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Halal or Haram: what is forbidden and what is allowed in Islam working with cryptocurrencies

The issue of the permissibility of using cryptocurrencies in the Muslim world has been discussed since the advent of Bitcoin. We have already talked about how Sharia law regulates the use of cryptocurrencies in Islamic finance. Halal or Haram? In this article, we will answer the main questions that Muslims have when using blockchain and participating in cryptocurrency projects.

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Is the PoS (Proof-of-Stake) algorithm halal?

In the PoS model, a user is selected as a node in the network only if he has a certain number of coins in his wallet. New blocks in PoS blockchains are created in proportion to the number of coins based on the wallet. For example, if you own 10% of all coins, then you get the opportunity to mine 10% of new blocks. There is no contradiction in this from the point of view of Fiqh, since someone’s coins are not played. Coin reserves are used to determine who will mine new blocks. The reward also does not come from other users who give their coins away.

Is it allowed to buy new cryptocurrency projects immediately after their placement on the exchange and sell them to get a quick profit?

Reputable Ulemas say that it is permissible to engage in cryptocurrency business if it complies with the rules and does not harm the economic system. According to the verdict, it is allowed to participate in such business. A quick profit does not change the reality of the business.

Is it allowed to invest in projects using cryptocurrencies as an investment asset?

According to many leading islamic scientists, investing in cryptocurrencies is allowed, but obtaining a fixed profit is not allowed, since this is a kind of usury. Your investments should bring you a percentage of the profit, if any. A fixed amount of income is not allowed.

Is it acceptable for a Muslim to be a professional broker buying and selling cryptocurrency?

The answer to this question depends on what kind of cryptocurrency you want to trade. If the cryptocurrency has a confirmed Fatwa and is considered halal, the decision on brokerage does not contradict the norms of Islamic finance.

Is it allowed to buy tokens for investment purposes. Is making a profit from their sale considered riba?

If the company rewards you with a large number of tokens, if you do business with them, attract more customers, then you are allowed to receive remuneration. Of course, this applies investing only into legitimate businesses.

Is it possible to receive payments using cryptocurrency in those countries where cryptocurrency is prohibited?

Muslims are not allowed to violate the laws of non-Muslim countries after they have committed to comply with them when applying for a visa or residence permit, etc. Obviously, the law should not violate Islamic rules.

Is it acceptable to make a living trading cryptocurrency? Yes, if it is done in accordance with the rules of Islam.

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