In the name of Allah, the inspirer of truth
Since its inception in 2008, Bitcoin has grown from an obscure digital experiment to a globally recognised asset, facilitating transactions worth billions of dollars daily. Alongside Bitcoin, thousands of other cryptocurrencies have emerged, each with varying levels of adoption and legitimacy. Their rapid rise has sparked intense debate—some see them as the foundation of a new financial era, while others dismiss them as speculative bubbles or instruments of financial instability.
Muslims, like much of the wider public, have largely approached cryptocurrencies with caution. Many scholars have hesitated to issue verdicts, often citing uncertainty regarding their nature and function. Where objections have been raised, they typically centre on concerns about Bitcoin’s substance, its classification under Sharīʿah, or its potential misuse. However, these discussions frequently rely on assumptions rather than a principled legal analysis.
This paper presents a structured Islamic assessment of Bitcoin’s permissibility. It begins by outlining the fundamental criteria for wealth, as established by the Ḥanafī jurists. These principles are then applied to Bitcoin, evaluating whether it meets the conditions required to be recognised as wealth in Islamic law. The discussion further examines Bitcoin’s classification—whether it qualifies as a currency (thaman) or remains an asset (ʿarḍ). Finally, common objections to Bitcoin’s permissibility are addressed, including concerns over its intangibility, volatility, and potential misuse. Two appendices are included at the end of this paper: one explains how Bitcoin works, and the other provides an overview of the modern financial system it challenges.
Any errors in this work are my own, and any truth it contains is from Allah, the Most High. May He grant us clarity and understanding in new matters and guide us to what is most beneficial.
To evaluate Bitcoin’s permissibility, it is necessary to establish the principles in Islamic law that determine whether an asset is valid and permissible. Classical jurists have laid out comprehensive definitions of wealth (māl) and value (taqawwum), which serve as the foundation for analysing new and unconventional assets.
The jurists describe wealth as something recognised by society, permissible for use, and capable of being stored. In Al-Baḥr al-Rā’iq, Ibn Nujaym (d. 970) cites from Al-Kashf al-Kabīr:0F[1]
وَفِي الْكَشْفِ الْكَبِيرِ الْمَالُ مَا يَمِيلُ إلَيْهِ الطَّبْعُ وَيُمْكِنُ ادِّخَارُهُ لِوَقْتِ الْحَاجَةِ وَالْمَالِيَّةُ إنَّمَا ثَبَتَ بِتَمَوُّلِ النَّاسِ كَافَّةً أَوْ بِتَقَوُّمِ الْبَعْضِ
“Wealth is that which people incline towards and can store for times of need. Its status as wealth is established by the recognition of all or some people (tamawwul al-nās kāffah aw baʿḍuhum).” (Al-Baḥr al-Rā’iq, 5:277)
Ibn ʿĀbidīn (d. 1252), in Radd al-Muḥtār, expands on this understanding:
الْمُرَادُ بِالْمَالِ مَا يَمِيلُ إلَيْهِ الطَّبْعُ وَيُمْكِنُ ادِّخَارُهُ لِوَقْتِ الْحَاجَةِ، وَالْمَالِيَّةُ تَثْبُتُ بِتَمَوُّلِ النَّاسِ كَافَّةً أَوْ بَعْضِهِمْ، وَالتَّقَوُّمُ يَثْبُتُ بِهَا وَبِإِبَاحَةِ الِانْتِفَاعِ بِهِ شَرْعًا؛ فَمَا يُبَاحُ بِلَا تَمَوُّلٍ لَا يَكُونُ مَالًا كَحَبَّةِ حِنْطَةٍ وَمَا يُتَمَوَّلُ بِلَا إبَاحَةِ انْتِفَاعٍ لَا يَكُونُ مُتَقَوِّمًا كَالْخَمْرِ، وَإِذَا عُدِمَ الْأَمْرَانِ لَمْ يَثْبُتْ وَاحِدٌ مِنْهُمَا كَالدَّمِ بَحْرٌ مُلَخَّصًا عَنْ الْكَشْفِ الْكَبِيرِ.
“Wealth (māl) is that which people incline towards and which can be stored for times of need. Its status as wealth is established either through universal recognition as wealth or partial recognition (tamawwul al-nās kāffah aw baʿḍuhum), and value (taqawwum) is affirmed by these as well as by permissibility of use in Sharīʿah. If something is permissible to use but not regarded as wealth by people, such as a single grain of wheat, it is not considered wealth. Similarly, if it is regarded as wealth but its use is prohibited, such as wine, it does not have value…” (Radd al-Muḥtār, 4:501).
The Majallah echoes these criteria, stating in Article 126:
مجلة الأحكام العدلية (ص: 31) (الْمَادَّةُ 126) (الْمَالُ هُوَ مَا يَمِيلُ إلَيْهِ طَبْعُ الْإِنْسَانِ وَيُمْكِنُ ادِّخَارُهُ إلَى وَقْتِ الْحَاجَةِ مَنْقُولًا كَانَ أَوْ غَيْرَ مَنْقُولٍ)
“Wealth is what people incline towards and can store for times of need, whether movable or immovable.” (Majallat al-Aḥkām al-ʿAdliyyah, 31)
From these texts, three primary conditions emerge for an item to qualify as wealth in Sharīʿah:
These criteria are principled and flexible, capable of encompassing both conventional and unconventional assets that meet these definitions.
When applying these principles to Bitcoin, the following observations can be made:
First, Bitcoin is globally recognised as a store of value and a medium of exchange, with increasing adoption across various industries and financial markets. The recognition of Bitcoin, even if not universal, satisfies the condition of tamawwul as articulated by the jurists. The reference in the above texts to partial recognition is especially relevant here, as Bitcoin’s value is acknowledged by a substantial and growing number of people.
Second, Bitcoin exists digitally and can be securely stored in digital wallets. Its ability to be saved and used at a later time for transactions or investment aligns with the condition of iddikhār.
Finally, Bitcoin itself does not inherently involve prohibited elements such as interest (ribā) or gambling (maysir). Its permissibility depends on its use, similar to fiat currencies or other assets, which can be used in both permissible and impermissible ways.
These points collectively demonstrate that Bitcoin conforms to the Sharīʿah definitions of wealth and value, providing a basis for its consideration as a legitimate asset under Islamic law. While objections such as its intangibility or perceived lack of intrinsic value may arise, these will be addressed in subsequent sections.
[1] ʿAbd al-ʿAzīz al-Bukhārī (d. 730), Kashf al-Asrār, 1:268. Some scholars refer to this book as Kashf al-Kabīr, see Qāsim ibn Qutlūbughā’ (d. 879), Tāj al-Tarājim, 1:361, and Ibn al-ʿImād al-Ḥanbalī (d. 1089), Shadharāt al-Dhahab, 10:53.