Prospect of crypto currency in Islamic monetary perspective

Abstract

Money in Islamic and conventional perspective has specific requirements, and functions, such as stability of its values, and is based on real assets. Crypto currency is a virtual or digital money designed to use as a medium of exchange, a unit of account, and store of value to facilitate financial transactions. But it is not yet issued by government. It is different from fiat currency which is a real representation of wealth, and it is also different from e-money, which is a digital representation of fiat money. There are divergent opinions among Islamic scholars about the legality and permissibility of this future currency from an Islamic perspective. In fact, final recommendations on this complicated issue are still to be undertaken. This research paper intends to review how far crypto currency is permissible in Islamic monetary perspective to be used as money. The work starts by defining the concept of crypto currency and its functions as future money. It goes on to discuss the concept of money and its functions from gold and silver money to fiat money and virtual or digital money. An important aspect related to crypto currency in Islamic monetary policy is whether it qualifies or not to be used as a medium of exchange, a unit of account, and store of value. This work attempts to show that crypto currency does not deserve to be used as money because it has not been issued by the recognized authority. Using inductive, and descriptive research methodologies, the author reviews several works and fatwas that have discussed the legal issues related to contemporary electronic money matters. This work goes further by identifying conditions that should be met in anything to be considered as money in both conventional and Islamic monetary perspectives. The work concludes by recommending that Islamic scholars take these observations into consideration when issuing fatwas related to future electronic and virtual monies.