Bitcoin & Cryptocurrencies A Second Look – Ask Shaykh YQ #242
Channel: Yasir Qadhi
Series: Yasir Qadhi - Ask Shaykh YQ
File Size: 23.89MB
Brother Bob from Auckland New Zealand my shots of Oracle I'm very happy we have viewers all the way from what do you call New Zealand Down Down Under I don't know because down under is Australia and you even down or down within Australia so you are mashallah Yanni
What do you call them Kiwis right that's what you call you guys Kiwis mashallah, this is not an insult brothers and sisters the people in New Zealand they call themselves Kiwis they they like this term so I have never been by the way HINT HINT wink wink maybe one day inshallah so brother thought it from Auckland, New Zealand he emails and he asks that recently a fatwa has been given by a national council of Illuma in a particular Muslim land, there's no need to mention the land over here saying that Bitcoin is held on and he has heard me state in the past that Bitcoin is halal. So in light of this new fatwa, he is asking, Can I comment on it? And what are my thoughts about this?
COVID iica Ilari Jalan No, he him first IRLO lickity.
So, to respond to this question briefly, without trying to rehash an entire lecture I gave about Bitcoin in the past that realize that this is the footwear that has just been released by a particular Muslim country. To be honest, I read it, there's nothing new in it per se. The same arguments are hashed and rehashed about Bitcoin and about cryptocurrencies overall, for the last six, seven years, and respected and respected counsels has spoken about this. And there are predominantly two main camps, the first of them, which is this country and other ground, you know, as great scholars, I should say, they say that it is completely impermissible, it is how long and
they have a number of you know, various evidences, they, you know, five or six they mentioned, and I have gone over this in a long q&a. And the second position, which is what I have advocated in the field Council, North America, and many finance experts across the globe, I have read a number of fatawa is from scholars in England, from scholars in Malaysia, from scholars in France, from scholars in Saudi Arabia, who have written treaties and papers on Bitcoins, on Bitcoin in particular, that they say that it is halal. And in the end of the day, really, dear brother, you will have to follow the authorities whom you trust, because this is a new matter. And both sides
have respected or Lemma and scholars and I have been teaching respect of scholarly opinions, you know, even as I position or even if I have championed my own position, and argue my own case, this is my opinion. In the end of the day, dear brother, you have to follow the group of scholars that you trust, and the rest is, you know, between you and Allah subhanho wa taala. But you've asked me to comment on this. And I will simply comment by stating that the position of those who say that it is permissible bitcoin is permissible, and I'm one of them and the field Council North America that I belong to also gave this fatwa is basically the default they don't need to bring any evidences,
they say, the default when it comes to all types of transactions is that they are permissible, whoever bans it, whoever makes it haram, the proof of burden is on them. And they say we say I say that all of these evidences that they bring to talk about Bitcoin being haram do not reach the level of making it how long the max that they can say is that it is speculative and perhaps dangerous for an investment and perhaps not wise to do but to make something how long based upon the arguments that they bring. We feel many scholars feel that they simply haven't done that. And because of this, Bitcoin remains upon as default, which is that it is valid. In other words, the onus of the proof is
on them, the onus of the burden is on them, and every single point that they bring to make Bitcoin haram, if you were to take that point, you could apply it to many other things that the same group makes Hallel please understand what I'm saying here, every single point that they bring to say that Bitcoin is haram, you can bring that same issue, whether it's speculation, whether it's the fact that you know, we don't know the price is going to be whether it's the fact that they believe it doesn't have tangible value. And we can extrapolate this to other things as well that you think it doesn't have tangible value, other people think it does have tangible value. So whatever criticism
that they bring, you can extrapolate it to other things that the same group will allow and therefore we find that in reality, the aspects that they bring to criticize a Bitcoin are not strong enough to make it head on and also realize that the issue of cryptocurrencies is over
All a relatively new market, it's literally a decade old a decade and, you know, a year I mean, 11 years literally. And so there's a lot of controversies and don't be surprised if people's FET was changed or modified over time. A lot of people a lot of scholars are not really understanding what Bitcoin is and cryptocurrencies in general. And, you know, I advise those of you that are interested to basically do your own research by the way, each cryptocurrency it has a white paper that is authored by the people who have founded that particular cryptocurrency and the information about it is, is available online, this white paper it it throws light on a number of aspects, most
importantly the purpose behind the Bitcoin sorry, the purpose behind the crypto technology, the cryptocurrency and also the technology that is that is used. Now, the issue of Bitcoin in particular, there have been quite a lot of fuss was given about Bitcoin in particular, I am not aware of any detailed fatwah that has gone into cryptocurrencies overall I'm sure there are I just haven't come across them. cryptocurrencies is broader than Bitcoin. Bitcoin is the first and the most famous and as of today is the most expensive as of right now, it is the most expensive Bitcoin, but the fact was that had been given are particularly about Bitcoin, and you can extrapolate them to
Aetherium and to some of the more established coins. The problem comes, there's no question that because of the success of Bitcoin, a lot of cryptocurrencies have been formed that are completely useless, they are formed by unscrupulous people who basically want to enact a large Ponzi scheme, a Ponzi scheme is where you take the investment of the later group in order to pay off the earlier group so that it looks to the earlier group that a profit has been made, that people feel there's a profit being made. And so they come in the next wave is then used to pay the middle wave, and then the middle way makes a profit. And then when you get a very large profit, all of a sudden, somebody
disappears, the Ponzi scheme collapses. And it turns out, it was a huge fraud from the beginning. And this is named after one of the first people to do this. So Ponzi was his name, so called the Ponzi scheme, there's no question that some of the newer cryptocurrencies, many of them might actually be elaborate Ponzi schemes. However, just because some of these are many of these are Ponzi schemes, it doesn't mean that every one of them is so we don't throw out you know, all of the apples in the barrel just because one or two or even 10 Apples are bad or corrupted. We look at them you know, bit by bit bit by bit pun intended with Bitcoin and Bitcoin in particular, the field Council
has issued a fatwa by naming Bitcoin only, and we did not talk about the rest of the crypto currencies. Now, we can extrapolate as we said to the stable and the established currencies in the cryptocurrency market such as Aetherium, such as Cardano, such as tether these are established by now and the fifth Council's photo can easily be extrapolated to these ones as well basically any established coin that has a legitimate purpose and that is based on the block blockchain technology. It does appear that you know, once it is established and people are now actually using it in the real world, that inshallah it will meet the same criteria as Bitcoin. Now, as I said, The problem
comes these fatwas that make Bitcoin haram.
They use generic, generic things, generic matters, that are not themselves applied consistently to other matters. So for example, one of the biggest things that is mentioned is they say the price is speculative, we do not know one day is going to go high, the other is going to go low. And of course, so are the prices of stocks. So are the prices of currency trade, we do not know if there's a crises in let's say, Japan tomorrow, Japan, the Japanese yen and the American dollar, the the the exchange rate might change completely is very volatile, especially if a country is engaging in trade or civil war or something of this nature, things might happen. Just because it's speculative. It
does not make it how long the fact that the price is unknown, or the price might easily go up and down does not make the product haram or the issue haram. Another issue that is raised is that Bitcoin is not backed by a government Hence, it is not an established currency. And this is a semi valid point in that it is not backed by a government. But then the next issue hence it is not an established currency. That's where the big question mark comes because the Quran and Sunnah does not define what a currency is. And especially in our times, when pretty much all of the currencies are most of the currencies of the world are no longer linked to actual gold and silver. You know,
President Nixon in 1971. Famously, he delinked the US dollar from gold. And so what exactly is a currency what constitutes Mal? What can be used to be to exchange commodities?
or to use as the basic measure by which to buy and sell things, what has monetary value? Is it only gold and silver? Some folk AHA said that, by the way, and there are people even today calling for a return of the gold standard and the gold did not and, you know, I mean, utmost respect to them, I have nothing against that. And, you know, in some ways we'll lay it makes a lot of sense. I'm not against that. But that's not how the world actually works. And the American dollar and the British Pound sterling and you know, the Japanese yen, they are not linked to any actual commodity, they are quite literally printed by their governments, and people give value to them because they trust their
governments. So because of this, quite a number of folk Aha, even an early Islam even in medieval Islam, they did they they said that, that mal a monetary you know, currency does not have to be tangible per se, and many of the shafr scholars in my Masuda and others are of this opinion, even some of the modern Hanafuda move to talk Earth money is also of the opinion that if a non tangible item such as Heroku, or rights and benefits, attains value, according to the custom of the people, then it can be treated as Mal. And so Mufti Taqi and others, Imam zeuthen. Before him and whatnot, they say we look at the Earth, or the prevalent customs of the people, we look at what people do
business with. And if they give value to something, and if they consider something to be worthy of value, then it can in fact, gain that value. And the whole point of Bitcoin is to break away from centralized banks, those fuqaha, who criticize Bitcoin, by saying it's not backed up by a government with utmost respect, it's as if they've kind of lost the whole point of Bitcoin, because that is exactly what Satoshi the founder of Bitcoin actually intended, he wanted a currency that is decentralized, he wanted a currency that is not linked to any government government, because he felt that governments are manipulative, that governments are elitist that governments are themselves
inflating the value of their own currency by printing or not printing or doing whatever. So he wanted a currency that is truly global, and that has no one entity or cabal that monitors it. And he wanted a currency that would be decided its price would be decided by all of mankind, its market value will be equally everybody gets to decide how much you know, a bitcoin is worth not the elitist banks or the governments or whatnot, he wanted it to be a truly open democratic, if you like, system. So the notion of Bitcoin not being backed by a government is absolutely correct. But that's the whole point of the Bitcoin. So the claim that Bitcoin has imaginary value, I mean, to be cynical
here, the same can be said, to be brutally honest of the American dollar, or the British pound, that technically, I mean, if you were to use if you were to go to the jungles of you know, some land that has no fiat currency, and try to use these, this paper money, they would just look at you and say, what, what is this? What am I gonna do with this, right? And there's an example that, you know, has been given by a certain scholar who talked about Bitcoin, I forgot his name. Now, I'm not trying to take credit for this example. But I remember hearing this in a lecture that the example of Bitcoin somewhat is like when you go to an amusement park. And you at this, when you enter the amusement
park, you hand over some money, and you get some tokens. And these tokens are used for rides inside the amusement park, right, some rides have one coin, some rides have two coins. Now, these coins, they have value inside of the amusement park, and they have value within that system. And everybody understands when you're within that system, that this coin, this this token, it has value. However, outside of the amusement park, if you were to take this, you know token that is used in the amusement park, and you were to try to buy food outside of the amusement park, or you go to another place, they're going to just look at you what is this, we don't know what it is. So this token has
value amongst a certain group of people. And it has no value amongst another group of people. The fact that one group does not consider it to have value doesn't mean that it actually doesn't have value. And a simple example here that suppose you purchase, let's say, 10 of these tokens, you go to the amusement park, and you have 10 of these tokens, okay? And you want to play some games, and you know, you want to do some rides and whatever. And then all of a sudden, you know, your wife calls you up and says, Where are you? You have some guests coming. By the way, what are you doing at an amusement park without your wife, they're stuffed full of love. But anyway, hypothetical example.
Your wife calls you up and says, You need to be home and you have these 10 tokens, right? And you have to leave the amusement park. What if you were to sell these tokens?
On the spot to somebody else. And and suppose that that person didn't want to walk all the way back to the entrance. Suppose it's like, you know, Disney World, those of you that have been in a massive, you know, park and you don't use cash in there by the way you do not use actual cash, they have their own currency, you know, inside by the way this is real, they have their own currency, their own tokens and whatnot inside Disney World, right? So suppose that person didn't want to walk all the way 20 minutes. And those tokens, you purchase them for $10 You're like, Okay, I have these 10 tokens, you want them for 20 Instead of walking back, I have them right here. And suppose the
token place closed down. And now you have the tokens, you have the ability to sell them inside the park, is anybody gonna say that is haram, it's clear as hell, because you have the tokens, and this person wants to buy them. And according to you, and this person, this token has meaningful value, it has something that the people inside this park they, they they believe so what exactly constitutes fake currency, in reality, a currency is only as strong as the people who believe in it, and the more people believe in it, the stronger it becomes. So you now have established cryptocurrencies, Bitcoin is the most established and because it has a limited amount, and because it is having every
so many years and within, you know, a few decades, there will be no more Bitcoins to actually produce, right? So Bitcoins are being mined, if you know how they're produced. And so, once you purchase a Bitcoin, you are you know, or even a fraction of a Bitcoin, that is it, you are taking a permanent, you know, portion, and once the Bitcoin runs out, there will not be any more Bitcoins produced after that it's going to be bartering, it's going to be handing bitcoins over, back and forth. The same goes for Aetherium, and Cardano, and tether, and all of these major ones, that they do have value amongst the people who believe in them millions and millions of people. In fact, some
governments have now opened up the door to accept Bitcoin as their official currencies as well, a number of governments have begun this right. And so the claim that Bitcoin has no intrinsic value is simply the same as saying, you know, the, the money that is used inside of Disney World has no value. No, it does have value for the people who believe in it. By the way, just FYI, when it comes to Kryptos. And Bitcoin, there are two major categories of people, the first of them, well, there's a third, they don't want to get involved, that's fine, too, that actually involved the first of them, they want to get rich off of it in dollars or in their currency. So they want to buy when it's
dip, and then when it sell when it rises, right. And this is probably the majority of the people they want to buy. And this is in and of itself head on. Because it's like imagine if the Japanese yen and the American dollar, imagine if you felt because you were expert in Japanese, you know, foreign policy, you felt that, you know, the dollar is going to rise in power. So you invested in this in order to then mark it off of the Japanese yen, that's your speculation is highlighted in and of itself, you know, as long as it's done on the spot, and the money exchanges immediately it is halal. So if you do this with Bitcoin as well, it is intrinsically halal. Nothing wrong with that,
per se, but you have a second group of people. And these are called the hodlers ha de el Hodel. And that basically means you're going to hold on and never let go. And these people actually believe that Bitcoin and these other cryptocurrencies will eventually replace the dollar or if not replace, at least become an actual bonafide global currency. Now, that might seem far fetched. But if anybody's following what's going on in the world, day by day news keeps on coming out that seems to indicate that Bitcoin and Aetherium and these major brands really are situating themselves to become a de facto currency within maybe even a decade if not earlier than that. So what people used to
scoff at five, seven years ago, now, it seems to be pretty, pretty mainstream and perhaps even you will even see it in the near future. Anyway, the point being, that the the the claim that Bitcoin is haram, because it is imaginary or because it is speculative, or I mean, some people say is haram because Bitcoin is used for haram purposes. And again, this is I mean, with utmost respect whoever says this, I really think they haven't studied the basics of the reality of how Bitcoin is being used. Of course, Bitcoin is used for how long is cash not used for how long if it cash itself cannot cannot be used for how long? Of course it can to make something how long? Because you an evil person
is using it for how long makes no sense? It depends on the functionality in and of itself, currencies are neutral, and whether somebody uses them for good or evil, the currency itself were neutral. Now what this group says is that the anonymity
of the user is what makes it haram. And to respond to this one can say, you know, what, to any, the anonymity of a cash giver can also be you can come with a, you know, full reveal and give a cash over to some criminal or something. And even by the way, wire transfers. I mean, was it last year where almost $2 billion were, you know, wired via via, via an elaborate scam in Bugaloo. There's somewhere some of that there's some some major, you know, scandal happened. I mean, where there's a will there's a way to make all of bank money, how long meaning bank wire transfers, because somebody can use it for how long to make all of Kryptos or Bitcoin how long because people buy drugs or do
haram because of it. Again, it's not a it's not a legitimate reason to make the entire currency or the entire issue haram. These are simply like I said, the max that can be said, You tell the person to use it for halal. So the the the fatwa for the filth Council and others remains and and I myself, don't see any problem to rethink through this, that all of these issues that are being raised about Bitcoin and others, they have been responded to quite quite easily to be honest. And I really don't see the max that can be said, By the way, the fact that these counselors say that it is halal, like the full council, that doesn't mean that they are endorsing you to go and actually use it. They're
simply saying it's not haram. And in fact, in our field Council, we actually said at the very last line, is that we caution people to Yes, just because it's halal doesn't mean it's wise. There are two different things you can eat something can be halal, but unwise, so you have to yourself think about whether you want to get involved. Yes, it is a volatile market. And the Shetty does ask that you preserve your wealth, and therefore, what the advice that I would give is the advice that many people are giving, do not invest in cryptos and especially in Bitcoin and what and what not more than you can afford to lose, be cautious, and it is best to be cautious and if you want to avoid it
completely, no doubt that that will be the safest thing to do. Now as for other cryptocurrencies, as I said, this is a case by case basis. And
I don't think anybody can say that all cryptocurrencies are halal, because some of them are clearly Ponzi schemes. And some of them are clearly meant to deceive. Some of them are used for like they're meant to use for filth or pornography or how long so clearly, any crypto that is meant to be used for drugs and whatnot. So the purpose of it in other words, the name and the transaction, it is meant for how long there are specific niche specific a lot of people don't know this. There are niche specific cryptocurrencies. So for example, there's cryptocurrencies for a dentist that's a valid cryptocurrency. There's cryptocurrencies for the types of business transactions. There's
cryptocurrencies for a niche market. They're saying this is going to be the way forward, okay. I mean, I understand that, but there are cryptocurrencies for how long things as well, like drugs, like alcohol, like manufacture and whatnot. Clearly, those cryptocurrencies have no question about it. And they're also cryptocurrencies that seem to be very fake or Ponzi schemes, those two would be haram, but any currency that is based on your standard blockchain technology, and is established by large groups of people such that really it's impossible, really almost impossible, realistically impossible for it to collapse or become a Ponzi scheme. Generally speaking, the default of the
*ty I would still be that these types of things are halal, whether they're wise or not, that is up to you to decide. And the default position that I would say is that do not to get involved in Kryptos. Unless a you really know what you're doing. You have studied, you have done your job researching and then B, you only put it enough that you can really afford to lose if locka de la something were to happen then and it's a loss but it's not the end of your livelihood or life. So be wise to Shani, I want you to protect your income and savings. And so with that, I respect the the scholars who gave this photo I respect the council may Allah xojo An interest. I don't have to say
this, the country that said It is haram. Last week, the neighboring country, another Muslim majority country, their council said it is halal. So go figure you have two Muslim majority countries right. And one council said is haram and the council next door said it is halal. So again, with utmost respect to our all of our viewers here and to the people of the council, you have to decide who do you trust and you have to decide whether the person that you're listening to really does understand what cryptocurrencies and Bitcoin is and whether they've done the research and whether they're qualified to issue their verdict, you make that decision and then leave the rest don't worry respect
the other opinion and I respect to this council and the fact that it is given and you follow what you think is the better opinion will law who to add the item and with that inshallah we come to the conclusion of today's lecture. We'll continue with unlike the other in our next session until then, somebody you can work with to law wabarakatuh