No, you are not imagining things. Everyone is talking about bitcoin, block chain, cryptocurrencies etc. It seems to be bigger than ever!
But what is actually Bitcoin, Cryptocurrencies or Block chain?
Cryptocurrency is a medium of exchange, created and stored electronically in the block chain, using encryption techniques to control the creation of monetary units and to verify the transfer of funds. At the moment, it has no physical form and no central authority or middlemen that control it. Thus far, bitcoin is the best known example of cryptocurrency, comprising the bulk of the market share, at 60.8%. Bitcoin is a digital currency that enables payment in a decentralised peer-to-peer (P2P) network that is powered and approved by the consensus of its users. However at a recent survey conducted by the Wall Street Journal, out of the 53 economists interviewed, 51 considered the price of bitcoin to be unsustainable. In addition, some sources also see bitcoin as a threat to the overall financial stability of traditional currencies markets. More shockingly, some experts have claimed that cryptocurrency could lead to the end of the world.
Below we can find some of the best quotes on “Is Bitcoin Investment Halal?” by some of the renowned names in the Islamic banking and finance industry.
Mr. Sani Hamid, Singapore – Director (Economic & Market Strategy) Financial Alliance
“At this juncture, it’s difficult to make any real judgement on bitcoin, may it be from the conventional or Shariah perspective. What happens when someone discovers something which is better (example, more secure)? Or that bitcoin actually has a major vulnerability that is inherent (example, open to cyber theft)? We do not have an answer to these questions because it’s too new and soon. At this stage, while it’s called a cryptocurrency, we are not even sure if it really will be accepted as one or is it merely a commodity or even a financial instrument in itself? While we assume it’s the start of something new, it could easily turn out to be a fad. Only time will help us answer the above questions”.
Dr. Rifki Ismal, Indonesia – Assistant Director, Macroprudential Policy of Bank Indonesia
“The main purpose of issuing money in human history is to facilitate a “real” transaction by having intermediary function, store of value, and most importantly stable value. Bitcoin violates these functions of money since it is not legally accepted as the intermediary function. Instead, it is storing the value of “other” monetary items and does not always have a stable value. Moreover, from a country’s perspective, the value of money is reflected on the overall condition of the country’s political stability, economy and trust”.
Mr. Yousuf Sultan, Bangladesh – Shariah-Tech Consultant, Ethis Ventures Sdn. Bhd.
“Blockchain opens a lot of opportunities for Islamic finance. Trust, transparency & immutability are the core components of any digital record that is stored over blockchain, thanks to its Distributed Ledger Technology (DLT). Smart contracts can be coded on the blockchain and executed automatically based on pre-set logics and conditions. Islamic finance can use smart contracts for many of its products and finances, thus removing uncertainty and ensuring the basic requirements of Islamic law of contracts. Bitcoin is the most popular cryptocurrency. While it is named as currency, most of the transactions are made for speculation purposes, and very little is accomplished for actual trade & commerce. Thus, the real implication of it being a currency is still not apparent. From Shariah perspective, no technology itself can be ruled as halal or haram in general, instead it’s the use case that shapes the ruling”.
Dr. Hylmun Izhar, Indonesia – Economist, Islamic Development Bank Group (IDBG)
“The debt creation culture must not be exacerbated by the current propagation of bitcoin; Islamic finance therefore should remain vigilant in this regard”.
Mr. Farrukh Habib, Pakistan – Researcher, ISRA
“The invention of bitcoin has introduced the world with the explosive trend of cryptocurrencies. Out of this explosion, the blockchain has emerged as a very powerful and innovative technological platform, having various novel applications. Islamic finance cannot ignore those game-changing applications anymore, if it wants to survive.“
Dr. Syed Adam Alhabshi, Malaysia – Partner, CSQ Law
“Bitcoin’s price is as volatile as the price of Durian. Let’s hope it is not seasonal so we can have a more consistent data to analyse it and issue a considered fatwa on its ruling”.
Mr. Fazrihan Duriat, Singapore – Shariah Manager, Maybank Islamic Singapore
“While technologies such as blockchain are welcomed to increase efficiency and security in business transactions, cryptocurrencies on the other hand produces the new cashless global monetary system created out of complex mathematical logic without possessing real intrinsic value. Hence, there is a concern how Bitcoin can be used to promote financial inclusion and sustain business, even for the man on the street”.
Prof. Dr. Humayon Dar, United Kingdom (UK) – Chairman, President & CEO of Edbiz Consulting Limited
“Bitcoin is the biggest fraud of the present time, as it is deceptive in name (it is not a coin), presented as outcome of mining (again deliberately misleading), and has no intrinsic value (against initial claims of those who started it); it is not money at least as of now and is just a useless overpriced security being purchased by speculators driven by greed”.
Datuk Mohd Radzif Mohd Yunus, Malaysia – Chairman Ethis Ventures Sdn. Bhd. Ex-group Managing Director of SME Bank.
“Is bitcoin a bubble, mirage or something else? The current frenzy on bitcoin underpins the demand of an alternative channel for money flow and investment which is less regulated but secure. Shariah scholars need to not only issue a comprehensive fatwa but to look at an Islamic dinar system that provides for this alternative need.”
Disclaimer: The views and opinions expressed in this article are the personal view of the author and do not necessarily reflect those of Ethis Ventures Sdn Bhd.