STANCE OF THE DARUL IFTAA WITH REGARDS TO BITCOIN AND OTHER CRYPTOCURRENCIES?
In the Name of Allaah, the Most Gracious, the Most Merciful.
The Darul Iftaa has been inundated with queries regarding Bitcoins and cryptocurrencies. This is a relatively new concept with many angles and dimensions to it. We also observe the reaction of China and other countries on Bitcoins. JPMorgan and other financial institutions have expressed concerns on Bitcoins which could be genuine concerns or motivated by other personal considerations.
Bitcoins and other forms of cryptocurrencies are electronic modes of currencies. It is incorrect to completely dismiss electronic modes of money as accepted modes of currency due to them not being backed by commodity.
Fiat money and fiduciary money are also not backed by commodities but are accepted modes of currencies. The possibility of electronic modes of currencies being an accepted mode of currency cannot be ruled out.
Apart from the fiqhi classification of electronic currencies, urf (accepted norm) is also an important consideration in issuing a ruling. Electronic currencies are in the infant stages. Hence, the issue of urf is also being observed for further consideration.
Bitcoin mining is the processing of transactions on the Bitcoin network and securing them into the blockchain. Each set of transactions that are processed is a block. The block is secured by the miners. Miners do this by creating a hash that is created from the transactions in the block. This cryptographic hash is then added to the block. The next block of transactions will look to the previous block’s hash to verify it is legitimate. Then your miner will attempt to create a new block that contains current transactions and new hash before anyone else’s miner can do so.
And Allaah Ta’aala Knows Best
Muajul I. Chowdhury
Student Darul Iftaa
New York, USA
Checked and Approved by,
Mufti Ebrahim Desai.
I'm still not sure what is being said :(