Bitcoin In Islam
Is Bitcoin HALAL In Islam?
Due to its immature nature, with very high price fluctuations, many people are wondering, is Bitcoin kosher according to Islamic Shari’a?
Before examining whether Bitcoin is halal or haram in Islam, let us first look at the various intricacies of Bitcoin. Later on, these things will also help understand this digital currency-related understanding.
Definition of Bitcoin
Bit is a unit to determine the sub-unit of Bitcoin value. 1 unit BTC = 1,000,000 (1 million) bits.
Bitcoin is a “Virtual (Digital)” currency created by Satoshi Nakamoto in 2009, using the Blockchain protocol consensus. Bitcoin has characteristics like Fiat currency (Dollar, Rupiah, etc), but can be used with the Virtual path.
Blockchain. 1 block average created in 10 minutes and contains millions of transactions in it.
BTC. Unit of Bitcoin units.
Wallet (Wallet). A Wallet or a Bitcoin Wallet basically has the same characteristics as a conventional bank account. With a specific access tool, Wallet owners can save, receive, and spend their BTCs.
Confirmation. It is a consensus process undertaken by Bitcoin miners on the network, required for the implementation of related transactions.
Cryptography. It is a mathematical science that can be used for high-level security functions. Cryptography is usually used for encrypting data so that others can not abuse it.
Private Key. Confidential data that permits ownership of a Bitcoin wallet.
Miners and Mining. Bitcoin mining is a consensus process by using computational hardware, to perform complex calculations, in return for Rewards in the form of BTC for each resource used. While Miner is the perpetrator of Bitcoin mining.
Signature. It is a mathematical mechanism to enable users to prove ownership of related funds (transactions).
Instant Transfer by P2P (Peer-to-Peer).
Small transfer costs (before any scalability issues occur).
Transactions are irreversible (irreversible). Transactions are pseudonymous.
The amount is limited, Maximum 21 Million Units.
The new Bitcoin unit can be released by a process called Mining or Mining. Miners will use high-capacity hardware, in completing the complex math provided by the network (SHA256 encryption). For 1 created block was once rewarded (50 rewards) BTC units. As the number continues to close to the maximum, Reward continues to be lowered. Currently, the reward per block is 25 BTC units.
Bitcoin security supported by blockchain technology as a base has proven to be safe, starting from its creation. Additionally, any transaction data that has already occurred from the first launch is still neatly stored on all network nodes.
Bitcoin Transaction Process in Indonesia
Having a conventional bank transaction account such as BCA, BNI, and others.
Register on the Exchange site or Bitcoin Exchange (eg: indodax, triv, etc).
Purchases and Sales can be made on the exchange (exchange).
Bitcoin is a tool of transactions.
The majority of governments and the world’s regulators have not (not) recognized Bitcoin as the official currency or exchange instrument, including Bank Indonesia (BI).
Bitcoin transaction processing scheme is very similar to Forex, that is investment can be done by way of buying and selling online.
In some countries, Bitcoin is classified as Digital Assets.
The Provisions of Islam (Fiqh) About Bitcoin
In a paper made by the Chairman of the Da’wah Commission of Indonesian Ulema Council (MUI), KH. Cholil Nafis said that some scholars have agreed that Bitcoin has the same function of money as a medium of exchange accepted by the general public, and can serve as a standard of value, as well as a store of saving value. However, some other scholars still have not approved it because there are still many countries that reject the presence of Bitcoin.
KH. Cholil also explained the definition of money according to Buhuts Fi Al-Iqtishad Al-Islami. “Money is anything that becomes a medium of exchange, generally accepted, in any form and condition”. Then, he adds that the buy/sell currency transaction is allowed from:
Terms of Bank Indonesia
Bank Indonesia (BI) has strictly prohibited the use of Bitcoin in every transaction in Indonesia, as it is not a legitimate means of exchange, and Bitcoin’s high fluctuations are harmful to the public.
So, Is Bitcoin Halal In Islam? Of the various equations above, KH Cholil concluded that the law of Bitcoin according to Islamic Shari’a as a medium of exchange is Mubah (may be done), for those who are willing to acknowledge and use it. Thus, the risks that the dealer (investment) entities are fully borne by each, without any guarantee of protection from the state.