[2018-04-12] Research Paper Declares Bitcoin Compliant With Shariah Law

[nickbelski]

Bitcoin and cryptocurrencies are intriguing because they are very different from the traditional financial systems we use today. One particular subject people have pondered is whether or not bitcoin complies with the religious law that forms a part of Islamic tradition — otherwise known as Shariah Law. This week a microfinance firm based in Indonesia, Blossom Finance, published a 22-page working paper that concludes that “bitcoin qualifies as Islamic money, except where it is banned by a local government.”

Is Bitcoin Halal or Haram?

Over the past few years since the creation of bitcoin, many people have wondered if cryptocurrencies are compatible with Shariah-compliant finance. Islamic banking has a lot more rules that apply to profit sharing, loss bearing, leasing, safekeeping, and more. For instance, Shariah Law specifically prohibits usury which is called “riba” or collecting interest paid on loans. Bitcoin and cryptocurrencies have come into question over the years concerning whether or not they comply with Islamic banking. Just recently this past December a Muslim cleric declared that owning bitcoin was compatible with Islamic finance. However other clerics have disagreed with this opinion and Egypt’s top Islamic cleric had issued a fatawa (religious edict) against bitcoin.

Blossom Publishes a 22-Page Study on Bitcoin and Islamic Finance

This week news.Bitcoin.com spoke with Matthew J. Martin, the founder of the startup Blossom Finance that uses cryptocurrency to help Muslims with Islamic financial law. Martin and Blossom’s internal Shariah advisor and Shariah compliance officer, Mufti Muhammad Abu Bakar, published a study that concludes bitcoin does qualify as Islamic money, unless a local government forbids the use of digital currencies. The research explains an in-depth analysis of the various legal opinions (fatawah) on the subject of Islamic banking and bitcoin.

Martin explains that even though cryptocurrency interest continues to grow there is a lot of confusion among Muslims who make up close to a quarter of the world’s population. Many individuals have asked Martin if bitcoin and other cryptocurrencies comply with the set of rules followed by Muslims in accordance with the guidelines of the Quran.

“Contrary to popular myth, Shariah law is not a single set of rules; it’s is a scholarly field subject to differing interpretations and opinions on various matters,” explains the CEO of Blossom Finance. “Several recent fatawah issued by prominent Muslim scholars offered incomplete or contradictory opinions on the topic. With all the confusion out there, we wanted to offer clear guidance supported by solid research that benefits both laypeople and practitioners of Islamic finance.”

"I’ve had so many people ask me ‘Is Bitcoin halal or haram?’, and the honest answer is ‘it depends’. Bitcoin is not just a currency, but it’s also a transaction and payment network. And blockchain itself is a whole category of technology with wide ranging applications."

See more: https://news.bitcoin.com/research-paper-declares-bitcoin-compliant-with-shariah-law/

[aso118]

You can add this to the list of meaningless research. I don't even think this should be called a 'research paper'. People think everything should be force fitted into a methodology they are comfortable with. You do not expect that Bitcoin can be classified based on what is written in a book from the medieval ages.

[davis196]

You can add this to the list of meaningless research. I don't even think this should be called a 'research paper'. People think everything should be force fitted into a methodology they are comfortable with. You do not expect that Bitcoin can be classified based on what is written in a book from the medieval ages.

Actually bitcoin can be easuly classified by anyone.BTC is money (in a digital form),just like any other national currency.All the islamic countries have their own currencies.They could use bitcoin just like they use their own currencies.Bitcoin is an asset,but it`s money as well.Some assets have a monetary value,but they can`t be called money.Anyway,clerics,who don`t understand how the blockchain works can`t determine what is bitcoin and is it suitable for the islamic financial system.

[hatshepsut93]

“Contrary to popular myth, Shariah law is not a single set of rules; it’s is a scholarly field subject to differing interpretations and opinions on various matters,” explains the CEO of Blossom Finance. “Several recent fatawah issued by prominent Muslim scholars offered incomplete or contradictory opinions on the topic. With all the confusion out there, we wanted to offer clear guidance supported by solid research that benefits both laypeople and practitioners of Islamic finance.”

In other words, different clerics can make different interpretations to suit their needs - in our case some people in islamic countries might want to see Bitcoin banned because it competes with their payment instruments or threatens their investments, so they ask some clerics to declare Bitcoin "haram", while others might be invested in Bitcoin, so they would want it to be declared "halal".
But as for Bitcoin itself, it really doesn't care what authorities think, with improvements for privacy it will be even more unstoppable and people will use it regardless of its legal and religious status, just like it was designed to.

[Kemarit]

I really don't know if this research has actual weight on our Muslim community because they can have numerous interpretations of how bitcoin or crypto is either forbidden or not. But it only proves that bitcoin encompasses everything, from whatever religious sectors you are in. But yeah, I would agree that it really depends on the person, if he consider it halal then as Muslim he will not go and invest or it. But if most of our Muslims brothers consider it currency to trade and barter globally, I don't think there's something bad or against their law to transact with anyone as long as its not illegal or criminal acts.

[Xavofat]

You can add this to the list of meaningless research.[...]You do not expect that Bitcoin can be classified based on what is written in a book from the medieval ages.

Since a massive slice of the world population are Muslims, it's definitely worth analysing whether they can use Bitcoin while complying to their religion teachings.

I don't particularly agree with the idea of aligning yourself with a major religion and accepting any suggestions made in religious texts as fact, but research is made based on what is relevant to people, not whatever you personally like.

I really don't know if this research has actual weight on our Muslim community because they can have numerous interpretations of how bitcoin or crypto is either forbidden or not.

True, but it might have an impact on general perception in the long run.  Detailed research can often end up seeping through into soundbites and affecting the mainstream.  In the short term, it'll probably be interesting to people involved in finance; people involved in law; important religious figures; and perhaps people in academia.

[FollowSynergy]

You can add this to the list of meaningless research.[...]You do not expect that Bitcoin can be classified based on what is written in a book from the medieval ages.

Since a massive slice of the world population are Muslims, it's definitely worth analysing whether they can use Bitcoin while complying to their religion teachings.

I don't particularly agree with the idea of aligning yourself with a major religion and accepting any suggestions made in religious texts as fact, but research is made based on what is relevant to people, not whatever you personally like.

I really don't know if this research has actual weight on our Muslim community because they can have numerous interpretations of how bitcoin or crypto is either forbidden or not.

True, but it might have an impact on general perception in the long run.  Detailed research can often end up seeping through into soundbites and affecting the mainstream.  In the short term, it'll probably be interesting to people involved in finance; people involved in law; important religious figures; and perhaps people in academia.

Islam is the second-largest and the fastest-growing religion in the world, with about 1.6 billion followers, almost a quarter of earth's population. A distinguishing feature of islam religion is obedience to their clerics and Shariah Law in different aspects of everyday life. So such warm statements are very important for cryptocurrency adoption in the world.

[Aikidoka]

Shariah law? Whether it was for religious purpose or not, people will always implement things based on what they see suitable. If it is not beneficial for them, they will just say it is haram and vice versa. Added to that statement, the implementation of bitcoin with the Sharia Law is quite good because more people are going to know about it. But the problem is that these religious people will put regulations on it and will have money from the taxes. They are smart, indeed.

[Betwrong]

This is a very good news indeed. Since the Shariah Law prohibits collecting interest paid on loans it means you can't put your money in a bank  which promises you any interest on your deposit even if it is as low as 2% per year if you want to comply with the law. And now Bitcoin offers the opportunity to earn much more while not breaking the law. Considering the fact that there are over 1.8 billion Muslims in the world one can assume that this may have a big positive impact on the future Bitcoin adoption.

[Bennj Loese]

Interestin news. I beleive that bitcoin will be haram as long as muslim authorities don't get profit from it

[Schirer]

This indeed is a interesting news , I came across this kind of news today which were correlated to sudden BTC pump in an amount of 1000$.
I dont know if it is actually correlated and also I was under impression that cryptos are used roughly in the same level within Islamic groups as in other religious groups .
It would be nice to hear from someone who actually lives according community and knows more.

[orions.belt19]

Great news for the Muslim crypto users. The Shariah Law is very strict and even though it may be traditional and old, the Muslim still follow it even to this very day. I'm not so familiar with it but I have even heard that there is a penalty for those who steal, which is a violation of the Shariah Law, will have their hands chopped. So as you see, it's important to determine for the muslim whether a matter is compliant to their Shariah Law or not otherwise they may violate their law and/or religion.

[Betwrong]

Great news for the Muslim crypto users. The Shariah Law is very strict and even though it may be traditional and old, the Muslim still follow it even to this very day. I'm not so familiar with it but I have even heard that there is a penalty for those who steal, which is a violation of the Shariah Law, will have their hands chopped. So as you see, it's important to determine for the muslim whether a matter is compliant to their Shariah Law or not otherwise they may violate their law and/or religion.

That's right,  they cut off the wrist of the right hand as punishment for theft in Sharia-controlled areas of Saudi Arabia, Nigeria, Iran,Yemen, Sudan, Somalia and some other countries. They stone women to death for "adultery" in some places too. However barbaric those punishments may appear to the western eye, they do exist in the modern world. Hopefully, considering the risks and expected gains of the Bitcoin investment, the latter won't be called gambling, because gambling is prohibited by Sharia Law as an intoxicant from Satan.

[La Maree Noire]

So, according to this research paper, now Turkish imams wouldn't be kicked out and punished for having bitcoins. Nice

[Notcalculator]

It sounds pretty arbitrary per Muslim community though. Like Christianity, they're pretty diverse. I would find it hard to imagine that they'd be united in one thing. Although, when the time comes im sure some of them will come around. Since BTC is a new technology it's pretty hard to define it. And the rules are changing rapidly per country. Once they see how useful it is, hopefully they jump in.

[zudujoly]

Bitcoin akbar!

[CryptoBry]

This so-called research may not be the defining moment for Bitcoin as far as millions (or probably billions) of Muslims around the world but am hoping this can be the start for authoritative figures to really dig into Bitcoin as see it as not against the Shariah law as should be interpreted by people who are experts in finance. In case it can be declared that Bitcoin can be acceptable then a big market for cryptocurrency can be opened.

[audaciousbeing]

Great news for the Muslim crypto users. The Shariah Law is very strict and even though it may be traditional and old, the Muslim still follow it even to this very day. I'm not so familiar with it but I have even heard that there is a penalty for those who steal, which is a violation of the Shariah Law, will have their hands chopped. So as you see, it's important to determine for the muslim whether a matter is compliant to their Shariah Law or not otherwise they may violate their law and/or religion.

Whether its good news or not, its only the liberal minded would see this as a justification for supporting bitcoin for those who are already involved while the others confirms this as authorisation to get into the game but only the liberal minded because as this article have some quotes to rely upon to support bitcoin, so also are some writings relying on the Qur'an to go against it.

This is something I have been waiting for though because I have seen people argue about bitcoin anti Islam which is still hard to believe that something that was created less than 10 years ago would be against a book written thousands of years back which makes it just a matter of interpretation of what is in the Book.

[kevoh]

"I’ve had so many people ask me ‘Is Bitcoin halal or haram?’, and the honest answer is ‘it depends’. Bitcoin is not just a currency, but it’s also a transaction and payment network. And blockchain itself is a whole category of technology with wide ranging applications."

The answer is not honest in anyway. When you try to forcefully conform new technology with a set of ideology that belong and should remain in the 8th century you get unclear answers as ''it depends''. No wonder there is confusion and disagreement among the various Islamic scholars whether it is halal or Haram.

[Theb]

Why is it called a Research Paper if they the researchers themselves have the answer of "it depends" at the end, but I cannot put all the blame on them as they are correct on it, because it heavily relies on the interpretation of the holy text. And in terms of creating a law even politicians have different sides on what is correct or right, they can even bend the definition to the way they like too. That is why I don't think that it is a good idea on creating a law based on their own interpretation of the holy text because it can differ from person to person.