What is Cryptocurrency? Is it Halal as per the Islamic Sharia in Pakistan?

Cryptocurrency is a digital and virtual currency that operates on a decentralized system using blockchain technology. Unlike traditional currencies issued by the government, there is no centralized authority like a central bank that regulates it.

Powerful mining pools (such as Awesome Miner, BetterHash, Kryptex, Antminer T9, Binance, EasyMiner, and more others) operate these cryptocurrencies, and their rates fluctuate based on their systems, sometimes going high and sometimes declining. Cryptocurrency utilizes cryptography for security.

How Does it Works?

  • It works through transactions which means when you send or receive cryptocurrencies, the transaction is recorded in the blockchain. Each transaction involves of a sender, receiver, and the amount of cryptocurrency being transferred.
  • Like in real life you store money in your wallet, cryptocurrency is stored in digital wallets which is software based (online).
  • There is process called mining through new coins are created and the transactions get verified on blockchain. Miners are the one who uses power computers to solve complex mathematical problems, once they solve it successfully, they add a new block to the blockchain and are rewarded with new coins in return.

Uses of Cryptocurrency:

  • Investment: Individuals around the world purchase cryptocurrencies as an investment, with the hope that their value will increase over time.
  • Payments: Cryptocurrencies can be used for buying goods and services from vendors who are willing to accept them.
  • Remittances: Sending money across borders can be quicker and more cost-effective using cryptocurrency.
  • Decentralized Finance (DeFi): This encompasses financial services such as lending, borrowing, and trading, all without the reliance on traditional banks.

Advantages of Cryptocurrency

  • Security: Transactions is ensured through cryptography and the decentralized nature of blockchains.
  • Transparency: All transactions are recorded on the blockchain, which provides transparency for anyone to view.
  • Lower Fees: Cryptocurrency transactions often have lower fees, especially for international transactions, compared to traditional banking systems.
  • Accessibility: Cryptocurrencies are accessible to anyone with an internet connection.

Risks and Challenges

  • Fluctuations: Cryptocurrencies can be subject to extreme price fluctuations.
  • Regulatory uncertainty: As cryptocurrency does not have a particular regulatory body that so uncertainty exists in regulating it due to differing regulations in various countries, and the legal landscape is constantly changing.
  • Security Risks: While the blockchain itself is secure, individual wallets and exchanges can be vulnerable to hacking.
  • Cryptocurrency adoption: Although its growing, is still limited compared to traditional financial systems.

Is it Haram or Halal? as per the Islamic Sharia Board of Pakistan?

Now the question arises here what status does it hold in Islamic Sharia? Is it halal or haram?

As per the sharia ruling given by Dar-Ul-Ifta of Jamia Uloom-Ul-Islamia (Allama Muhammad Yusuf Banuri Town, Karachi, Pakistan), it states that “the matter of digital currency is suspicious, and it does not have the status of legal tender in Pakistan. Therefore, its purchase and sale, as well as any form of business transactions involving it, should be avoided.”

For more details, please refer to the fatwa at the following link:

The business of digital currency and the Onecoin company!

Moreover, for more detailed information related to cryptocurrency check out the below sources:

These resources can provide you a comprehensive guide and up-to-date information about Cryptocurrecy.

Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute legal, financial, or religious advice. The views expressed are based on individual interpretations of Islamic Sharia and may vary among scholars. Readers are advised to consult with qualified religious authorities or financial advisors for personalized guidance regarding cryptocurrency investments and their compliance with Islamic principles. The author and publisher are not responsible for any actions taken based on the content of this article.

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