IDEAS home Printed from https://ideas.repec.org/a/idn/journl/v20y2018i4dp475-492.html
   My bibliography  Save this article

Cryptocurrencies From Islamic Perspectives:The Case Of Bitcoin

Author

Listed:
  • Ahmed Kameel Mydin Meera

    (International Islamic University Malaysia)

Abstract

Cryptocurrencies’ popularity has surged during the last few years. This is especially the case of bitcoin, one among cryptocurrencies which price has soared from USD1,000 in the first quarter of 2017 to USD20,000 by the end of 2017. It has now being used by merchants as a medium of exchange. Upon realizing its popularity, the CME Group that owns the Chicago Mercantile Exchange launched a futures contract on bitcoin. Yes, there are cases where bitcoin is banned by the country. This article examines the implication of bitcoin on Islamic finance and question its acceptance as a medium of exchange (money) based on its compliancy with shari’ah. By analyzing its nature and characteristics, the paper concludes that, strictly speaking, cryptocurrencies that are not backed with real assets are not shari’ah-compliant. However, the majority of shari’ah scholars are learning towards approving bitcoin on maslahah basis. Bitcoin is neither fiat money nor real money. The absence of an intrinsic value coupled with lack or zero supervision by the central bank will result in misusing bitcoin. Furthermore, we content that it has the elements of maysir and gharar. This can contribute towards socio-economic injustices, thereby jeopardizing the maqasid al-shari’ah. Hence, based on a thorough analysis, we conclude that fiat cryptocurrencies are not shari’ah compliant. However, gold-backed cry cryptocurrencies are argued to be desirable and consistent with the maqasid al shari’ah.

Suggested Citation

  • Ahmed Kameel Mydin Meera, 2018. "Cryptocurrencies From Islamic Perspectives:The Case Of Bitcoin," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 20(4), pages 475-492, April.
    • Handle: RePEc:idn:journl:v:20:y:2018:i:4d:p:475-492
    DOI: https://doi.org/10.21098/bemp.v20i4.902
    as

    Download full text from publisher

    File URL: https://bulletin.bmeb-bi.org/cgi/viewcontent.cgi?article=1130&context=bmeb
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21098/bemp.v20i4.902?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Cryptocurrency; Bitcoin; Islamic Money; Islamic Finance; Shari’ah Money; Fintech;
    All these keywords.

    JEL classification:

    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:journl:v:20:y:2018:i:4d:p:475-492. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lutzardo Tobing or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.