Cryptocurrencies with their highly unstable and volatile prices rising and plummeting every week posses serious risks for investors, and especially for those who believe in Islamic Sharia. An Islamic scholar declared Bitcoin “permissible” under Sharia law. This has opened the market to 1.6 billion Muslims around the world. This may also explain the sudden surge in Bitcoin’s price by more than $1,000 as the Muslim crypto traders increased rapidly.
Since the rest of the world began to adopt the new virtual currency. Muslims around the world were forbidden to stake their claim in the crypto-currency market until this new information released by an Islamic scholar named Mufti Muhammad Abu Bakar published a paper in which he addressed the issue of Bitcoin and other cryptocurrency is halal or
Muhammad Abu Bakar said,
“In Germany, Bitcoin is recognized as a legal currency and therefore qualifies as Islamic money in Germany. In countries such as the US, Bitcoin lacks official legal monetary status but is accepted for payment at a variety of merchants, and therefore qualifies as Islamic customary money.”
There have been various debates in the Islamic Scholar community over Bitcoin trading that whether it is permissible or not. Although, the Islamic Sharia Law prohibits ‘usury’, the practice of lending money at high-interest rates and Bitcoin trading is volatile and involves huge profit and loss.
The paper also disclosed that,
“Bitcoin is permissible in principle as bitcoin is treated as valuable by market price on global exchanges and it is accepted for payment at a wide variety of merchants.”
Since this assumption is purely speculative, many believe the price surge was largely due to the crypto market finally opening to 23% of the world’s population. It is reasonable, especially considering Bitcoin’s price is often swayed by external third parties, such as the media. According to many experts, Bitcoin is here to stay and this adoption of the crypto world by the Muslim world is another step in the right direction towards mainstream adoption.
Shortly after the paper was published, over one billion dollars in trades were initiated across all exchanges of the world causing Bitcoin’s price, a sharp increase over a short duration and the largest one-hour trade volume in history.