This article seeks to explore the Fatwas of Shiite faqihs (well-qualified religious authorities/experts on Islamic Jurisprudence) regarding digital currency such as Bitcoin so that Shiite believers know how to treat such a new phenomenon.
As written contracts failed to meet the increasing public desire to establish mutually fruitful economic relations, the great product of the modern world i.e. E. Commerce was developed, following the invention of telephone, Fax etc., from within the chaotic world of business to fill the gap.
The coincidence of the rapid development of this modern form of business with the globalization of the economy which is supported and joined by many nations along with the increasing number of Internet users worldwide have turned E-commerce into a meta-systemic form of business which is inextricably linked to the daily life of human beings.
The history of E-commerce, i.e. the application of new electronic technologies into business affairs dates back to many years ago. Using Internet for business activities offers great benefits for its users including a considerable decrease in their costs which would become even less with the development of the World Wide Web. However, uncertainty is a common disadvantage of such newly emerged forms of transactions which would provide the ground for fraudulence. Bitcoin, with no paper note or actual coin version, is a cryp to currency and a network-based digital payment system in which transactions are done through the Internet when verified by the users.
This article seeks to explore the Fatwas of Shiite faqihs (well-qualified religious authorities/experts on Islamic Jurisprudence) regarding this digital currency so that Shiite believers know how to treat such a new phenomenon.
Digital cash, like any other new phenomenon, has its own pros and cons. However, contemporary Shiite marāji’s opinion differ in this regard; some, like Grand Ayatollah Sayyid Ali Sistani and Iranian Supreme Leader, Ayatollah Sayyid Ali Khamenei have expressed their views on the issue in such a way that, taking the current literature on Islamic Jurisprudence into account, their opinions could be construed as follows:”Should the followers of these two Grand Ayatollahs want to make any transaction through Bitcoin, they need to act based on the fatwa of the next marja whom they may choose to follow”. In other words, the office of Iranian Supreme leader has neither confirmed nor denied the use of Bitcoin for business transactions (Istifta (asking for fatwa on a given topic) No. 430401), but Grand Ayatollah Sayyid Ali Sistani’s office with its special language on some topics such as network marketing, says: “the Ayatollah does not permit such a transaction”.
However, some of the marāji such as Ayatollah Shobeiri Zanja believe that if the following two conditions are met, transactions through Bitcoin are permissible: first, any credit must be earned in return for a religiously allowed activity, i.e. the individual’s credits in this form of investment should be increased not through fraud or illegal activities, but based on religiously allowed ones; and second, the transactions based on this type of digital currency must not be against the common rules and regulations of the country in which the deal is made.
As long as the aforementioned conditions are not met, any transaction through Bitcoin is not permitted for the believers who themselves are responsible for the enquiry about the plausibility of the conditions whatsoever. The text of the Ayatollah’s fatwa is as follows: “Should the revenue earned in return for a religiously allowed activity and the action is in accordance with the rules and regulations of the target country, such a transaction is not religiously illegal” (question No.41850). Moreover, in response to a new Istifta which was recently published in his Telegram channel, he added a new condition as the prerequisite for Bitcoin-based transactions: “Should the use of such digital currencies leads into any financial corruption or should it be against the law, any transaction through them is not permitted”. In other words, if trading such digital currencies makes any financial trouble for the individuals and/or society, the Ayatollah does not permit any transaction based on them.
As digital currencies are fiduciary in nature, they carry many investment risks and the fact that they may lead to the despoliation of the assets of the Islamic community is really worrisome. Therefore, the followers of Ayatollah Shobeiri Zanjani should be wary of the potential financial disadvantages of trading digital currencies and to avoid being engaged in such corrupt activities.
Meanwhile, many of the Shiite marāji such as Ayatollah Wahid Khorasani, Ayatollah Safi Golpaygani, Ayatollah Makarem Shirazi, Ayatollah Hashemi Shahroudi, and Ayatollah Nouri Hamedani have, taking what follows into consideration, issued a fatwa against such a trade and declared it as Haram or religiously forbidden. In other words, these Ayatollahs have declared Bitcoin trade as Haram considering the uncertainties and the following problems regarding such digital currencies:
First problem: the mining process and its consistency with the Islamic jurisprudence is not clear. Moreover, as Bitcoin networks are decentralized, there is no supportive and responsible structure backing such a currency up while in common monetary systems, central banks and financial institutions carry the responsibility for all transactions. In Bitcoin there is no responsible official to account for the transactions which are irrevocable and thus there is no way to redeem one’s assets if they are mistakably lost.
Second problem: the fact that using Bitcoin is totally forbidden in Russia and that there are many legal constraints for using it in such economic world powers as the United States and China are regarded as some other proofs for the suspicious nature of such a digital currency. Moreover, no central bank in EU has verified the validity of Bitcoin so far.
Third problem: there are many reports delivered to the offices of the marāji indicating huge misuses of the profiteers and the losses sustained by a wide range of people in trading Bitcoin.
Taking the three aforementioned problems into accounts, the following Ayatollahs have issued fatwas against Bitcoin:
“Considering many uncertainties and ambiguities regarding Bitcoin including the fact that mining source of this currency is not clear and that it has not been recognized by many states, and taking into account that the currency has provided the ground for many misuses and swindles, its trading is therefore not permitted” (full text of Ayatollah Makarem Shirazi’s fatwa).
“Trading Bitcoin is religiously invalid” (Ayatollah Wahid Khorasani).
“It is a clear example of illegal earnings and it is religiously forbidden (Haram) accordingly. Allah is the One and Only Knower” (Ayatollah Safi Golpaygani).
“Regarding many uncertainties over such a trade, using Bitcoin is not permitted” (Ayatollah Hashemi Shahroudi)
“Engaging in such dealings is not permitted” (Ayatollah Nouri Hamedani).