A prominent scholar of Islamic studies has officially declared the bitcoin and other cryptocurrencies to be allowed under halal rules. Cryptocurrencies have been found to work under the general concept of what is money according to the Islamic faith.
The development has opened up cryptocurrency trading to nearly 1.6 billion Muslims from all around the world. This may add extra volume to such currencies as many people who follow the religious faith can start trading without worrying about whether or not it is against their religious law. The law, which is also known as Sharia law, is followed by people of the Islamic faith throughout the world, albeit at varying extents. When something is considered to be halal, this means that it is suitable for use among people of the faith.
The Overall Decision
The move to make cryptocurrency halal came following an extended study into such currencies. Prominent scholar Muhammad Abu-Bakar of the Blossom Finance group in Indonesia analyzed how cryptocurrencies, the bitcoin in particular, can work. The key way to see if these currencies can be interpreted as money. This is based on the definitions that the Islamic faith has over money.
The study was designed to clear up the overall confusion that people had over how cryptocurrencies can work.
The study also found that many cryptocurrencies are being used as legal currencies in many parts of the world. The study focused on Germany and how the bitcoin is recognized in that country as a legal currency. There is also a report on how the bitcoin and other currencies are actively used in private transactions throughout the world with those currencies linking to many physical properties.
The General Islamic Belief
In Islam, money is considered to be a commodity that has an intrinsic value attached to it. This means that something can be used as money provided that it is backed by a commodity with a fixed exchange rate attached to it.
The ruling by Abu-Bakar states that cryptocurrencies fit in with this value. This is provided that a currency is treated as being valuable based on a market price on an exchange. It must also be accepted for payment at various merchants around the world.
Boost In Value
The declaration that cryptocurrencies are halal and allowed under Islamic law helped the market to grow. The bitcoin went up by close to $1,000 in value not long after the declaration was announced. The currency went past the $7,000 value and has been crawling up to the $8,000 as the weekend started up.
Most other cryptocurrencies experienced some increases in their values. This can particularly be noticed by EOS rising from $7 to around $9 in a short period of time. The currency has been trading well around that range since then.
The overall declaration of cryptocurrencies being halal is expected to cause the overall market volume to increase. This comes as such currencies can be traded in places with large Muslim populations. These include places like Saudi Arabia, the United Arab Emirates, Qatar, Oman and Indonesia among others.