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Investing into Bitcoin

Answered as per Hanafi Fiqh by DarulIftaBirmingham

Answered by:  Maulana Jamal Ahmed​


Nowadays many people are investing in bitcoins and other cryptocurrencies. Many leading financial institutions have warned that it is very risky and all these currencies may appear one day and it’s similar to a pyramid scheme. However, it is growing very fast and may become a 1 trillion dollar industry soon.

Most of the developers for these currencies are anonymous and have no backing from the governments around the world. So no real wealth is created, rather it goes from one pocket to another when new people invest. Would it be permissible? Please consider answering it because its a contemporary issue which requires high attention and sound judgement.

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم

In the name of Allah, the Most Gracious, the Most Merciful 


In Islam there are two types of money: 1) Natural money 2) Customary money

  1. Natural money refers to gold and silver which have intrinsic monetary value, they can also be used for other purposes such as jewellery.

  2. Customary money is of two types: 1) Commodity money which has natural value allowing it to have other uses such as salt, grains etc. but they do not have an intrinsic monetary value. A commodity can be acceptable money in shariah if people attribute monetary value to it. 2) Fiat money, this does not have any value of its own nor does it have an intrinsic monetary value. Fiat money gets its value from a government order which is acceptable in shariah


For an item to be accepted in shariah as money (medium of exchange) it needs to fulfil three conditions.

  1. It needs to be considered as Maal in shariah.  Maal is “what is

normally desired and can be stored up and can be retrieved for the

time of need.

  1. It must possess legal value (taqawwum). This refers to an item being lawful to use in shariah.

  2. It must have monetary value (Thamaniyyah).  This means that money must have two critical functions.1) Independent standard of value, this means that it should independently price and valuate goods along with having stability and widespread acceptance. 2) Unit of account, this refers to being a primary reference point and yardstick for people to use to post prices and record debts. It is a thing that goods and services are priced in.


Bitcoin fails to fulfil these criteria due to its many risks and volatility.  Mufti Faraz Adam says: “Considering all of the above, it is difficult to argue at the current stage that Bitcoin is currency proper in Islamic law due to the following reasons:

1. Bitcoin falls short of possessing Thamaniyyah. (monetary value)  

2. There is doubt in Bitcoin being money. The legal maxim states that the Aṣl and foundational premise in temporary attributes and changeable state (ṣifāt ‘āriḍa) is that of non-existence (al-‘adm) thus, for other than gold and silver, the currency is a changeable state; it is not a permanent attribute. Considering the legal maxim, currency cannot be attributed to Bitcoin unless there is sufficient evidence to suggest otherwise.

3. The number of risks associated with Bitcoin undermines the very reasons and objectives money was created to serve.

4. Bitcoin fails to uphold the Maqāṣid al-Shariah (objectives of Shariyah) with respect to wealth (which is to create stability in the society). 

5. The tendency to invest in Bitcoin as opposed to using it as a medium of exchange shows that there is no overriding and encompassing ‘Urf (custom) to consider Bitcoin as money. 

According to this opinion, Bitcoin would qualify as a digital asset (Mal) which possesses value (Taqawwum).

From a purely fiqh and Islamic law perspective, investing in Bitcoin and the return could be considered lawful based on this opinion. 

However, he concludes with the following remarks:

“Bitcoin was further assessed in terms of the principles of Islamic moral economy. A key theme and objective of Islamic moral economy are embedded financing and investments linked to the real economy. Bitcoin and cryptocurrency investments do not serve the real economy and do not promote real growth of an economy. Therefore, considering the overarching principles of Islamic moral economy and the established principles of investing in the real economy, one should consider the different arguments before making long-term, concentrated investments in digital assets which are not linked to the real economy. Concentrating all of one’s wealth into digital assets can have more harm for society than good. Investing in such assets are fuelled by profit and utility maximization. Investing in Bitcoin does not benefit the society nor the real economy; Bitcoin investments do not boost services, labour nor the production of goods.

Nevertheless, any return on Bitcoin investments would be lawful and Shariah-compliant according to this argument.

For more details you can refer to his book called ‘Bitcoin: Shariah-compliant?’  you can download it from the following link: Research Paper on Bitcoin – Mufti Faraz Adam

Only Allah knows best.

Written by Maulana Jamal Ahmed

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham

This answer was collected from DarulIftaBirmingham.co.uk, which is run under the supervision of Mufti Mohammed Tosir Miah from the United Kingdom.

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