Despite Bitcoin meeting the Sharīʿah definitions of wealth, several objections are often raised regarding its permissibility. This section addresses these objections, demonstrating that they do not undermine Bitcoin’s status as a valid and permissible asset under Islamic law.
One frequent objection is that Bitcoin is intangible, existing only as a digital construct within a decentralised network. Critics argue that tangibility is essential for an asset to qualify as wealth (māl) in Sharīʿah.
However, this argument does not hold upon closer scrutiny. Modern economies have accepted and normalised the sale of intangible assets such as software, domain names, e-books, and fiat currencies in their digital forms. Digital transactions of fiat currency, for example, consist of changes in electronic ledgers and are not tied to tangible cash. Yet, these transactions are widely regarded as valid, and contemporary scholars have generally not raised significant objections to their permissibility.
Moreover, classical jurists did not stipulate tangibility as a prerequisite for wealth. Their definitions, as cited earlier, focus on recognition (tamawwul) and storability (iddikhār). These criteria emphasise the functional and societal recognition of an asset rather than its physicality.
Overall, intangibility alone cannot disqualify Bitcoin from being permissible in Sharīʿah.
One common objection is that Bitcoin lacks intrinsic value. But what does intrinsic value mean, and is it even a requirement for permissibility in Sharīʿah? Classical jurists did not use intrinsic value as a criterion for wealth. Instead, they focused on conditions such as recognition as wealth by society (tamawwul) and the ability to be stored for future use (iddikhār). This raises the question: is not having intrinsic value a valid criticism of Bitcoin?
Critics often suggest that assets like gold and silver have intrinsic value. However, in reality, things only have value because people collectively agree to assign value to them.
Similarly, fiat currencies, despite lacking physical backing by gold or other hard assets, hold value because of trust and mutual agreement among people. Historically, fiat currencies were tokenised representations of gold and silver. Over time, this backing was abandoned, leaving fiat currencies without hard reserves. Critics of fiat currencies often highlight how this shift contributed to financial instability and crises.[1] However, fiat currencies remain widely accepted as wealth. This acceptance reinforces the notion that value is fundamentally a matter of societal consensus (ʿurf), not intrinsic characteristics.
In fact, the issue of intrinsic value is arguably a more significant critique of fiat currencies than of Bitcoin. Fiat currencies, which were once tokens for gold and silver, have since lost their backing and thus their intrinsic value, yet they continue to function as wealth. This demonstrates that intrinsic value is not a strict requirement for an asset to be recognised as wealth, even within Sharīʿah. Instead, societal recognition (ʿurf) plays the decisive role.
The critique of Bitcoin’s lack of intrinsic value often stems from its meteoric rise in valuation over the past 15 years, which some claim was driven primarily by speculation. Critics argue that its price increases are unstable and lack grounding in tangible assets. However, this view does not align with Sharīʿah definitions of wealth, which are centred on storability and custom, rather than intrinsic value.
Unlike fiat currencies, Bitcoin was never designed to be a token of another asset. Its value stems from its utility as a decentralised medium of exchange, its scarcity (limited to 21 million units), and its growing recognition as a store of value. This independence from hard backing makes Bitcoin more resilient to criticisms traditionally levelled against fiat currencies.
Some critics may attempt to analogise Bitcoin to intangible rights or usufructs, which Ḥanafī jurists typically restricted from independent sale unless attached to an underlying asset, i.e., Bitcoin should also be backed. However, Bitcoin fundamentally differs from these rights. While intangible rights fail to meet the Sharīʿah definition of wealth due to their lack of storability, Bitcoin fulfils these criteria. Furthermore, intangible rights were sometimes treated as wealth by the jurists due to custom (ʿurf). As Muftī Taqi Usmani explains:
The recognition of certain intangible rights as wealth by the jurists, despite their failure to fully meet the classical definition of wealth, was justified purely on the basis of custom (ʿurf). In contrast, Bitcoin not only enjoys clear and undeniable ʿurf but also fully satisfies the criteria of wealth in Sharīʿah, being recognised as wealth (tamawwul), storable (iddikhār), and permissible for use (taqawwum). Given that the jurists demonstrated leniency in categorising certain rights as wealth solely due to ʿurf, there is an even stronger case for recognising Bitcoin as wealth under Sharīʿah, especially as it comprehensively fulfils the classical definition. Any doubts about its status as wealth, therefore, are unwarranted.
Ultimately, Bitcoin’s value is not tied to tangibility or backing by another asset. Its acceptance, utility, and recognition as wealth align with Sharīʿah principles, which prioritises custom over intrinsic worth. Thus, the objection that Bitcoin lacks intrinsic value appears misplaced when evaluated against Sharīʿah principles.
A common criticism of Bitcoin is that it is not issued or regulated by any government, unlike fiat currencies. Critics argue that this lack of state endorsement undermines its legitimacy and stability as a currency. While government recognition can contribute to societal acceptance (ʿurf) of a currency, it is not a requirement in Sharīʿah for something to be considered valid wealth or a medium of exchange.
The jurists define wealth (māl) based on its recognition as wealth by society (tamawwul) and its ability to be stored for future use (iddikhār). None of these criteria require an asset to be issued or regulated by a government. Historically, during the time of the Prophet g, the Arabian Peninsula did not mint its own currency. Instead, the Arabs used gold dinars and silver dirhams minted by the Byzantine and Sassanian empires.[2] These coins were accepted and circulated widely among the Arabs due to the material worth of their gold and silver content, not out of allegiance to or recognition of the issuing rulers. In fact, they were traded based on their weight rather than any standardised nominal value assigned to the coins.[3]
The legitimacy of a currency in Sharīʿah has always been determined by its utility and acceptance within society, not by its source of issuance. Even after the first Islamic coins were minted during the Umayyad Caliphate under ʿAbd al-Malik ibn Marwān (d. 86),[4] the fundamental principle of acceptance through usage (ʿurf) remained central to defining currency.
Critics often argue that government endorsement ensures stability and legitimacy for currencies. While government involvement can facilitate trust in a currency, historical examples illustrate that government backing alone is not sufficient. Currencies experiencing hyperinflation, such as the Zimbabwean dollar or the Venezuelan bolívar, lost societal trust and ceased to function as mediums of exchange despite continued government support.[5] This demonstrates that societal recognition, not state regulation, is the decisive factor in establishing the legitimacy of an asset.
Governments also have vested interests in maintaining monopolies over money supplies, since control over currency issuance allows them to fund spending without immediate restraint, with the long-term costs borne by currency holders.[6] Bitcoin challenges this authority, which could explain why governments were often critical of Bitcoin. Despite this, Bitcoin gained significant societal recognition independently of state endorsement, illustrating that government backing is not a prerequisite for legitimacy.
Now, many governments have implicitly recognised Bitcoin’s value. For instance, Bitcoin is taxed by numerous countries, which demonstrates that governments consider it a valuable asset. Some nations, such as El Salvador, have gone further by recognising Bitcoin as legal tender.[7] Bitcoin’s legitimacy is also reflected in its adoption by financial institutions, the approval of Spot Bitcoin ETFs,[8] and its use as a reserve asset by certain countries, including the US.[9] These developments indicate that Bitcoin is increasingly being accepted within global financial systems.
Even in remote villages in India, people are investing in Bitcoin, reflecting its growing appeal across diverse demographics and regions. Bitcoin’s market capitalisation has surpassed the GDP of several sovereign nations,[10] further demonstrating its global significance. This level of societal recognition and adoption exceeds that of many fiat currencies, even without official government backing.
Ultimately, Bitcoin’s legitimacy stems from its utility, scarcity, and societal acceptance. While government endorsement can help foster acceptance, it is not a condition for an asset’s validity in Sharīʿah. Bitcoin’s decentralised nature and its widespread adoption affirm its status as legitimate wealth under Islamic law, irrespective of its relationship with governments.
Another objection raised against Bitcoin is that its price volatility constitutes excessive uncertainty (gharar), which is prohibited in Sharīʿah. Gharar refers to ambiguity or uncertainty in the subject matter or terms of a transaction, leading to potential injustice or exploitation. Examples cited by jurists include selling fish still in a pond or milk in a cow’s udder, where the existence or deliverability of the asset is uncertain. As described in Maydani’s (d. 1298) Lubāb:
Bitcoin, however, is not like such examples. Its existence, ownership, and transferability are guaranteed in every transaction, ensuring there is no ambiguity in deliverability or terms. Transactions involving Bitcoin are clear, immediate, and final, distinguishing them from the classical forms of gharar prohibited by Islamic law.
Volatility itself is not a new concept in Islamic jurisprudence. Historically, jurists addressed scenarios where fulūs (base metal coins) lost their value or became devalued (kasād).[11] This demonstrates that fulūs experienced volatility and yet were still treated as valid wealth when circulating. Their rulings evolved with changes in societal recognition, illustrating that volatility alone does not render an asset impermissible.
Volatility is evident in assets such as silver, which has fluctuated considerably over the years. Similarly, currencies like the Turkish lira and Venezuelan bolívar have undergone extreme depreciation and instability, yet their trade has not been cautioned by scholars. These examples show that volatility itself is not a factor for prohibition.
Sharīʿah also recognises the principle that risk and reward are intrinsic to trade, as characterised by the following juridical maxim:
Bitcoin’s volatility is a natural part of its adoption as a relatively new asset class and its limited market size. As its adoption and market capitalisation grow, its volatility has decreased, suggesting that this issue is transitional rather than inherent. While volatility may warrant caution as an investment, it does not affect Bitcoin’s permissibility under Sharīʿah. By contextualising Bitcoin’s volatility within the broader framework of permissible trade and historical precedents, it becomes clear that this objection does not render Bitcoin impermissible. On the contrary, its transparency, clear ownership, and recognition as wealth affirm its compliance with Sharīʿah principles.
Some opponents argue that Bitcoin is used for illicit activities, such as money laundering, tax evasion, and purchasing illegal goods. While it is true that Bitcoin has been misused in criminal enterprises, this does not inherently render it impermissible. Any tool or asset—whether cash, gold, or bank accounts—can be misused. Sharīʿah does not judge the permissibility of an asset based on the actions of some of its users but on the intrinsic characteristics of the asset itself. Bitcoin is a neutral technology, and its ethical use depends on the intentions and actions of its users.
Moreover, the notion that Bitcoin is predominantly used for illegal purposes is increasingly baseless. Studies show that only a tiny fraction of cryptocurrency transactions are linked to criminal activity,[12] with cash remaining the preferred medium for illicit enterprises due to its anonymity. Unlike cash, Bitcoin transactions are recorded on a transparent, decentralised ledger (the blockchain), allowing anyone to trace and verify activity. This transparency makes Bitcoin an impractical choice for criminals, as transactions remain permanently recorded and traceable, allowing authorities to monitor illicit activity more effectively than with cash.[13]
In conclusion, while Bitcoin has been misused in isolated instances, its transparent and decentralised nature discourages criminal activity and provides a high level of accountability. Its permissibility in Sharīʿah remains rooted in its intrinsic characteristics and legitimate uses, rather than the misdeeds of a minority of its users.
A commonly raised concern is that Bitcoin’s origin is unknown. The software was first released in 2009 by an individual using the pseudonym Satoshi Nakamoto, whose true identity has never been revealed. As such, some fear that it may be a conspiracy of the rich to enslave the poor, created by a malicious actor, or riddled with hidden backdoors, designed to eventually take control of the world’s wealth.
Beliefs and suspicions such as these may warrant caution on a personal level if a person finds them convincing, but they are not sufficient grounds for declaring Bitcoin impermissible unless substantiated by verifiable evidence. As outlined earlier, Bitcoin fulfils all the conditions of a valid asset in Sharīʿah and does not contain any inherently prohibited elements. It is therefore permissible in and of itself. If genuine harm were to be established, a ruling of impermissibility could be issued due to the external factor of public harm (mafsadah). However, that requires the harm to be real and evidenced, and not based on suspicion or conjecture.[14] The fears raised about Bitcoin’s origin, however sincerely held, appear to rest on precisely such unsubstantiated conjecture, as outlined below.
The anonymity of Bitcoin’s founder does not, in itself, imply deception or harm. Even if the founder had malicious intent, the tool must be judged by its actual effects. A person of questionable character may invent something beneficial, and that invention does not inherit the inventor’s moral flaws. Throughout Islamic history, Muslims adopted technologies, instruments, and systems from non-Muslim civilisations, assessing their permissibility based on usage and compliance with Sharīʿah, and not the background of the inventor.
Moreover, Bitcoin’s design is open-source and publicly auditable. Its code is transparent and has been examined by thousands of developers, cryptographers, and security researchers for over fifteen years. No major vulnerabilities or backdoors have ever been discovered. Furthermore, Bitcoin operates on a consensus model: no single person or authority can secretly change its rules. Any change must be accepted by the global community of users, node operators, and miners. This design—of transparency, decentralisation, and user-enforced rules—strongly suggests that the founder did not retain covert control. And even if malicious intent existed, it has not translated into any discovered threat within the system so far.
Bitcoin was deliberately designed to be trustless: users are given cryptographic and mathematical guarantees of ownership, and are not required to trust any third party to hold or transfer their wealth. The culture of “trust nothing, verify everything” extends throughout the Bitcoin ecosystem. For example, when downloading Bitcoin software, users are provided with cryptographic hash values (checksums) and digital signatures from developers, which can be used to verify that the file is authentic from the original creator and has not been altered or corrupted during transmission. Given this level of openness and global collaboration, it is reasonable to assume that any harmful features or vulnerabilities would have been identified long ago by the open-source community.
While the identity of Bitcoin’s creator remains unknown, the writings attributed to “Satoshi Nakamoto” offer insight into his apparent intentions. He was openly critical of central banks and the concentration of financial power, and expressed support for decentralisation, privacy, and financial autonomy.[15] These values are reflected in the very architecture of Bitcoin. Moreover, far from supporting it, most governments and centralised financial institutions in the West have opposed or sought to restrict Bitcoin, often portraying it as a threat to the current monetary system. This context makes the theory that Bitcoin was created by global elites or hostile powers appear less plausible.
Finally, even if these concerns about the founder’s identity once had merit, they have diminished over time. Bitcoin has been running independently for more than a decade and has grown far beyond its creator. The founder has long since disappeared from public view and has played no role in the network’s development for many years. Even if the founder were to reappear, he would have no power to impose changes unilaterally. Any attempt to alter the core rules would require widespread consensus from thousands of independent users and node operators. In short, Bitcoin has become a decentralised protocol governed by its users—not by its creator.
In summary, while caution around Bitcoin’s unknown origin is understandable, it does not amount to a valid basis for prohibition in Sharīʿah. The system’s open design, proven resilience, and lack of demonstrable harm offer strong reassurance that such fears, though common, are unfounded.
Ibn ʿĀbidīn, Muḥammad Amīn ibn ʿUmar (d. 1252). Radd al-Muḥtār ʿalā al-Durr al-Mukhtār. 2nd ed. Beirut: Dār al-Fikr, 1412 ah/1992 ce. 6 vols. (Accessed digitally via Shamela).
Marghīnānī, Burhān al-Dīn ʿAlī ibn Abī Bakr (d. 593). Al-Hidāyah fī Sharḥ Bidāyat al-Mubtadī. Edited by Ṭalāl Yūsuf. Beirut: Dār Iḥyā’ al-Turāth al-ʿArabī, n.d. 4 vols. (Accessed digitally via Shamela).
Maydānī, ʿAbd al-Ghanī al-Dimashqī al-Ḥanafī (d. 1298). Al-Lubāb fī Sharḥ al-Kitāb. Edited with notes by Muḥammad Muḥyī al-Dīn ʿAbd al-Ḥamīd. Beirut: Al-Maktabah al-ʿIlmiyyah, n.d. 4 vols. (Accessed digitally via Shamela).
Ammous, Saifedean. The Fiat Standard: Debt Slavery Alternative to Human Civilization. The Saif House, 2021.
Bates, Michael L. Islamic Coins. American Numismatic Society, 1982. Accessible via babel.hathitrust.org.
Kamali, Mohammad Hashim. Principles of Islamic Jurisprudence. 3rd rev. and enl. ed. Cambridge: The Islamic Texts Society, 2003.
Usmani, Muhammad Taqi. Fiqh al-Buyūʿ ʿalā al-Madhāhib al-Arbaʿah maʿa Taṭbīqātihi al-Muʿāṣirah Muqāranan bi’l-Qawānīn al-Waḍʿiyyah. Karachi: Maktaba Maʿārif al-Qur’ān, 2015 ce. 2 vols.
[1] For a detailed critique of fiat currencies and their historical development, see the Appendix of this paper. For further reading, consult chap. 1–3 of Saifedean Ammous, The Fiat Standard.
[2] For an introduction to the history on Islamic coinage, see Coins of Two Realms. AramcoWorld, June 15, 2015. aramcoworld.com; and Bates, Islamic Coins.
[3] Coins of Two Realms.
[4] Islamic Coins.
[5] See, for Zimbabwe and Venezuela respectively: Steve H. Hanke and Alex Kwok, “On the Measurement of Zimbabwe’s Hyperinflation,” Cato Journal 29, no. 2 (2009): 353–64. object.cato.org; and Venezuela’s Central Bank Releases Data Showing Dire Economy. Wall Street Journal, May 28, 2019. wsj.com.
[6] See Seigniorage and How Governments Profit from Issuing Money. European Central Bank, April 7, 2023. ecb.europa.eu; and Money Creation in the Modern Economy. Bank of England Quarterly Bulletin, March 14, 2014. bankofengland.co.uk.
[7] El Salvador Makes Bitcoin Legal Tender. BBC News, June 9, 2021. bbc.co.uk.
[8] U.S. SEC Approves First Bitcoin ETF. Reuters, January 10, 2024. reuters.com.
[9] The U.S. Government Is One Step Closer to Holding 1 Million Bitcoins. Forbes, November 11, 2024. forbes.com.
[10] The current market cap of Bitcoin is ≈ $2T. GDP Data from the World Bank website suggests that there are only 11 countries with GDP similar or higher than this figure. See “Bitcoin Market Capitalization”. CoinMarketCap, accessed January 31, 2025. coinmarketcap.com; and “GDP (Current US$)”, 2020. World Bank, accessed January 31, 2025. data.worldbank.org.
[11] Al-Hidāyah fī Sharḥ Bidāyat al-Mubtadī, 3:85.
[12] A report by a blockchain analytics firm found that illicit activity accounted for only 0.34% of all cryptocurrency transaction volume in 2023, highlighting that criminal use of cryptocurrency is minimal compared to its overall usage. This point is also affirmed by a report published by Europol on cryptocurrency–related crime. See The 2024 Crypto Crime Report. Chainalysis, January 18, 2024. chainalysis.com; and Cryptocurrencies: Tracing the Evolution of Criminal Finances. Europol Spotlight Report Series, updated January 26, 2022. europol.europa.eu.
[13] Blockchain analytics has proven highly effective in tracing cryptocurrency movements, even when users attempt to obscure their transactions. For examples, see Chainalysis in Action: US Government Agencies Seize More Than $1 Billion in Cryptocurrency. Chainalysis, November 5, 2020. chainalysis.com; and The $477 Million FTX Hack: A New Blockchain Trail. Elliptic, October 12, 2023. elliptic.co.
[14] This is based on the principle of maṣlaḥah. A useful overview can be found in Kiani, Principles of Islamic Jurisprudence, ch. 13.
[15] For Satoshi Nakamoto’s early writings and related commentary, see P2P Foundation Post. Nakamoto Institute. satoshi.nakamotoinstitute.org (accessed June 27, 2025); “Satoshi’s Views on Motives”. Nakamoto Institute. satoshi.nakamotoinstitute.org; and “Satoshi as a Libertarian?” Bitcoin.com. news.bitcoin.com.