If you have been asking yourself “What Is Bitcoin? Is Bitcoin Haram?”. Then you came to the right place. We will discuss the same questions in this blog post.
Bitcoin is the largest and most well-known type of cryptocurrency. Generally, you can create, trade, and store bitcoins using a decentralized ledger system known as a blockchain. You can keep balances on this public ledger which gives access to anyone. Precisely, physical bitcoins do not exist, but we can accept them as payment methods for products and services. Even though none of the government organizations issue and control bitcoins, they have value like traditional currencies and commodities such as gold and silver. Whilst commodities like gold are permissible as currencies in Islam, currency does not need to have intrinsic value in Sharia. Importantly, such currency must have value, be accepted, and used in transactions by individuals. As bitcoin can be someone’s possession, we consider it satisfies the core tenets of Islamic law in transactions.
Is Bitcoin haram?
According to recent academic findings, most general uses for Bitcoin confirm it to be halal in Islam. However, there exist several popular uses which are confirmed to be haram. One of these haram uses is gambling. Because gambling, in general, is not ethical according to Sharia laws, these laws forbid gambling with Bitcoin as well. Not only gambling but also lending and some other types of trading with bitcoin are almost certainly prohibited.
For example, recent uses of Bitcoin, such as its use in margin and decentralized finance (DeFi) lending, are truly haram. Because earning/paying interest on loans is “riba,” people would not be able to charge interest on loans or receive a Bitcoin loan in the case of interest charged. This clearly illustrates that using Wrapped Bitcoin with most Defi protocols is very likely to be haram. Trading Bitcoin currency requires meticulous research. We can recommend that you check before you trade bitcoin if it complies with all legal and formal rules that follow Shariah law.
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