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  1. 2 points
    Mufasa

    Cryptocurrencies: THE FUTURE IS HERE

    I've been doing a lot of research on cryptocurrencies over the last few days. The most popular of these currencies is obviously Bitcoin, which has been in the news much. Many feel that they are too late to the game- but there are a ton of currencies out there that are just beginning to surge, and actually provide much more promising models than Bitcoin (which happens simply to be the first and therefore has name-recognition, but is not necessarily the best). Now, I don't have much money to actually invest, but I also don't have many expenses, so I am thinking to invest a very [very] modest amount. Anyone investing in cryptocurrencies should tread carefully and acknowledge that we do not know the futures of these currencies. They could all crash. Or, we could have a situation as with Bitcoin, where people who invested hundreds could today be millionaires. Of course, it will probably be something more modest and nuanced. I would be happy to share insightful articles/forecasts if others are interested. My major hold-back at this point, however, is the Islamic issue -- whether they are halal, haram, or something in between. I have seen mixed [though vague and maybe unqualified] opinions from scholars, none of which have really made me feel convinced either way. I just came across this article, which I have not yet read, but which I think Okays Bitcoins at least for certain usages. This thread is just to open a general discussion about cryptocurrencies. My first question for Mo- or others who know about cryptocurrencies: What would be your major arguments for it being haram? Let's start there, and then I'll have some more pointed questions depending on your responses.
  2. 2 points
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    Ok so I asked Sh. al Judai about a wide range of topics and their Islamic perspective. He told me some things to hold into generality: The four major madhabs do not have significant differences on what they consider halal and haram when it comes to modern financial transactions, as they did not deal with the same things we dealt with today. There are however minor differences on some points Modern scholars, irrespective of madhab, take from a variety of sources (i.e., other madhabs and opinions, including those of non-traditional sources such as some trustworthy Shia sources (e.g. Sh. Muhammad Baqir al Sadr's book on banking has been cited by many) when it comes to Islamic finance. There is a lot of Ikhtilaf between scholars on numerous points, coming from both a lack of specialization and a large requirement for Ijtihad. These things are important because, people often ask what a specific madhab says about a certain transaction, but due to the nuances of Islamic jurisprudence today and the rapid rate of innovation in fian Firstly, some definitions I learned (or improved upon): Qimar (gambling): Gambling occurs when two parties enter into an agreement that based on an outcome related to probability or chance, one party will win and the other will lose (e.g. a coin toss with a winner and a loser). Gharar (risk, in finance, risk arising from speculation, synonymous with uncertainty): Is in Islamic business terms, when the outcome of a transaction bears some level of uncertainty. Investments with extreme Gharar are generally considered haram, for example, investing in something that is priced irrationally like a bubble with abnormal returns. Mudaraba (speculation): When an investor/market participant holds a certain view of the future and enacts a transaction based on this view (e.g. buying stock in a company deemed profitable). [Note: the common definition people use for this is the idea of the Mudaraba contract, which is a very narrow element of the actual theory]. Mudaraba al Sila' (speculation on a good/service/commodity): When a market participant purchases something for a holding period in the hope its price will change in the direction they favor by the end of this holding period (e.g. buying a barrel of oil and keeping it for sale at a later date for a higher price). Mudaraba al Si'ir (speculation on price): Where a market participant invests purely speculating on the price of something, and not on the thing itself (e.g., a contract for difference). This is haram as it is a form of gambling. Bay' (sale): the exchange of goods or services. Bay' al Salam (deferred sale): when a sale takes place, with the payment upfront and the good/service delivered at a later date. In this sense, this type of sale can take place in two manners in modern terms: Cash paid today for the provision of a good or service later; A good or service is provided today for the provision of cash later. Bay' al Inah (cash buyback): when a deferred sale takes place, but the good is sold back immediately at a lower price. This has major ikhtilaf, the Shafi'i's say it is permissible, but the other madhabs say it is generally not. All madhabs however agree that if the intention of the person is to essentially create an interest bearing loan in all but name (i.e. a heela [a work around]), it is haram. Cryptocurrencies: On Bitcoin, he informed me that the UK Fatwa Committee (which consists of himself, Sh. Suhaib Hasan and several other prominent UK based scholars) had decided putting money into Bitcoin (and cryptocurrencies in general) were not halal at the current time for multiple reasons: It is not currently recognized as legal tender in its current form, and several governments have instituted bans on it. This is contrary to the idea that Muslims should obey the laws of the countries they live in. It acts as a source of extreme Gharar. Whilst the idea itself does not go against Islamic principles (i.e., crypto in of itself isn't haram), the fact that it is primarily used for money laundering (whether by Chinese people going against capital controls or people who have illicit income through black market places), means it is currently unsuitable for use. Online trading: The Sh. corrected me on the point that speculation is not gambling Islamically, unless two parties are involved. I explained to him that, other than traditional retail brokerages which only generally sell vanilla stocks and bonds, most retail investors only have access to websites that provide CFD's (contract's for difference). He informed that this is equivalent to gambling if the speculation is being made in this case purely for the hope of an increase in price and contains two contracted parties. However in the case of actually owning the commodity/bond/stock, without a contract for difference, there is no problem with speculation as long as it does not carry extremely high risk. Insurance: Most scholars today say insurance is haram, but Sh. al Judai said it is halal generally speaking and there have been modern scholars from all backgrounds who hold the same view. He says this because, Bay' al Salam can be considered a primitive form of insurance and has generally been allowed. The issue with insurance comes down to contract specifics and the type of insurance (naturally for example, life insurance would be particularly troublesome Islamically). Insurance in itself can be sold in the form of an investment (e.g. an insurance company invests the money you give them for a particular policy in liquid assets, and grows a large enough balance sheet to pay off any claims) or it could be in the form of relying on the collective yearly payments from clients outweighing the collective yearly claims. The contracts themselves ultimately vary too and it really depends on a case by case basis. I asked him a bunch of other things in my time and went of plenty of examples for my own project. I can share those too but I felt what I included here were things related to the questions in this thread in particular.
  3. 2 points
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    I would like to add, blockchain itself and the concepts around it are generally very innovative and could lead to some major changes in the way we handle transactions by enhancing speed, security and allowing for a return to decentralization (similar to the free banking era of the past). The main issue with this of course is how it will affect government finances who are dependent on measures like quantitative easing/tightening where they can effectively print money or burn money. We've had central banks for the good part of the past century and they are essential for the existence of big governments.
  4. 2 points
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    We have to define the differences between the two primary sorts of speculation: 1. Speculative investing (halal), 2. Gambling (haram). An example of speculative investment, for example, would be purchasing Exxon Mobil stock because you believe that they will outperform their peers and the market. This means that you inherently believe that the company is going to generate value for you over time and that is why you want to own its stock. An example of gambling, would be purchasing Exxon Mobil stock because you think the price will go up. Not because you inherently believe the company will generate value in the future, but simply because you are of the belief that the price of the stock itself will go up as a result of market momentum or another market force unrelated to underlying value. Now you're probably asking "didn't both examples contain the same action?". Of course, but the intentions were different. How do you then apply this rule to Bitcoin? In the case of Bitcoin, or cryptocurrency in general, it isn't generating any value. Any movements it makes are driven by market momentum in one direction or another and are unrelated to any sort of underlying value. Why? Because Bitcoin isn't a value generating asset (like a house that can be rented, a company that produces goods or services, a cow that produces milk, etc.) in the traditional sense, in that you as an owner can't do anything with it that would generate value. The only way to generate value with cryptocurrencies is through the ones that operate a proof-of-stake model, but very few people would be able to acquire the amount of necessary cryptocurrency in a reputable PoS network. tl;dr unless you have enough for PoS on a reputable network, crypto is effectively gambling.
  5. 2 points
    M-C

    Last film you watched?

    Jumanji WAY BETTER THAN I THOUGHT ITD BE. I had fun watching this movie.
  6. 1 point
    Haku

    Cryptocurrencies: THE FUTURE IS HERE

    I think you misunderstood him. Using bit coin as currency is okay according to some scholars, but final fatwa is pending. Investing in bitcoin (buy now and sell later) involves lot of uncertainty and hence extreme gharar. Otherwise it is like investing in currency, but with the uncertainty/bubble factor. I am not too sure about investing in traditional currency my self.
  7. 1 point
    Spider

    Inspirational Quotations

    "Creativity requires taking what Einstein called 'a leap into the unknown.' This can mean putting your beliefs, reputation, and resources on the line as you suffer the slings and arrows of ridicule. Other common attributes are a strong motivation to bring order and definition to the world, as well as independent judgment. Creative people are able to go against the mainstream. While in many ways they can be quite conventional, they tend to rebel against conformity as they accompany their own private visions down lonely, untrod paths." Frank X. Barron (1979)
  8. 1 point
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    1) but the loss is not proportional and is deemed an externality. In a bet, the loss is explicit and contracted between two parties, therefore it is gambling Islamically. When Walmart decides to open a new store, it isn't betting against the local stores, in fact due to agglomeration it is expected some local stores could even see an increase in customers. 2) speculation in Islam is halal.
  9. 1 point
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    I have a nice write-up I'll do tonight inshallah
  10. 1 point
    Talhaz1

    Is rolling up your food haram?

    I am not going to give my age but yes roti can be classified as an example.
  11. 1 point
    Mufasa

    Is rolling up your food haram?

    Salam, I have not heard that but I'm not sure. Welcome to Maniac Muslim! Why don't you create a thread to introduce yourself?
  12. 1 point
    Mo-

    Cryptocurrencies: THE FUTURE IS HERE

    On the first question: It is a generally accepted definition yes. It is based on chance because in essence, if you are speculating purely on price movements, then you're completely ignoring the underlying value of the asset itself. This is because of the reality of the random walk, whereby the future price of any given asset cannot be predicted. When it comes to investing in a company, the random walk in a stock price generally has a trend upwards or downwards based on its prospects as a company. By analyzing the prospects of a company you can assess the risks and based on your preferences and expectations of the performance of those prospects, you can speculate on the general motion of the trend of the random walk (e.g. with the Exxon example, say they won a new oil contract in Peru and Peru is assumed to have x amount of recoverable oil assets that Exxon will now be in charge of marketing to the world). If you're speculating purely on the random walk itself, and not the trend which is defined by underlying value, then it is the exact same as a Martingale. You might respond to this with "Well Bitcoin has a trend! That trend is up!", which in itself is a fallacy because it still conforms to the Martingale property of a random walk even if it appears to have a trend. Why do I say this? Because the underlying value of Bitcoin is in its value as a means of exchange, but because it is not a functioning means of exchange (proof of this is in the volatility of currency itself, for something to be a viable means of exchange it has to have stability relative to the prices of goods), it has as a result even lost its underlying value as a currency. On the second question: Ripple is different because the value of the currency is driven by the Ripple Network. But buying XRP doesn't mean that you own part of the network or are creating value, because unless you're an institutional investor it'll be impossible for you to have a stake large enough to be considered in granting rewards for proof of stake when the consensus of any ledger is applied. If you want to invest in the future of the technology, then your best bet is to buy Ripple shares when the company itself goes public or invest in banks adopting the tech. The banks themselves aren't buying or transacting in XRP, but they're using the code and technology developed by the company to simplify transaction costs. On the third question: As far as I know, unless you offer currency exchange services then simply investing in currency is gambling too. It makes 0 sense to buy USD on the notion that you believe the USD will increase in value (same goes with most commodities that are simply stored, e.g. gold, oil, palladium, etc.). I haven't read the article but tomorrow I am going to have a long session with Sh. Abdullah al Judai where I will spend around 5 to 6 hours one to one breaking down financial concepts in their simplest terms and seeking answers on whether they are haram or halal.
  13. 1 point
    Haku

    Cryptocurrencies: THE FUTURE IS HERE

    one reason why there is a bubble (a bubble it is) on crypto currencies is that it is used very widely for criminal activities in the darkweb, thus driving the demand.
  14. 1 point
    you can design the shirt and teesprings have a factory that produces the shirts on demand. You get like a 50/50 split of any revenue made. This dude just decided to make a design and advertise it to a niche audience lol
  15. 1 point
    ICEX

    Last film you watched?

    Now watch... Doom 2005.
  16. 1 point
    ICEX

    Last film you watched?

    Rec 4 Apocalypse. Rec 2 Planet of the Apes 2001
  17. 1 point
    ICEX

    Listening to...

    What a dumb question.
  18. 1 point
    Abdul Rahman

    Islam and the Theory of Evolution

    Well. I certainly believe in de evolution now.
  19. 0 points
    Breeze

    Listening to...

    Icex, homie... did you ever consider that you could be a man-child?
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