Assalaamu Aleikum everyone! Back in 2017, I wrote a series of blog posts addressing the question, is Bitcoin halal or haram? And in 2017, I was not able to find a single scholar that mentioned whether Bitcoin was either halal or haram. In fact, many simply said, “I don’t know.”

So now, what do our scholars have to say? Is Bitcoin halal?

The answer is, there is still no consensus among the scholars as to whether Bitcoin is halal or haram but we are seeing some movement with scholars having a better understanding of cryptocurrency where some scholars now say it is halal while others still say it is haram and some say it is makruh (disliked). As for scholars who say it is halal, they fall into two groups, one who sees bitcoin as an asset and the other that sees bitcoin as a currency. For those who see bitcoin as a currency, then the rules of Riba Al Buyu would apply.

The chart below gives a quick overview of scholars and their opinions on Bitcoin. Let’s take a more detailed look at what our scholars have to say about Bitcoin. Insha’Allah this will help you make a decision as to how to proceed when it comes to Bitcoin and cryptocurrencies in general.

Dr. Salah Al Sawy and Bitcoin

Dr. Salah Al Sawy is currently the Secretary General for the Assembly of Muslim Jurists in America (AMJA) as well as President of Mishkah University. Dr. Salah takes a very balanced approach with Bitcoin and adheres to the general Islamic principle that when it comes to business transactions, all transactions are considered halal unless we have clear proof that it is haram.

When it comes to Bitcoin, it is the position of Dr. Salah that we cannot say that Bitcoin is haram as he sees no direct proof that it is haram. He even notes that he sees many positives and benefits of Bitcoin such as, it can be easy to use, can be an inexpensive way to send money, it can be faster to send money with Bitcoin as opposed to wiring money, and its secrecy is a positive `and also other benefits.

However, even with these positives, he does see some negatives such as, there is no supervising body over the currency, there is no authority backing the currency, and one can make huge profits but can also experience huge losses.

He also notes that even though it is not necessarily haram to attain huge profits from cryptocurrencies, making huge profits as such is not something that is normally found in other products. Also, the secrecy of the coin could be used for money laundering, buying illegal items, and financing haram things.

Dr. Salah also notes that one of the principles of Islamic economics is that money has some tangible benefit to the country such as creating jobs and businesses, and he does not see cryptocurrencies adding work or jobs to the economy at this time. Rather, it is just an investment that people are putting their money into.

As of now, Dr. Salah Al Sawy sees Bitcoin and cryptocurrencies as very “shaky and dangerous territory” where people could potentially lose all of their money by investing in it and that we must proceed with caution and be very careful when using cryptocurrencies.

His opinion is that even though we cannot say that Bitcoin is haram, at this time, he sees it as makruh. You can watch his talk on Bitcoin here.

Grand Mufti Shawqi Allam Bitcoin Fatwa

Shawqi Ibrahim Abdel-Karim Allam is the current Grand Mufti of Egypt and a Ph.D. graduate of Al Azhar University where he earned his degree in Jurisprudence and Sharia Law. Mufti Shawqi has taken a more stern stance with Bitcoin and has issued a fatwa stating that Bitcoin is haram.

“Dr. Shawqi Allam, the Grand Mufti of the Republic, affirmed that it is not permissible according to Sharia to trade in the currency of “Bitcoin” and deal in it through buying, selling, leasing, and so on. Rather, it is prohibited to participate in it because it is not considered as an acceptable medium for exchange by the competent authorities, and because of the harm it entails resulting from deception, ignorance and fraud in its bank, standard and value, in addition to the high risk that its practice lends to both individuals and states.” Read his fatwa here.

Mufti Shawqi was also interviewed by the Egyptian magazine, Egypt Today, and had the following to say,

“Allam told Egypt Today that he met with a group of economic experts to reach his final ruling. He clarified his findings on the cryptocurrency, stating that Bitcoin could allow for tax evasion, piracy, money laundering, fraud and corruption, and therefore is forbidden in Islamic Sharia Law.” See the article here.

Mufti Shawqi also sees Bitcoin as haram because of its price volatility as well as being a high-risk investment where investment is focused on speculation. He also notes that Bitcoin is not controlled or issued by a government bank and that this can be problematic for the state.

In short, Mufti Shawqi has not noted any good that Bitcoin or cryptocurrencies can offer to humanity.

Sheikh Assim Al Hakeem Bitcoin Haram Fatwa

Sheikh Assim Al Hakeem is a prominent scholar and imam based out of Jeddah, Saudi Arabia who takes the position that Bitcoin is haram and lists a number of reasons as to why he holds such a position. Here are the 10 reasons why Sheikh Assim sees Bitcoin as haram.

• The origin of Bitcoin is unknown and it has sustainability and security issues.
• The price of Bitcoin fluctuates too much.
• Bitcoin is not physical. You cannot hold it and it is not real.
• Bitcoin is a Ponzi scheme and/or is similar to a multi-level marketing scheme.
• People are only using Bitcoin to make fast money.
• Bitcoin is not backed by people or a central bank.
• Bitcoin’s price is inflated and Bitcoin is in a price bubble.
• It is unknown what will happen after all 21 million bitcoins are mined.
• Bitcoin is used for criminal activity.
• There is ambiguity with Bitcoin.

After closely reviewing his reasons as to why he sees Bitcoin as haram, I can see that he has some slight errors in his understanding of Bitcoin and I have written a blog post commenting on his fatwa. Please see my following blog post here, 10 Reasons Why Bitcoin is Haram. Sheikh Assim Al Hakeem Bitcoin Fatwa.

Shaykh Haitham al-Haddad Bitcoin Fatwa

Dr. Haitham al-Haddad is an Islamic jurist and judge for the Islamic Shariah Council in the United Kingdom and has given a fatwa stating that Bitcoin is haram.

Shaykh Haitham believes that Bitcoin is haram because it (Bitcoin) is not backed by anything. It is not backed by gold or any commodity. Bitcoin also has no government backing and when a currency has no government backing, then no one can be forced to use it as legal tender.

Price volatility within the market is yet another reason why Shaykh Haitham sees Bitcoin as haram and since it is not backed by the government, the currency could fall to zero value and thus be a hardship on people.

He also notes that Bitcoin is created out of nothing and that there is nothing real or tangible to hold and says that it is haram to have money that is created out of nothing.

His conclusion is that all aspects of Bitcoin are haram. Therefore, it is haram to use it, to manufacture it, to mine it, to trade it, to buy it, and to invest in Bitcoin.

You can read his fatwa here and also watch a video on his fatwa here.

Mufti Faraz Adam and Bitcoin

Mufti Faraz Adam holds a Master’s degree in Islamic Finance, Banking and Management. He is currently President of Amanah Advisors where he works as a finance and fintech consultant.

Mufti Faraz is one of the few scholars I have found to have a very deep and solid understanding of Bitcoin and cryptocurrency as a whole, yet you will not find him giving fatawa on Bitcoin. He will defer that to other scholars.

Instead, he looks at the overall technology of cryptocurrency, its features, and if it is in harmony with an Islamic paradigm that could be of benefit to humanity.

If I was to summarize my understanding of Mufti Faraz’s position on Bitcoin, I would say that he does not view Bitcoin as haram but rather holds the view that at this time,

“Bitcoin is not ideal as a long-term investment and neither should the Islamic finance industry consider its use in exchange unless there is a specific need to until a regulated and transparent framework is established.

At this current time, Bitcoins are just another investment which are for individual profit maximisation. Nevertheless, returns on Bitcoin investment would be lawful and Shariah compliant according to this understanding.” Read the full paper here, “Bitcoin: Shariah Complaint?” Page 6

In addition to his statement above, there are also six key areas in his research that he touches on that have led me to the conclusion that he does not see Bitcoin as haram.

1) Bitcoin does exist and it is real:
Mufti Faraz offers a counterargument to scholars who say that bitcoin is not real and is made out of nothing. He argues that even if you cannot see or touch something, this does not mean it is non-existent or not real.

As for Bitcoin, he notes that we can see digits [addresses and transactions] on a blockchain and we can see the results of these digits in real life [purchasing coffee, buying a house, paying for a service, etc.] so therefore we know that Bitcoin is real.

2) Bitcoin is mal:
Mal is commonly translated as, “money”. However, in Islamic law, the technical meaning of mal is something that is retrievable.

Mufti Faraz argues that bitcoin is mal. He notes that bitcoin can be stored and retrieved when needed from a Bitcoin wallet, therefore, we can say that Bitcoin holds the characteristic of mal.

3) Bitcoin has taqawwam:
Taqawwam means, legal value. Islamic law states that valid trade can be done only with items that have legal value.

Mufti Faraz makes it understand that we cannot conduct trade with a bottle of wine and/or pork because they are considered haram; therefore, wine and pork do not hold legal value.

Mufti Faraz argues that Bitcoin is nothing more than software code and software code in and of itself is not haram; therefore, we can say that Bitcoin passes the test of having taqawwam, legal value.

4) Bitcoin as a currency:
Is bitcoin a currency? To determine this, Mufti Faraz examines whether Bitcoin has what is called, thamaniyyah.

Please note that the video of his conversation was held sometime after he wrote his research paper, “Bitcoin: Shariah Complaint?”, so his conversation on thamaniyyah may differ slightly in the video when compared with his research paper.

You can find the video of his talk here, Bitcoin: Shariah Compliant? | Mufti Faraz Adam | AMAL.

Thamaniyyah can simply mean, the fundamental features of currency. Those features are a store of value, a medium of exchange, a unit of account, and a standard of debt repayment.

Mufti Faraz highlights that there are differences of opinion on this matter as some scholars have valid ijtihad that Bitcoin is an asset and not a currency while other scholars have valid ijtihad that Bitcoin is a currency.

He also notes that past scholars have made it clear that the Qur’an and Sunnah provide no characteristic or definition as to what is a currency. Allah has left it to mankind to define this for themselves.

5) Bitcoin is not issued by the government:
Mufti Faraz notes that Hanafi jurists have made clear arguments that the people of a society can determine what is a currency just as a government can determine what is a currency.

This would mean that we cannot say that just because Bitcoin is not issued by a government that this now makes Bitcoin impermissible.

6) Risk: 
Mufti Faraz notes that some scholars have noted that Bitcoin is haram because of the high risk that entails investing in bitcoin.

However, he notes that risk in and of itself does not make a matter haram due to the fact that the very nature of investing encompasses some risk, and risk sharing is permissible in Islam.

Rather, risk due to gharar (ambiguity) is what is prohibited, but not risk in and of itself. Investing in bitcoin is not in and of itself gharar so long as the person is clear of the risks and what it all entails.

These 6 points and his extensive research on the matter make it clear that he does not see Bitcoin as haram. Still, though, he would like to shift the focus away from only looking at Bitcoin.

Mufti Faraz holds a similar belief to my own which is, this new area of cryptocurrency is bigger than Bitcoin. Bitcoin is one small part of cryptocurrency. There are other aspects of cryptocurrency that we as an ummah should be exploring.

Over the past few years, his research and interest have extended beyond Bitcoin and have expanded into other areas such as ICO’s (Initial Coin Offerings), Blockchain, tokens, and crypto coins examining their usefulness from an Islamic and sharia perspective.

He would like to explore how we can utilize this technology to benefit not only the ummah, but humankind as a whole and this is in complete harmony with the goals of the Islam and Bitcoin website.

Dr. Ziyaad Mahomed and Cryptocurrencies

Dr. Ziyaad Mahomed is currently the Associate Dean of E-Learning/Online Programs and Director of Executive Education at The Global University of Islamic Finance, Malaysia, and has over 20 years of experience in Islamic Finance with a specialty in banking and investments.

Dr. Ziyaad does not provide a fatwa on Bitcoin but mentions the overall ruling from other reputable scholars noting that some say that it is halal, some say haram, and some say use with caution. He notes that unfortunately, not as many scholars provide an opinion on cryptocurrencies as he would like.

When it comes to assessing the permissibility of Bitcoin, Dr. Ziyaad mentions that there are 3 things that one must examine as it relates to the shariah.

(1) Is it considered mal.
(2) Does it pass the test of permissibility according to the shariah, taqawwam.
(3) Does it meet the objectives of the shariah, Maqasid al-Shariah.

His overall assessment of Bitcoin is that ”there are no clear serious standards on cryptocurrency so therefore one will have to exercise caution in the beginning and one will have to be very brave in entering into cryptocurrency assuming that he understands the necessary shariah parameters behind it before entering into it.” In other words, he does not see it as haram, but one must proceed with caution.

Dr. Ziyaad would love to see a more standardized approach to cryptocurrencies from the scholars as he believes that the future of cryptocurrencies lies in implementing cooperative programs that utilize cryptocurrencies to develop sustainable halal projects that can be of benefit to humanity while also allowing investors to earn a halal income from it.

He has provided a wonderful talk on the topic of Bitcoin and cryptocurrencies which can be found here, Cryptocurrency in Islam: Halal or not Halal? – Ethis Webinar.

Mufti Muhammad Abu-Bakar and Bitcoin

Mufti Muhammad Abu-Bakar is a Shariah Scholar of Product Development and Shariah Structuring at Emaan Islamic Banking and a Shariah Advisor at Blossom Finance. He holds a Master of Science in Islamic Finance from INCEIF, The Global University of Islamic Finance, Malaysia, and is also a Certified Shariah Advisor and Auditor (CSAA) from Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Bahrain.

His area of specialty is Shariah, Islamic Banking and Finance, Takaful (Islamic Insurance), and Islamic Fintech.

Mufti Muhammad has not given a fatwa on Bitcoin, but he does hold the view that Bitcoin is halal and permissible to use and has written a research paper on Bitcoin that you can find here, Shariah Analysis of Bitcoin, Cryptocurrency, and Blockchain.

However, he does note that one of the objectives of the shariah is the protection of wealth and because of this, Mufti Muhammad believes that is it necessary to exercise caution and to be mindful of risks when using cryptocurrency.

He also does not advise buying cryptocurrency as an investment just as one would buy stock in a company, but rather, use cryptocurrency networks as a payment system particularly in areas where the benefits of utilizing cryptocurrency outweigh that of conventional payment methods.

Mufti Muhammad does note that Bitcoin,

(1) Meets the characteristics of mal
(2) Can be classified as money/currency
(3) Money/currency does not need to have intrinsic value

His argument is based on the ijtihad of prominent scholars in the field of Islamic jurisprudence such as Shaykh Zuhayli, Shaykh Khalid Saifullah Rahmani, Shaykh Taqi Usmani, Turki, Al-Mausuah, Al-Fiqhiyah, and Al-Kuwaitiyah.

Finally, he examines the arguments made by scholars who note that Bitcoin is haram because of the following reasons:

(1) Bitcoin is not a legal tender
(2) Bitcoin’s issuer is unknown and has no central authority or government backing
(3) Bitcoin is highly speculative and not stable
(4) Bitcoin can be easily used for money laundering and illegal purposes

To summarize Mufti Muhammad’s counterargument against these points he notes:

(1) Bitcoin is not a legal tender
“The main criteria for money in Shariah is its acceptability by people – whether it comes about by forcing it upon people through laws, or through widespread voluntary acceptance of people.” Page 17

(2) Bitcoin’s issuer is unknown and has no central authority or government backing
Mufti Muhammad argues that even though the inventor of Bitcoin is unknown, the framework of how Bitcoin works, “is a set of rules adopted by voluntary mutual acceptance by users of the currency, and that these rules are published and open for anyone to critique or suggest revision.” Page 17

And even though there is no central bank or government to back Bitcoin, he notes that the blockchain technology of Bitcoin has been, “more secure than any centralized system employed by a government or central bank.” Page 17

He also cites the case where $1 billion USD was stolen from the central bank of Bangladesh in 2016 to note that a centralized bank or government backing alone does not promise security of wealth.

(3) Bitcoin is highly speculative and not stable
Mufti Muhammad notes, “Bitcoin and cryptocurrency cannot be declared haram (impermissible) based on the fact that they experience speculation. In fact, if this principle was valid and applied, then trading in gold, silver, US Dollars, and Euros would all be ruled impermissible, since those assets also experience extreme levels of speculation.” Page 18

However, Mufti Muhammad does acknowledge that cryptocurrency prices in the market are more volatile than many cryptocurrencies and because of this he says, “it is not advisable to trade in cryptocurrency, especially for laypeople who lack professional experience and sophistication with regard to foreign exchange trading.” Page 18

(4) Bitcoin can be easily used for money laundering and illegal purposes
Mufti Muhammad makes the argument that Bitcoin or cryptocurrencies being used for illegal purposes is not an Islamic criterion of currency.

He makes the argument that utilizing something lawful for an unlawful purpose does not make the thing itself unlawful.

“An example from the Hadith can be found in that the Prophet Muhammad (peace be upon him) forbade the selling of grapes to a wine merchant, since making wine is haram (impermissible), but did not forbid the production or trading of grapes for lawful purposes.” Page 18

He also notes that fiat currencies are regularly used for illegal activities with the United States Dollar being the most widely used fiat currency for illegal activities.

Dr. Mohamed Ali El Gari

Dr. Mohamed Ali El Gari holds a Ph.D. in Economics and is a shariah scholar with a specialty in Islamic Finance. He serves on numerous Shariah advisory boards and is currently the Chairman of the Amanie Shariah Supervisory Board.

Dr. Mohamed believes that the advent of cryptocurrency is merely the natural evolution of money as we have already been utilizing digital currency for decades and sees cryptocurrency as the “grand finale” of money.

Dr. Mohamed notes that from the shariah perspective, there is nothing in the shariah that dictates exactly what medium of exchange Muslims must use. The decision is left to the community.

As for Bitcoin, through his research, Dr. Mohamed notes that Bitcoin does fulfill the shariah requirements to be considered mal and classifies Bitcoin as a currency, and states that the rules of riba al buyu apply. Dr. Mohamed also believes that Bitcoin does pass the test of permissibility to use according to the shariah, and it is in harmony with the objectives of the shariah.

Therefore, according to Dr. Mohamed, Bitcoin is considered permissible (halal) to own, buy, sell, use, keep, and invest in, and that cryptocurrency issued by a government is also halal.

He goes on to note that even though he considers Bitcoin and cryptocurrencies halal, he does mention that cryptocurrencies that are not issued by a central bank will have characteristics such as high speculation in the marketplace.

And cryptocurrencies that are not controlled or monitored by a government can end up being used for gambling, embezzling, to steal money from the weaker of those in society, and could also be prone to collapsing and this will end up casting doubt on using such cryptocurrencies as a measure of value or a store of value.

To hear his commentary on Bitcoin, please see here and also here.

Dr. Mohd Daud Bakar

Dr. Mohd Daud Bakar is a shariah scholar receiving his shariah degree from the University of Kuwait. He is also a serial entrepreneur whose professional career now lies within the world of Islamic Finance and is now the President and CEO of Baker Investment company (Financial Investment Company) and also the President and CEO of the International Institute of Islamic Finance (IIIF) Inc.

He is also the current Chairman of the Central Shariah Advisory Council of the Central Bank of Malaysia and a member of the Shariah Advisory Council of the Securities Commission of Malaysia.

Dr. Mohd Daud actively researches fintech applications such as Bitcoin and other cryptocurrencies to gain insight as to how these technologies fit into an Islamic paradigm and can be of benefit to the Muslim world and humanity at large.

Dr. Mohd Daud has worked with a group of scholars researching Bitcoin and cryptocurrency for two years and came to the conclusion that Bitcoin does meet the shariah requirements to be considered mal regardless of whether it is tangible or intangible and classifies Bitcoin and digital currencies in general as an asset and not as a currency.

Dr. Mohd Daud acknowledges that even though he classifies Bitcoin as an asset, he is well aware that people use it as a medium of exchange. However, even though Bitcoin is used as a medium of exchange in the market, he does not classify it as a currency because he believes Bitcoin falls short of fulfilling the requirements of a currency in two key areas:

(1) At this time, it falls short of serving as a unit of measurement
(2) At this time, it does not fulfill being a store of value as the market still pegs Bitcoin to fiat currency and not the other way around

He also notes that since Bitcoin can be classified as an asset, then the rules of riba al buyu do not apply. The only exception would be is if the cryptocurrency is backed by a commodity such as gold, silver, fiat currency, etc., then the rules of riba al buyu would apply. Please find Dr. Mohd Daud commentary on Bitcoin, here.

Sheikh Mustafa Umar and Cryptocurrency

Sheikh Mustafa Umar holds a B.A. in Islamic Studies from the European Institute of Islamic Sciences and an M.A. in Islamic Studies from the University of Gloucestershire, UK. He has also studied under scholars from as far as Nadwatul Ulama in India as well as at Al-Azhar and Darul Ulum in Egypt and is the founder and Director of California Islamic University.

I had a wonderful interview with Sheikh Mustafa where we discussed Bitcoin and its permissibility which can be found here, Is Bitcoin Halal or Haram? Sheikh Mustafa Umar Has the Answer.

To summarize, Sheikh Mustafa agrees with the opinion of Dr. Salah Al Sawy which is, at this time, we can say that Bitcoin might be permissible or it might be makruh (disliked), but we definitely cannot say that it is haram. He also notes that there are other scholars who hold the opinion that Bitcoin is halal and is also a currency and as such, Sheikh Mustafa says that if we are to say that Bitcoin is a currency, the rules of riba al buyu must apply.

Final thoughts

After reviewing the opinions of multiple scholars, I lean more towards the scholars who view Bitcoin as halal or even makruh as I find their ijtihad and arguments to be more sound than those who argue that it is haram.

I also find that the scholars who hold the opinion of Bitcoin being halal or makruh have a deeper understanding of the technology of cryptocurrencies as a whole.

I also want to correct myself. I had posted a blog article called, Is Bitcoin Trading Halal or Haram?, where I mentioned that since there is no consensus among scholars that Bitcoin is halal or haram, then there is no need to follow the rules of riba al buyu when dealing with crypto.

I have changed my position on this due to the understanding that there are scholars who make sound arguments that Bitcoin and certain cryptocurrencies can be categorized as a currency and as such, the rules of riba al buyu would most certainly apply.

And in the end, Allah knows best.

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Today we talk with Sheikh Mustafa Umar, from California Islamic University, to gain insight into whether Bitcoin is halal or haram as well as discuss investing in bitcoin, fatwas on Bitcoin, bitcoin mining, and more.

But first things first, is Bitcoin halal or haram?

To summarize the words of Sheikh Mustafa Umar, at this time we can say that Bitcoin might be permissible or it might be makruh (disliked), but we definitely cannot say that it is haram.

To learn more about why we cannot say that Bitcoin is haram as well as how Muslims should approach this new technology, please watch the video below or simply read the video transcript of the interview below.

Sheikh Mustafa Umar’s websites to check out
California Islamic University
Video: “Bitcoin & Cryptocurrency” by Sh. Mustafa Umar on January 26, 2018
Mustafa Umar’s Blog
Sheikh Mustafa on Facebook
Twitter: @mustafaumar

Video Transcript

Hacking and Cryptocurrency

Andre Rishi: As-salamu alaykum wa rahmatullahi wa barakatuh! And I want to thank everybody out there for joining us for today’s episode here of the Islam and Bitcoin Podcast. Today, we have another special guest with us, Shaykh Mustafa Umar, from Cal Islamic University.

Our Shaykh, comes to us with a very established background, I would say. He does have a Bachelor’s and a Master’s in Islamic Studies as well as a bachelor’s in Information Systems and Computer Science. The brother just loves to study.

He is definitely – he’s also traveled the world and been able to study at the feet of scholars; something that many of us would love to do. And if that’s not enough, if he’s not busy enough, he actually is the author of several books and also the founder and director of California Islamic University. So, I wanted to welcome you Shaykh, to the Islam and Bitcoin Podcast.

Shaykh Mustafa Umar: Thank you very much for having me. It’s a pleasure to be here.

Andre Rishi: Hamdullah! Hamdullah! Now, just so the audience knows I actually met you at the Islamic Institute of Orange County back in January of this year. And you gave a wonderful talk on Bitcoin and cryptocurrencies.

So, just so the audience knows, I really believe you have a very solid understanding of cryptocurrency married to Islamic finance. Again, for the audience, I’m actually going to post a link to that talk that you gave in the show notes here of the podcast and I highly encourage everyone to go check it out.

It’s two hours long but that’s Ok, it’s two hours of excellent information, and I definitely highly recommend that people check that out. So, again, I think your background in cryptocurrency and Islamic finance is better than most of what I’ve seen with the scholars out there.

I mean I have been doing this podcast, this website for a while now probably two years, and I have yet to find scholars who can articulate cryptocurrency well in conjunction with Islam. So, I’m curious, how did you even get into studying cryptocurrency?

Shaykh Mustafa Umar: [Laughter] So, it’s a long story going back but I mean when I was in high school, I used to – like every other high school kid, I used to be motivated by the movies that I watch. So, one of the movies that really influenced me a lot was a movie called Hackers.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: And it kind of got me into this idea of computer security, network security, and things like that. So, that’s what kind of motivated actually to go and do a degree in computer science.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: So, I’ve always been into computers and I kind of got a little bit more into the idea of digital security, cybersecurity, those types of things. Call it a little bit of computer hacking but like not the really illegal type.

[Laughter]

Shaykh Mustafa Umar: I just want to throw that out there.

Andre Rishi: Just clarify, clarify a little bit.

Shaykh Mustafa Umar: We got to clarify that before I get so much showing up on my door.

Andre Rishi: I know right. I know right.

[Laughter]

Shaykh Mustafa Umar: So, I was kind of – I’ve been into that and you know ever since I was a kid and that interest never really went away. That’s even while I was abroad studying Islamic Studies and all of that stuff.

I used to come home in the summers and I’d still like open up my books and go on websites and I was really interested in cybersecurity and those types of things. So, that’s why I have been following things like Bitcoin and cryptocurrency, that’s something that kind of started out amongst a group of people who are into that stuff.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: They’re into like new technology, they’re into the idea of you know cryptography. And also, on top of that like when I was studying Islam, I started to understand you know what, you know, what is riba? What is interest in the Islamic model? It kind of, when you realize that riba kind of encompasses everything.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: It’s built into the economy then you find these ideas of, well you know what was the gold system of the past and does currency mean, what does money actually mean and how could you have an actual, “Islamic System”?

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: These two things kind of came together, interest in computers, interest in cryptography, interest in computer hacking mixed in with this interest in alternative financial systems or a potential system that could be riba free; that could be interest-free completely.

That’s really what got me interested and that’s why I kind of been following cryptocurrency along the way here and there as much as I can kind of keep up with the – what’s going on in the emerging technology.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: And then you know as soon as this boom started in like 2016…

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: …2017, that’s when I started getting questions, I’m like, “Oh, there’s actually Muslims in the community who actually know what Bitcoin is!” Like, I’m not the only one. And they’re not even…exactly…

Andre Rishi: Yeah.

Shaykh Mustafa Umar: And people started asking me these questions like, “What do you think about that?” And I’m like, “Oh…” and I’m like the only, you know, pretty much the only scholar at that time who could even explain what it is. Like, can even tell you something otherwise everyone is just like, “What are you talking about?”

Andre Rishi: Right. Right.

Early Fatwa on Bitcoin

Shaykh Mustafa Umar: So, that’s kind of what sparked my interest initially and then what really got me more motivated was when I saw some fatwas, or some like Islamic rulings, coming up about scholars commenting on Bitcoin. And I looked at it and I said, “You know I don’t really think you understood the technology very well.” So, that got me more kind of a little bit aggravated you could say.

Andre Rishi: Right. Right. Right.

Shaykh Mustafa Umar: So, that’s kind of what sparked my interest, kind of interest increased and increased over time.

Andre Rishi: Right. Right. Give me one second, I just want to make sure as we’re doing this, does my video look frozen to you?

Shaykh Mustafa Umar: Yeah, it does.

Andre Rishi: It does? All right, so hold on and see if I can pause. All right, so, I completely agree in what you’re saying in regards to when you have scholars out there who are giving fatwa and again like you said they are giving these fatwas saying that this is what you know, Allah subhanahu wa ta’ala and our messenger say, when I’m seeing some of the reasons why –

Well, first of all, even before I get into certain, some of the rulings, what has been the general consensus amongst the scholars as it relates to Bitcoin and cryptocurrency as a whole whether it is a halal or haram?

Shaykh Mustafa Umar: So, the majority of scholars who issued statements initially, I think they were a little bit politically motivated because they were more issued by like State agencies run like State of Egypt, the official – the Egyptian body from the State issuing the fatwa.

And so, they said it promotes terrorism and it makes it easy for money laundering and there’s a lot of danger to the State. Initial Turkish fatwa was something ever similar.

Andre Rishi: Hmm.

Shaykh Mustafa Umar: Many other independent fatwas coming out of Madinah University and others not necessarily representing the school but individual scholars saying that this cryptocurrency has no real existence. So you can’t – something that has no real existence is not valid in Sharia; it’s not considered to be something valid.

Other people talking about the danger of it you know talking about it’s a bubble, it’s going to burst and it’s going to become just nothing because it has no value because it’s not tangible. So, these are the kind of the most of the fatwas that were coming out.

I think it’s changing slightly so there are a few people now kind of saying we should be careful about it. It’s very volatile. People can lose a lot of money but at the same time, we can’t just say that it’s haram.

We can – we have to be a little bit more careful. That’s – things are changing slightly but those are the initial fatwas. Most of them were saying that it’s haram to use which we shouldn’t have anything to do with it.

Andre Rishi: Yeah. And even I’d have to say that I remember seeing or hearing some of the fatwas that didn’t make complete sense to me like there was a – it seemed like there was such a huge push between some of the shuyukh, the scholars, saying that well, it’s not backed by a central bank.

Shaykh Mustafa Umar: Mm-hmm.

Andre Rishi: And I remember thinking to myself saying, but during the time of the Messenger,  may peace be upon him, there was no such thing as a central bank back then and I– and granted I’ve never studied all the hadith that’s out there to see whether if banks are ever mentioned. But even in the Qur’an, you don’t hear anything about banks being mentioned and money or currency having to be backed by banks. So, that was something I thought was a little odd.

Also, the whole thing of anonymity. So, one thing that I saw a lot of the scholars mentioning too that “It’s anonymous”, “It’s anonymous”, “It’s anonymous”. And truth be told that anyone who studies Bitcoin, in particular, it’s not actually really fully anonymous.

There are some other altcoins out there like Monero, I think, is actually is more so anonymous. But even aside from that, I think modern-day currency – I always tell people that I think modern-day currency is it is a – cash is probably anonymous.

And even if you look back in the day of the Messenger of Allah, may peace be upon him. They use of gold and the transaction of gold back then between two people again, that can be anonymous.

You wouldn’t know – you can’t tie but you can’t link the gold back to the person who used it. So I didn’t – I was kind of curious that does the Sharia stipulate anything about currency having to be – it shouldn’t be anonymous or should be backed by a central bank or anything as such?

Money During the Umayyad Caliphate

Shaykh Mustafa Umar: Yeah. No, there’s nothing like that technically. The closest, closest thing that you could get is basically what happened was after the time of the Prophet, peace be upon him.

Andre Rishi: Sallallahu alaihi wasallam (may peace be upon him)

Shaykh Mustafa Umar: During the Umayyad Caliphate, the Khilafa, when Islam became a very powerful force, it was spreading to different regions. Muslims were at war with the Roman Empire at that time. And up until that point in time, the Muslims were using Roman stamped gold coins.

Basically, Roman produced gold coins. Because the gold coins have to have like a certain type of measurement so you know exactly what they are, the Dinar or the Silver Dirham that exists. So, they’re being minted basically by the Roman Empire.

So, Muslims were using these Roman coins and then what ended up happening about maybe 50 years or 60 years something after the Prophet, peace be upon him, they decide we need to stop using these Roman coins. We’re going to mint our own coins and we’re only going to accept taxes. We’re only going to accept Zakah for distribution from our own coins.

Andre Rishi: Hmm.

Shaykh Mustafa Umar: Right? So, that was kind of like a State-mandated thing. Now, you can imagine Muslim scholars at that time saying, “You know what? This is – this is a good thing. There’s nothing wrong with that. Let’s stop using the Roman coins that we’re going to use the Muslim empire coins.” Right?

So, that can become like a fatwa where it’s like you know you have to follow the points that are made by this specific group or by this government because that’s better for the stability of society rather than using some foreign coins where we’re at war with these people, we don’t want to support them, right?

So, that makes sense and there’s a sense of security in that. So, you know that if someone is coming to you with another coin that looks like a gold coin and I guess I don’t know you bite on it or something like that and you’re like yeah, it seems good but it may be a counterfeit, right?

So, it’s safer for you if you’re using a minted coin than if you were using a non-minted one because of a potential counterfeit, you might get harmed. You can understand like is fatwa something along the lines with support the government in having decentralized minting of coins for the protection of people, right? So, that’s the closest thing you can get.

Now, to make the argument and take that same argument say, “Ok, therefore we need to have a central bank.” It’s quite different because a central bank is setting the value of the coin itself and has the potential to manipulate the value of that currency. So, there are two different things, that’s the closest that someone can find historically to some type of Sharia presence.

Andre Rishi: Ok. Yeah. Yeah. And it’s not only that too, but like you said, the bank being able to set the value and now, they– especially with our currency not being backed by anything. They literally can just print as much currency as they want to flood the market with.

So, it seemed like there’s no limit to it. So, it seems like that would be – that in itself to me seems like it can be a form of like a silent theft. And I don’t know – I don’t know the exact ayah in the Qur’an, but just to summarize, audhubillah min al-shaytaan ir-rajeem (I seek refuge in Allah from shaytan the rejected), is that the ayah in the Qur’an, Allah says something along the lines that you should not usurp the wealth of others.

Shaykh Mustafa Umar: Mm-mm-mm.

Andre Rishi: You shouldn’t usurp the wealth of others.

Shaykh Mustafa Umar: Yes.

Andre Rishi: So, when you see banking systems develop an economic system as such from what I see, it is a silent theft because the more currency they print, the less value the currency that you currently hold has.

So, all your work and labor that you put into earning this currency, you don’t get the full value of it because a group of people or cartel or a centralized system has usurped that value from you.

So, I know sometimes when I see, you see scholars out there telling people, like funneling people back into a central banking system. To me sometimes it’s like you’re funneling them right back into a system that steals from them which is really, I find really interesting, very interesting. So, yeah. Yeah.

So, what about the average Muslim who’s looking at this and saying, ‘You know what? You know I hear these fatwas and some of those are from my favorite Shuyukh, but I think, they may be wrong and XYZ but at the same time, they want to definitely be a good Muslim. So, what is the ruling on fatwas in regards to the obligation of following fatwas?

The Obligation of Following Fatwas

Shaykh Mustafa Umar: Hmm, that’s a good question. So, you know the average person, who’s not a specialist, they should rely on fatwas because they shouldn’t just take the law unto their own hand and say, “Well, I’m going to interpret the Qur’an and the hadith however I think is right.”

There’s a less likelihood of them arriving at a correct answer. You know, it’s almost like you trust your doctors, you trust your lawyers, you trust your architect that you know if you’re going to build a house you want to get someone who understands architecture.

They know how to build, you know the engineer or someone knows how to build this house, you don’t just go and like grab some wood and then I’ll just hammer it into the ground and you know, I think I’ll be all right. You don’t want that, right?

So, there is a sense of reliance that you should have on scholars collectively. Now, what we’re talking about is a fatwa is usually a statement of one specific scholar. And again, it’s their interpretation of what they think the Sharia stands for, right? And they could be mistaken but usually you should not abandon a fatwa unless there’s another fatwa from an equally or a more competent scholar.

So, what people should realize is that look, when it comes to Bitcoin, when it comes to cryptocurrency as a whole, there’s not that many fatwas on them because it’s a new technology and it’s something that has not really been around for a long time.

It’s not been researched for a long time. It’s not hit the fatwa question sites for a long time where now they have six months, one year to kind of let it simmer in their minds, do some more research, get some funding to have a council go and do some research and then come up with some papers that are really high quality one research papers.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: But because that’s not happened yet, you have to take some of the fatwas that have come out with a grain of salt and say, “Ok, you know what? This issue has not been given enough time to really fully understand it, grasp its origins.” And that’s what’s going to happen in any type of new fatwa that comes out, you know.

The moment the first sheep was cloned for example, right? People are like, “Oh, give us a fatwa on you know what do we say about cloning?” Right? I mean you’re going to get some fatwas and they’re from qualified people. It’s not like the people are not qualified.

They’re qualified in the Islamic aspect of it but they are not qualified in Ok, what is – how does cloning work exactly, you know? What are the ramifications, scientific, political, ethical ramifications of cloning? That’s whole, that’s a large discussion. Right?

So, what happens is you have to have knowledge of both of these things, right? And at the same time, the scholars are getting questions like this which are very complex, they’re new and people need answers immediately. They’re like, “I’m going to buy this tonight. I need an answer. Now!”

And so they’re like, “Ok, we’re going to try and give you something of what we kind of think it is.” And most of the people who are actually giving fatwas on new issues they’re saying “Look, this is based on our preliminary research. This is based on our minimal research. This is what we see and the opinion may change in two years.

It may change in five years when a little bit more research is done, we understand the issue a little bit better and we have more people on the council of scholars who can help us to kind of think through this issue.”

So, that’s the way we should kind of perceive these fatwas that are coming out because they’re still new. Most people did not get questions about cryptocurrency until about 2017, maybe 2016, definitely not before 2014. It really wasn’t well-known. So, that’s still fairly new.

Andre Rishi: Mm-hmm. Mm-hmm.

Shaykh Mustafa Umar: So, it’s going to require simple processing there.

Andre Rishi: Mm-hmm. I know I probably started asking questions in 2015. Like I started reaching out to scholars back then and you know hamdullah, I got honest answers. Pretty much, they all was like, “I don’t know.”

Shaykh Mustafa Umar: Mm-hmm.

Andre Rishi: Simply said, I don’t know. That’s it. They have nothing else to say. I will say though that right now from what I see, it seems like the majority, even if it’s a few scholars, the majority of those – of that pool of scholars have ruled it to be haram.

And the reason being is because they simply say that is simply not a currency. And for me, when I look at that, I think to me it would serve the purpose more of they were a little more nuanced in how they come about the ruling.

So, one thing that I did want to ask from your understanding of cryptocurrency, do you see right now as a currency or as an asset or just a digital token?

Is Bitcoin a Currency According to Islamic Law?

Shaykh Mustafa Umar: Hmm. I mean again, we can get into the philosophy of what a currency means. But understanding the way currency functions today in terms of fiat currency and different currencies throughout the world I personally see it as a currency. Because the idea of – the idea of fiat currency meaning like this has been declared to be something of value by government, right? So, that’s fiat– that’s what fiat means.

So, that idea of fiat doesn’t necessarily have to come from a government, it can come from any group of people now in a – just international network. So, if people consider it to be something of value that they will use it as a currency, then the fiat part of it is done by people due to their trust and due to their wanting it to be used as something of value.

So, I see it personally as currency. And I think currency is something that can be – the way we understand currency today is something that could be introduced, it can be removed, it can become extinct.

So, that’s the way currency operates today. That’s the way most of the rest of our currency is. Now, whether it’s the – you know, how does it compare to gold currency and all that is a whole another discussion but I would rule that as a currency.

Andre Rishi: Ok. Hamdullah. Yeah. It’s funny because with one of the teachers I was studying with, he – one of the things that he did mention was – again, going back to government saying that government pretty much puts the stamp on saying what is and what is not a currency.

And my thought was when it comes to cryptocurrency, this is something that – again, going back to your studies on computer science and hackers, this is something that someone can sit down in their home and now the knowledge and the information is out there where they can program a currency and print out it for anyone to use. It’s that simple now.

And I do think that I think that we’re probably going to see down the road where again, if it’s not my children – I don’t have children yet, God willing, insha’Allah, but let’s just say, your children or grandchildren, it will get to the point where they will be able to program their own currency.

So, I’m curious is that at what point does Islam say, “Well look, as…” I think you’re definitely thinking more long-term in regards to with some of your thoughts that you’re sharing. But what will they say in regards to be the average small group of people just declaring a currency that they’ve come up with for themselves?

Shaykh Mustafa Umar: Right. So, I mean again, it’s hard to define in this day and age exactly what is – what is the quantity that you need for people to buy in and what their geographical distance should be. So, there are no clear-cut rules especially in this day and age where we’re all interconnected across the borders.

So, it’s very hard to make a claim and say this is how many people need to adopt it. So, yeah, there are some risk anyone can just make their own currency. But if that currency is being used by a significant number of people and they’re valuing it without defining what that significant number of people is then that should suffice it for being a currency. Because if you look at what currency was primitively, you look at small little village somewhere and…

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: And they have different currencies and all of a sudden they find some shells in the water and they’re like, “Oh, these shells are kind of rare and not – there’s not that many of them, Ok, let’s go ahead and use this as a bartering system. This becomes our currency where we’re going to have to trade all these products all the time, we use the shells as intermediaries and they represent some store value.”

As long as that’s recognized, you could make anything into a currency. You could take a shell to currency. You could take a random colored rock because that has a certain restricted number within a society and there’s like a – you can call it a social contract or something among those people that they’re saying, “We agree to transact and give certain type of value to this state that’s there.” Right? And that’s exactly what a self-program cryptocurrency would end up becoming.

Andre Rishi: Right. Right. Now, with that being said and I know you said you see it as a currency, one argument that I have definitely seen some scholars make in regards to ruling out Bitcoin in particular, not other altcoins but Bitcoin, in particular, is that trade cannot be instantaneous.

So, for instance, when you make a let’s say a transaction with bitcoin per se, it is at least a minimum of about 10-minute window of time for the transaction to truly be confirmed, even though you’ll see it pop-up on the ledger instantly. So, what are your thoughts on this?

Shaykh Mustafa Umar: Yes, I mean that is one of the issues with Bitcoin. So, it does take some time to process. But again, I think the – that’s due to the technology. So, again, the risks that’s actually involved of it not processing, like you said, it appears instantaneously, right?

So, even with processing at the same time, the appearance ends up being that you know this is something that has transferred over. There are many other types of transactions. I mean if you look at, even when you send money to someone else in a bank or something that used – you write me a check, I’ll deposit that check. It’s not going to come instantaneously.

But what is the ruling on ownership? The moment you handed me that check, and the moment I put it into the bank, that is technically considered to be my property even though it’s not really appeared, even from the Islamic perspective. You’ve handed the money over to me. That property is considered to have transferred over to me, right?

So, from that perspective, this is not a major issue because we already deal with that on a regular basis. What’s the most important thing in Islam is to understand who owns what at what particular period of time and what level of danger or risk is there that a transaction is somehow not going to process such that someone is going to think that they’re getting property transferred but they don’t get it transferred. Right?

I think risk is fairly low as far as my understanding goes, and that’s why it’s not a major issue. We’re like looking and look at this and nitpick on this detail because this stuff happens all the time.

Bitcoin and Riba al Buyu / Riba al Fadl

Andre Rishi: Right. Right. Right. And just hearing you say that definitely clarifies certain things to me and makes more sense. I mean I posted a blogpost some months back where I was talking about trade. And one of the things – again, I always tell people who come to my blog, I’m not a scholar.

I take information from scholars I’ve studied with and share that with them. I know one of the teachers I have had before clearly doesn’t see this as a currency and so because of that, when people had asked me in regards to my studies with Bitcoin and regards to trade I would always say, “Well, at this time, if I don’t see any consensus that people are calling it a currency, then my thought process was that the rules of riba al-buyu, also known as riba al fadl, wouldn’t apply to it simply because there was no consensus and they didn’t call it a currency.

However, from your viewpoint if you can see it, as a currency right now then it would be that the rules of riba al-buyu would apply, no?

Shaykh Mustafa Umar: Absolutely. In fact that’s why I’m very – I actually read a fatwa that said it’s a digital asset and they were making an argument about it being an asset but then the rules of riba don’t apply and that’s very – it’s very problematic because then you can just justify, if you can’t loan money to someone else, you can go ahead and do the whole riba business with cryptocurrency saying that we’re selling you an asset with the profit and there’s Murabaha and all of that and – I mean that’s not the way it functions.

So, I mean I think sometimes people will go down into the technical details and forget that you have to look at the substance and the spirit of what – of how this thing functions and what it’s supposed to do and what was it intended to be and what it generally is rather than trying to make some analogy based upon you know some pre-conceived definition that you have in a book of Islamic law or something like that. I think that’s where the issue arises.

Andre Rishi: Ok. Ok. So, then what are your thoughts when it comes to other aspects of a cryptocurrency such as mining? I’ve seen some scholars here that all of it is haram. All of it, whether you’re doing transactions, whether you’re mining, all of it is not in line with the Islam. What are your thoughts on mining?

Thoughts on Bitcoin Mining

Shaykh Mustafa Umar: So, I mean in terms of mining, there are two aspects. One of them is the electricity consumption, you know, so that’s obviously concerning. So, you know, I mean they say if it becomes so big and you know it takes up a lot of electricity. There’s no doubt about that. Obviously, there’s ways around that. I mean ways to overcome that shouldn’t be too difficult to think of other mechanisms and alternatives.

The idea of mining if you look at it again, what is the substance of mining? The whole point according to my understanding of mining was two things, I mean one, is that they wanted you know Satoshi, whoever that was, wanted to come up with this idea of gradually introducing more and more currency and then putting a cap on it. Right?

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: So, there is that cap when it comes to bitcoin and mining it, built-in. So, this is a problem that’s technically going to resolve itself. I mean the mining is going to be done after certain period of time. That’s the way he planned it to be. And I think that’s a genius way to think about it from that perspective.

One of the ways to restrict the harms from the current financial system that – one of the reasons why cryptocurrency was made in the first place was because you could just manipulate it anyway you want and it just – you can keep on printing more and more like you said, right?

So, once you put a cap, you’ve really – you’ve taken a really big step in preventing that type of abuse from taking place. So, I think the cap is very, very important. And obviously, he had a very good reason or they, whoever they are, they had a very good reason…

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: …for putting out this gradual thing in order to get more acceptance, in order to give an incentive to people who are not just going to do this for the purpose of verifying transactions because there’s not going to be that much money initially.

It seems like an ingenious idea to me. So, it makes sense, people have gone in and said “Well, where’s this money coming from intrinsically? And you know you’re somehow getting money for nothing.” I know it’s somewhat of a far analogy but the analogy is like you know you’re putting effort in to actually mine gold. Right?

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: That’s where the term mining came from. So, yeah, they say well gold has intrinsic value so that’s why you’re doing it. But I mean again that’s another argument whether it has intrinsic value or you know, declared value due to historical reasons and all that. So, I don’t have intrinsically an issue with mining because I understand the purpose of it and the substance of it and the spirit of it.

Once – and if there’s another way or a better way around that, I think it wouldn’t be necessary and I think because cryptocurrency has already become so popular perhaps the transaction cost or whatever technology to transact through it would suffice and people would make enough money just through that without having to do all of this mining. So, I mean my – I would say, I haven’t really thought too much about this issue but I would say that my initial thoughts are, even if mining was like stopped right now.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: It wouldn’t hurt cryptocurrency and people would still be able to charge certain amount of money for their services and it would still – the service would be valuable, the person would still make a profit like many companies are doing and people would be willing to pay that and they would still prefer that and the traditional methods of currency that we have today.

Investing in Bitcoin

Andre Rishi: Ok. Yeah. I agree. I do see that. I do see that. So then, what you’re saying in regards to people being involved in it in transactions and mining, obviously you have the people who are looking to invest and I do know, I do see people that come to my site who they – they do have some knowledge of cryptocurrency and they may not necessarily agree with some of the fatwas that they give and they still move ahead and look to invest.

So, I want to hear what your thoughts on investing.  And before I do that, I definitely want to preface this and say that none of us here financial advisors so please – we’re not here giving you financial advice and what to do or what not to do just speaking generally. Generally speaking for the average Muslim who does have some understanding how this works and is seeking to step in and get involved in this. What are your thoughts in those thinking about investing in it?

Shaykh Mustafa Umar: Right. So, here’s the thing, this is like investing in any other currency, Ok? For me, this is a currency. So, if you’re going to invest in any currency the Islamic definition or the Islamic idea of investing into a currency is not, is not really there, right?

Because currency is not supposed to – intrinsically, it’s not supposed to be fluctuating from an Islamic perspective. You got your gold coin, you got your silver coin, that’s what’s considered to have value. You don’t go like “Ok. I’m going to take my gold coins now and I’m going to buy a bunch sea shells from the village that uses sea shells for currency with the hopes that I can go ahead and sell this sea shells back to my other village for more money than I bought them for.” Right?

So, the idea of investing in currency as far as I understand it is not really something in Islam that’s there. All right. So, from that perspective you don’t like buy and sell currency that kind of comes in the idea of riba. Riba in the sense that you know you’re using currency, using money to make more money that’s not an asset that’s supposed to actually have a certain value that’s increased. That’s the fundamental part of it.

Then you got the practical part of it. Currencies are going to change, right? And they are being valued and devalued. So, the only time that it’s normally acceptable to purchase currency for the “purpose of investing” is when you have a strong reason to believe that either your currency that you have is going to be devalued or the other currency – it’s more about your currency being devalued relative to the other currency which means that that currency is going to be increased in value. To give you an example, Ok let’s – give you an example, let’s say, you live in Zimbabwe, Ok? And…

[Laughter]

Andre Rishi: Oh yes.

Shaykh Mustafa Umar: …before what happened…

Andre Rishi: May Allah helped them. Aameen.

Shaykh Mustafa Umar: Aameen.

Andre Rishi: Aameen.

Shaykh Mustafa Umar: So, let’s say you live in Zimbabwe 2005 and all you do is you transact in the Zimbabwe whether they’re dollars or whatever they were.

Andre Rishi: Their currency. Mm-hmm.

Shaykh Mustafa Umar: Their currency. And somehow you get information that this government is not doing very well and they don’t seem to be making good decisions and I think there’s a very significant risk that my currency in Zimbabwe is somehow going to devalue itself and I’m going to end up losing – a lot of people are going to end up losing a lot of money because this is an unstable currency and the government is going to make decisions and things are going to happen.

You say, “You know what? There’s a big risk in that and I have a very good insight that this is likely to happen. Let me go ahead and protect myself and take some of the money that I have even though I’m a Zimbabwean, I live in Zimbabwe, let me go and put my money in a safer place.

Let me go convert it into US dollars, for example, right?” And then hyperinflation happens and then you realize oh that guy got saved because he realized that his currency was going to be devalued.

So, the same principle applies. When we talk about investing into a currency, when we have an understanding that our currency relative to the other currency is somehow something is going to happen to it and we’re going to have a problem that’s kind of like a flip way of looking at “Ok, this other currency is going to be going up relative to my currency that I happen to hold all of my assets in.” Right?

So, when you lose trust in your own currency and you put your trust in another currency, what you’re doing is you’re switching from one currency to another because you’ve lost trust in it. Rather than looking at it from the financial transaction of “I’m going to buy $10,000 worth of cryptocurrency and I’m going to – the intention of selling it when it hits $30,000.” Right?

So, that’s kind of the way that it should be viewed from Islamic perspective because we don’t buy and sell currency as an asset because it’s not an asset.

Andre Rishi: Ok. All right. So, again, just to clarify, you’re saying that going in with the intention of like well, I’m going to purchase XYZ cryptocurrency because I believe that in three years, it will be worth $15,000 instead of $100 today that that intention is not allowed Islamically or shunned upon Islamically.

Shaykh Mustafa Umar: Yeah.

Andre Rishi: Yeah, Ok as opposed to just saying hey, I just think maybe the country I’m in like the US is just going to keep on inflating the money supply and it’s going to lose value. So, let me go and hedge by purchasing other currency.

Shaykh Mustafa Umar: Yeah.

The Philosophy of Bitcoin and How it Relates to Islam

Andre Rishi: Ok. All right, cool. So, with that being said, I think that’s a really good segue to talk about the philosophy behind Bitcoin and cryptocurrency as a whole. So, what are your thoughts on the philosophy behind this new technology and how does that, how does that work with Islam?

Shaykh Mustafa Umar: Ok. Where should I start?

Andre Rishi: Ok in – I know that my understanding is this whole thing really came about with – at least I don’t want to go too far back because cryptocurrency happened before Satoshi, it was already talked about. With Satoshi, in his white paper, it does seem to be a reference between a 2008 financial crash and wanting to have the philosophy behind having a decentralized system, a currency that’s set on a decentralized system that would be of benefit to everyone.

Shaykh Mustafa Umar: Right. Right. Right. So, you know the philosophy of it, it makes sense from two perspectives and it doesn’t make sense from one perspective. So, two perspectives which are in line with Islam is that governments – currency is not supposed to be something that can be easily be manipulated by government.

Because what that does is that puts people’s assets, it puts their money, it puts their property all at risk and at risk of a simple government decision. And that’s very, very dangerous and there’s something known as principles or the underlying objectives of the Sharia, it’s called maqasid al-Shariah.

Andre Rishi: Hmm.

Shaykh Mustafa Umar: And five principles – basically, it’s five principles that underlie every single rule in Islam. And one of those principles is the preservation of wealth. So, if you look at you know if you ask, well, why is stealing haram? Why is stealing prohibited in Islam?

Well, because God wanted to preserve the wealth of people. That’s why when you say, why is drinking alcohol forbidden in Islam? Because one of the second rules is the preservation of the intellect. God wanted society as a whole, everyone to preserve their intellect because that’s how they make rational, reasonable decisions and moral decisions.

So, you want to preserve certain things within society, one of them – one of the objectives, underlying or overlying objectives is the preservation of wealth. So, when you have a system where a government can somehow, anyone can become elected or become leader and then make a decision and somehow take people’s wealth.

I mean basically, you’re taking the wealth by devaluing whatever they own without even having to exert the physical military force to go and steal from them.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: That’s very dangerous. So, that goes against one of the principles of the Sharia, the underlying principles of Sharia. So, in that perspective, the idea of a decentralized currency makes a lot of sense and fits into the paradigm of Islam.

Andre Rishi: Right.

Shaykh Mustafa Umar: From the second perspective, you have a quick transfer of currency, transfer of money or transfer of goods with a very quick way of paying. So, this is a faster means of technology without exorbitant amounts being charged particularly to people who cannot afford such amounts like third world countries, you know the amount of money that gets sent from wealthy countries, “first world countries” to like to poor developing countries and their relatives back home, it’s in the billions. I mean it’s huge.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: There’s a lot of money that’s sent back and the amount that these people are going to have to pay because they don’t have, in their village, they don’t have a bank, branch or something like that setup, they have to pay a really large fine, or fee.

You could say a fine in a sense for not being developed or whatever, [maybe] war happened you know 40 years ago or something like that. So, that’s very sad. And this actually, this technology can and actually is being used to help a lot of poor people and that completely fits in line with the principles of Islam as well. So, these two things directly fit in line with the principles of Islam.

Andre Rishi: Hmm.

Shaykh Mustafa Umar: The only thing that where you can say there is some level of danger for decentralization is that Islam does recognize that you have to have a just government, put certain principles in place to prevent people from doing bad stuff.

So, sometimes may not be legitimately used, but sometimes government needs to crack down on people who are funding money launderers, drug dealers, terrorists, all of that stuff. That stuff happens and if they have a little bit more oversight that can be a thing if used correctly to prevent people from doing bad things. Again, now, the flip side of that is the government can be doing bad things about it.

Andre Rishi: Yeah, exactly.

Shaykh Mustafa Umar: So, that’s why you have to have this balance.  We have to weigh it out, right? So, that’s where it becomes a very difficult decision to make in terms of who do you trust more? Do you trust the government more or a government more or specific government more?

Or do you trust that the average person is not likely to engage in this type of activity that’s going to harm society? So, kind of comes back down to what is going to be better for society as a whole? And not every country, not every time, not every period, not every society you can give the exact same answer.

Some societies work better, some societies, it’s worse. So, you go into very corrupt country and you look at that country and you say, “Is it better that this currency is centralized or decentralized?” We could pretty easily say, “You know, this government is so corrupt, we definitely are better off with the decentralized currency.”

Andre Rishi: Right.

Shaykh Mustafa Umar: Whereas you could go to another one and you say, “Oh, these people aren’t so bad, but there are some really bad people within that society but they’re not in government. They could potentially do a lot more harm so maybe we should give government the benefit of the doubt here.” So, it’s not a clear-cut black or white answer all the time.

Andre Rishi: Right. Right. And I think that makes a lot of sense. Yeah, when I look at a lot of again, just the economic system that we have worldwide for me and not just me. I think I, a lot of people see that there’s just so much corruption and then I think that’s why you see so many, I can’t say so many people, but at least groups of people who are very open to and push for a sort of decentralized system where they figured, “All right, well, all of us say have an invested stake and we all want to protect our wealth.”

So, if we all sort of spread out trust, then you know they do see that as a more reputable, possibly more solid system.

But like you said, there are so many nuances to that which also leads me to what you believe the future is for cryptocurrency. One of the things I tell a lot of the viewers of the podcast, people come to the site, and this is one thing that sometimes I think, I’m not even sure if some of the scholars really understand right now. I always say that this is more than Bitcoin. Bitcoin could be gone tomorrow.

Shaykh Mustafa Umar: Yeah.

The Future of Bitcoin in the Muslim World

Andre Rishi: I think that the – I do think that the technology though, I’m just curious, what are your thoughts on the cryptocurrency and the future, how that relates to the Muslim world as a whole?

Shaykh Mustafa Umar: Yeah, I mean I think cryptocurrency is not going to be going away. It’s a concept. Like you said, I agree Bitcoin may disappear. It may disappear in a year. It may disappear in 20 years.

But the idea of a currency whether it’s through cryptography or through some other means, a decentralized currency, the idea is not likely going to go away because people believe in it. And as long as people believe in that idea, you can’t just take it away. It’s going to be very, very hard to take it away.

And in terms of what is the future, how is it going to look? How is it going to look in the Muslim world? It’s hard to speculate. I think time will tell. But I think it’s going to develop over time and I think we’re going to find more and more uses and different uses for things like this.

So, you find people already – people taking blockchain technology as one aspect of cryptocurrency, it’s not the decentralized aspect but they’re taking this like implementing it within their own system even within the banking system and all of that. The decentralized aspect of it is something that’s going to remain as a means of transfer or –  what do you call it? A money transfer.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: Money transfer that’s something that’s going to continue. It’s not likely to go away unless somehow massive competitions somehow keeps up and it doesn’t require it to be the case anymore.

So, if that was the case, then yeah, things are going to change. Like the postal service took a huge hit when emails started becoming international phenomenon and everyone has an email and send messages and how many people send letters?

Andre Rishi: Right.

Shaykh Mustafa Umar: It’s not that much. So, they’re obviously going to lose out. So, I think it’s going to be something like that in terms of people who like to transfer money or who are responsible for transferring money, making currency exchanges and all that. Cryptocurrency will become part and parcel of their system or those systems will go away and cryptocurrency will replace, for the most part, that type of transfer system.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: From there, what’s going to happen afterwards? I mean I think there are so many possibilities. It really depends on what Muslims do and how much freedom they have to actually develop something…

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: …across this new one that was coming up called OG OneGram.

Andre Rishi: OneGram, yes, yes.

Shaykh Mustafa Umar: Yeah, so it’s like a cryptocurrency that is somehow tied at minimum value to one gram of gold.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: persons look at that and they’re like, we need to go back to the gold standard. They said that Libya once tried the gold standard and look what happened to them?

Andre Rishi: Yes, God forbid God and I personally think there is some truth in that and I think there’s some truth in that.

Shaykh Mustafa Umar: Yeah, absolutely. I think so too. And Malaysia, they have been talking about it for a very long time. And I think a lot of the Muslims who kind of know they are very excited about this idea but it’s extremely difficult to somehow go back to a gold standard when – like a traditional gold standard when the entire world economy is taking a different turn and the way gold is being controlled and manipulated all of those things.

Now, this potentially could be that one thing that people are waiting for to overcome all those obstacles and somehow structure something where you can either get – you can get back to a standard that resembles the pros of a gold standard which is what Muslims have been really calling for and waiting for actually.

And that would cause a lot more stability within economies, a lot less speculation which is definitely in line with the principle of Islam, less riba-dominated all sorts of transactions and just the economy itself. Right? So, there’s I think where cryptocurrency can lead. How it will lead there exactly I can’t say.

Andre Rishi: Right.

Shaykh Mustafa Umar: I think this is one of the technologies that could potentially help us get us there if we’re doing the right things and we’re making the right decisions with regards to it and the leadership is going to give people the freedom to develop these things.

Andre Rishi: Yes.

Shaykh Mustafa Umar: And not put a ton of hurdles in their way to prevent this technology from actually getting there. It’s kind of like electric cars. I mean the technology has been there for a long time but the oil companies and stuff.

They have been preventing all of these. Solar technology, same thing. Now, it’s finally starting to take off, why? Because some of those hurdles have been overcome. So, as long as the hurdles don’t get in the way, I think it’s a lot of development then.

Andre Rishi: Yeah. And I think what you’re saying with hurdles is absolutely right. And again, it goes back to what I was saying earlier in regards to I really wish I would have – we would have seen more nuance from some of the scholars on their rulings because I would hate to see them, by simply painting a broad brush and saying that it’s all haram in some ways to kill the research and development that can go into this new technology.

Because I look at it as like Ok, well, cryptocurrency right now is not perfect. It’s in its beginning stages.

So, I would much rather them say something along the lines or say, “Ok, well, maybe this is makruh (disliked) or maybe this aspect of it doesn’t work but if you can fix it here or do X, Y, and Z here then we can take a second look at it.”

I would love it if we had scholars that would dimply encouraging Muslims to actually do research into this new technology and to find a way for it to be better for all of humanity as opposed to just striking the whole thing down and then just keeping quiet and not saying anything else.

Is Bitcoin Halal or Haram?

Shaykh Mustafa Umar: Yeah, well I got good news for you then. And probably this is the last thing I have to say before I have to get going.

Andre Rishi: Yes.Mm-hmm.

Shaykh Mustafa Umar: I was at a scholar’s conference recently. It’s called the AMJA, the Assembly of Muslim Jurists of America.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: And there was about you know 150 scholars and about another 200 students of knowledge And Bitcoin came up and there was a presentation given. And one of the head Shaykh, Shaykh Salah Al Sawy, he presented a paper on Bitcoin and cryptocurrency. And his initial paper seemed like he was going to come out saying that it’s forbidden, the draft of it.

And then finally, when he presented it, he actually said, “You know we cannot outright say that it’s prohibited and we can’t even say that it’s technically even makruh for sure. We can say that it’s somewhere, it might be makruh or it might be permissible, but we still need a little bit more research. But we definitely know we cannot outright say that it’s haram.”

So, after doing more research, he actually changed his view and his view was not – is not just a view of one person. He’s a very heavy-weight scholar so when he gives his view, you got probably the other 150 scholars in the room, most of them are agreeing with him.

So, that’s a good step in the right direction. I was very happy that came out. And that paper was written in Arabic. So, it has been translated yet. But I think that’s a good step in the right direction. That was just a few weeks ago.

Andre Rishi: Masha’Allah Hamdullah. I’ll be on the lookout for that and then I’ll probably touch base with you to see if that does come out in the English version so I can talk about it here. I don’t want to keep you too long because I know it’s already – we’ve been going at this for like a little over an hour now I believe or just about an hour.

What is California Islamic University?

But I did really – I would love for you to share with my audience what is California Islamic University? I mean here you are with years of study under your belt, a bachelor’s, a master’s degree, studying worldwide and now, you have founded this university, if you can share with us what is this all about and how can people get involved?

Shaykh Mustafa Umar: Sure. So, about five years ago, I was out of the country and I was thinking, am I just going to come back to the country and just be an Imam again or, how do I take people to the next level?

So, I came up with the idea, I said, you know we need an educational institution that teaches people, gives them a foundational knowledge of Islam that I wish I had. I mean, I’ve always had a lot of questions about Islam and that’s the reason why I went abroad to study. I traveled to different countries. I didn’t want to be an Imam. I never wanted to become a scholar or anything like that. I just wanted to learn my religion.

And I think there are a lot of people like me but not all of them have to quit their jobs. They don’t all alone to you know have to drop out of school and like travel to some random country and go through different living circumstances, culture shock and all of that stuff.

But I said, how can I make the knowledge that I’ve learned that you’d find in the average seminary, which is like in Islamic university, and take the stuff that is the most relevant to Muslims living in the west and sift out the stuff that’s the least relevant Muslims living in the west.

And that’s when I said, “You know what? Let me start a school. And what we’re going to do is we’re going to take the curriculum of Madinah University, Al-Azhar University just looked to all of them and start sifting, what’s the most relevant, what’s really not relevant to the average person unless they’re going to specialize and become like a scholar.”

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: And I started reconstructing a curriculum from scratch on what’s going to be the most important thing. So, we cover – basically, I made 22 courses.

Andre Rishi: Ok.

Shaykh Mustafa Umar: We covered everything from the life of the prophet, peace be upon him.

Shaykh Mustafa Umar: …from that Islamic law, the Sharia, the principles of making everything from wudu, to fasting, to zakah, to marriage, to divorce, the correct way to get divorced if that ever happens, economic transactions.

But every time you studied the subjects not looking at like camels and you know goat, stuff like and replaced it with modern-day examples of what we actually encounter you know.

Andre Rishi: Salla Allahu Alaihi wa Salaam.

So, taking the research that has been done and issues like cryptocurrency and zakah and 401(k) accounts and you know what are modern manifestations of interest in today’s transactions and stock market and options trading and future and you know all of that stuff selling short. Taking that and implementing into the core curriculum.

So, we go from there and we go, “Ok. There’s rules that we’ve got to learn. There’s recitation of the Qur’an that we’ve got to learn. There’s history of the Qur’an. How do you know the Qur’an has been preserved? How is the hadith… How do you know stuff is authentic? Where does all of these come from?” And then supplement that with a few classes like research methodology. How do you research a subject in Islam on your own; under some guidance maybe.

Andre Rishi: Mm-hmm.

Shaykh Mustafa Umar: Public speaking, once you got your knowledge down, how do you convey the message of Islam to other people? How do you give a khutbah (Islamic sermon) that people are not going to bring their pillow and fall asleep? Unfortunately, there’s a lot of khutbahs like that.

Andre Rishi: Yeah.

Shaykh Mustafa Umar: So, that’s what we’re trying to do. We have a two-year curriculum. You could do it part-time, you could take six years and do one class a quarter, that’s perfectly fine. And we have quite a few students, you know different parts. We have online students, you can be anywhere in the world. We have students randomly like Taiwan and South Africa.

Andre Rishi: Yeah.

Shaykh Mustafa Umar: …different countries. So, we use top-of-the-line technology and management system technology so that people can take classes at their convenience, according to their own schedule.

You know you don’t got to quit work, you just watch the video later and finish the exam, you get credit for that class. You don’t want to take all the exams, you don’t want to do all that stuff, just take the class as an audit student.

Andre Rishi: SubhanAllah. SubhanAllah.

Shaykh Mustafa Umar: You just get the – that’s it.

Andre Rishi: Ok. Ok. So, yes, you can study like, physically on – you have a physical campus.

Shaykh Mustafa Umar: Physical campus in Fullerton, California. You could do that or you can attend live so you can like actually chat with the teachers and ask questions live. Or, you can watch the videos afterwards. You can attend courses later on. You can learn your Arabic, you can learn your Qur’an, you get your tafsir, you get your hadith.

Andre Rishi: Masha’Allah.

Shaykh Mustafa Umar: And do it at your own pace as well.

Andre Rishi: Masha’Allah. Ok so, ok so once they finish this then they should have a basic understanding then, a foundation of Islam that they can go and to the community maybe be, maybe an Imam…

Shaykh Mustafa Umar: Probably an assistant Imam.

Andre Rishi: Assistant imam. Ok.

Shaykh Mustafa Umar: Yeah.

Andre Rishi: Ok. Very good. Very good. But what I’m going to do I’m going to leave the link for that website down below so people can check that out as well. I highly encourage people to check it out. I mean I myself am a student of knowledge myself, I’ve studied with like SeekersHub, Qibla for Islamic Science, so I’m definitely taking a look at this for sure since it’s right down the block from me.

I really wanted to thank you for your time today for joining us here on this Islam and Bitcoin Podcast, you shared a lot of information, a wealth of knowledge that I think is highly beneficial to the community and it’s really good to see someone have a very balanced understanding of cryptocurrency as a relates to the world of Islam.

So, we lost our Shaykh. I just heard from him and he said that the battery on his laptop went dead. Alhumdulilah, no worries. It was wonderful having and a beautiful conversation with our dear Shaykh and I wanted to thank Shaykh Mustafa Umar again. Thank him for coming on the, appearing on the Islam and Bitcoin Podcast and having a great conversation with us.

Please do share your thoughts. Leave comments down below and let us know what you think about the conversation we just had. And as always, we say sharing is caring so please do share this podcast far and wide with those who think may benefit from it

And as always, I leave you in the way that I greeted you assalaam alaikum wa rahmatulahi wa barikahtu, Ma’salama. 

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