money in general use in a particular country”. Even bitcoin, the most spread of all, is not in general use in the US!
Also if creating money from nothing is haram, what is fractional reserve then? When bank can create real money/currencies out of literally nowhere.. According to him it is then haram to use pounds, dollars, euros, riyals etc.
I’ll stop here but I could carry on and on and on
It is a shame that our “scholars” are researching so little to make fatawa nowadays. Assim Al hakeem and a professor from Madinah University did the same mistake.
We Muslims used to be pioneers in the world in scientific and technological matters. Now we are jokes.
He mentions how fiat money like fractional reserve banking is haram but its unavoidable. He said if crypto currencies became legal tender and unavoidable then okay but otherwise you should avoid.