Is Crypto Staking Halal?
With the sudden increase of interest and chaos in the crypto market, a lot of people are curious about Cryptocurrency and what’s the hype all about? Is it really worth the hype? Is crypto halal?
What is Cryptocurrency?
So to clear everything up, Crypto means “secret” and Currency means “medium of purchase”, basically secret digital currency available to perform transactions. That involves peer-to-peer networks that holds and updates data called Mining.
Ledgers that are maintained through mining, which are distributed in all the computers involved in mining called Minors, retain the data and when a transaction is performed, all the computers cross check the data. Assets are always tracked through the blockchain technology.
The data is Decentralized, meaning it is digitally distributed and exists in a public ledger, hence the transactions are safe.
Privacy factor of crypto
Here comes a strong pilar of Cryptocurrency, Cryptography, meaning all the data of the assets and transactions are encoded. One of the major reasons for the popularity of Cryptocurrency people’s assets are not known to the public. Now wealth can be hidden from government and banks, might seem like a major advantage, but is it so? Yes, crypto is very private but is abundantly used for dark matters and crimes because of how untraceable it is.
Price of Crypto
Cryptocurrency is produced in limited supplies and its price depends on the demand and market values. For example, Bitcoin has a limited supply of 21 million coins.
Bitcoin’s price also depends on the news, what companies are up to and what investors are planning. It’s price is directly proportional to its demand. In 2010, bitcoin never went over $1. After Elon Musk announced in February 2022, that Tesla will allow transactions through bitcoins the price of bitcoin went $60,000 to $30,000 in May, also known as “Musk Dip”.
Advantages of cryptocurrency
Any single country, power, or individual are not controlling it, crypto is controlled through and with the people involved.
- No government controls
Governmental decisions and fluctuations will not affect their money and their financial capabilities are not affected but it.
Blockchain technology provides security and safety to crypto, and will be used in Education, Healthcare, Data management and other areas will use blockchain to withhold data.
Disadvantages of Cryptocurrency
- Unethical uses
Due to crypto being a “secret currency” a lot of unethical actions are performed using crypto. This might lead to one of our major concerns “Is crypto Halal?”
- Not Eco-friendly
The process of mining is not very eco-friendly as a lot of power and resources are wasted in maintaining the records in the public legers.
Cryptocurrency according to the Shariya
The issue of cryptocurrency is a fairly recent one, which means that it is not found or discussed by scholars in the past, unfortunately with such new events evolving, some of them are crystal clear and some may require collaboration of scholars to deliberate and come up with a conclusion.
There are a lot of serious concerns when dealing with crypto, whether it is from it’s origin or the aspect of sustainability. Crypto is not tangible, it is not something you can touch. it all depends all on blockchain, peer-to-peer and algorithms.
The biggest loophole in it is that the price goes way up and down, so it is a bubble waiting to be inflated, it remains anonymous when you deal with it, so that means it opens the gate for Money laundering, drug money, haram money nobody can trace you. Major cyber attacks demand Ransome in crypto money
Physicality in Islam
In Islam it is permitted to exchange money with in fact one condition, that it has to be hand to hand, basically it has to be physical and simultaneous.
Assim ul hakeem said “Ambiguity makes bitcoin Haram in my opinion and Muslims should not get involved in such dubious transactions simply to make quick buck.”
Bakar et al.:
He presented three reasons of digital currency to be declared Haram. These are
(b) anonymous holder
(c) no intrinsic value
There are many cryptocurrencies that are approved by the scholars such as
- Stellar [XLM]
The Islamic opinion that we follow is that some cryptocurrencies are halal (permissible) and others are haram (impermissible). Each coin has to be analyzed and researched individually to determine whether it is permissible to invest in. The main issue is that nothing is set in stone about the tangibility and the future of cryptocurrency. Hence the main requirement is doing background research about each coin.