To begin with, the world today is or can be said to have rapidly changed over the last few decades. The new Millennium ushered in a much more sophisticated way of doing things which owed its success to the technological inventions and innovations as well as a paradigm shift into the world of Information Technology.
Nine years ago, the Bitcoin AKA cryptocurrency or electronic money was introduced by Sakoshi Makamoto and had been a force to reckon with in the international economic market. Bitcoin tends to give its users a self-independent trading status. In other words, there would be absolutely no controlling body like the Central Bank to help regulate your affairs. Thus, one can transact as many businesses and trades as you like. This flexibility goes a long way in making Bitcoin a household name on the lips of everyone.
THE ISLAMIC BANKING AND FINANCE
The Islamic banking and finance as an economic institution that conforms and withholds the economic practices of the Shariah had been in existence for a very long time. Its wings had spread from Islamic countries to even the Western world since the last millennium. Islamic Banking follows a strict adherence to pure Islamic economic policies like the Mudarabah (Profit and Loss sharing), Wadiah (Safe Keeping), Musharakah (Joint Venture), Murabarah (Cost-plus), and the Ijara (Leasing).
Financial practices like Riba or Usury (Interest on loans) is highly prohibited and seen as Haram. Notwithstanding, investing in Haram investments and businesses like a liquid store or pork meat shop or stand are also prohibited and tagged as Haram.
IS BITCOIN HALAL OR HARAM?
To a very large extent, Bitcoin can be viewed as two sides of the same coin. As a payment gateway, Bitcoin is very halal. But it doesn’t meet the requirements of being called money in Islamic Banking, thus it is Haram.
BITCOIN INTRODUCTION INTO THE ISLAMIC BANKING SYSTEM
After all said and done, we all would agree that Bitcoin is the new face of online international market and business. After its introduction, it had generally received a great number of accolades and overwhelming likes with millions of people all over the world transacting and conducting their businesses with the new virtual money.
Meanwhile, the Islamic Banking had made quite an impression in the world economic growth. Even the stiff competition it Western counterparts seem to throw on its path, it had still managed to sail past the storm. The first ever International Monetary Fund’s executive board meeting on Islamic Banking and Finance is a very good example. The fusion of the Bitcoin and Islamic Banking and Finance was first perceived by Charles W. Evans in his research paper, “Bitcoin in Islamic Banking and Finance”.
According to the paper “Bitcoin in Islamic Banking and Finance” by Charles W. Evans, “The relationship between a distributed, autonomous Blockchain management systems (BMS) like Bitcoin—also referred to as a ‘virtual currency’—and Islamic Banking and Finance (IBF). It shows that a BMS can conform with the prohibition of riba (usury)—as Bitcoin does—and incorporate the principles of maslaha (social benefits of positive externalities) and mutual risk-sharing (as opposed to risk-shifting). With regard to maslaha, the world’s unbanked number in the billions and represent the majority of the world’s adults.”
Therefore, the operation of Bitcoin in the Islamic Banking system is a great idea which promises to thrive and adapt with the system. This can be seen in the United Arab Emirates, with the introduction of BitOasis which serves as the Bitcoin exchange. The BitOasis also operates in other Islamic countries like Qatar, Kuwait, Bahrain, and Saudi Arabia. This had been highly successful since its establishment and had cemented the fact that both the Bitcoin and the Islamic Banking and Finance can coexist in one environment.
To sum it up, Bitcoin does not only provide a stress free trading and transaction but also an assurance over your business. It is safe and particularly fast. All these attributes make it one of the fastest growing payment gateway and virtual currency in the world at large.