Alwaght- The Egyptian Grand Mufti has issued an official fatwa, banning bitcoin which soared in value over the $20,000 mark in December. Trade in cryptocurrency is similar to gambling, which is forbidden in Islam, he said.
Mufti Allam referred that Bitcoin is one of virtual banking currency, or a digital currency, which first appeared in 2009, created and held electronically, and is not available in a physical form.
He was quoted by Egyptian media as saying that Bitcoin is a virtual currency, not backed by any tangible asset, and can be issued without any control and without relying on any centralized authority, adding that it does not undergo any surveillance or financial institutions, as it depends on internet trading without any control. He indicated the risks that could arise as a result of this lack of surveillance.
“It is not the first of its kind in the currency exchange market; there are many other digital currencies known as cryptocurrency,” Allam stated.
The Mufti also pointed out that Bitcoins are “mined” or can be bought using actual money. Bitcoin can be mined using specific computer software and mathematical formulas designed by the Bitcoin founder, who remains anonymous.
Simply put, one uses their PC or laptop to download a program that utilizes the machine’s horsepower to go through certain processes and solve some formulas, and depending on how much data the machine processes, one, accordingly, gets paid in Bitcoins. To protect the Bitcoin system, only a certain previously-specified amount of Bitcoins can ever be created. The crypto currency can be used to carry out transactions. The fact that only a certain amount of them are out there and that they can be used to carry out transactions has made the coin’s value go up.
He stressed that he met with economic experts to reach a final decision regarding the Bitcoin by analyzing its effect on the economy.
In November, Turkey’s highest religious authority – the Directorate of Religious Affairs, also known as the Diyanet – declared that buying and selling of digital currencies is at odds with its religion due to its lack of regulation and close connection to criminal activities.
Last year saw cryptocurrencies steal the headlines and take retail investors on a rollercoaster ride. Despite declines in December, bitcoin has seen a remarkable rise over the course of 2017, during which its price increased by over 1,300 percent.
