Islamic Perspective – Crypto Currency Observations

In Muslim countries, which are bound to Islamic teaching, the permissibility of cryptocurrency is an important issue in the Islamic perspective. So far, no single Muslim country permits cryptocurrency for legal transactions. While it is quite difficult to identify the purpose of using specific money, in the case of cryptocurrency, such as Bitcoin, most users have a speculative motive to gaining profit instead of for exchange as with money. This is interesting, as the characteristic of cryptocurrency may not be liquid and stable for conversion. In the case of supply, not all cryptocurrencies have a sufficient supply to cover all transactions. In addition, this must be supported by available online merchants, especially for electronic transactions. The last issue is stability. Cryptocurrency is more volatile than the S&P itself. This result is also consistent with robustness tests. Users must be aware of these characteristics. Therefore, cryptocurrency may be classified as a medium of exchange of digital currency rather than money for this category. Money has flexible characteristics from cryptocurrency and its stability can be intervened by the government.