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The Challenges of Cryptocurrencies and the Shariah Paradigm

In: Islamic FinTech

Author

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  • Hurriyah Islamy

    (Badan Pengelola Keuangan Haji)

Abstract

Overreliance on centralized system, that is, the ecosystem built on trust and thus there ought to be a trusted party for the mechanism to work, was seen as the crux that prevented the existence of an effective and true electronic payment system, that is, one that’s truly non-reversible. Bitcoin was introduced as an answer to that (Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. bitcoin.org, 2008). It gave rise not only to a whole new system of electronic payment akin to the more original mode of trading, it also gave birth to the new world of cryptography. What’s interesting is that despite its wider global acceptance, such initial introduction of cryptocurrency raised many issues more than the issues its introduction sought to resolve. The questions raised and issues arise not only from the commercial but also regulatory point of view. As Islamic finance is growing and due to the borderless and nationless nature of cryptocurrencies, it becomes necessary that we also examine it from Shariah view point. Hence, in this chapter, after the general discussion of cryptocurrency and its characteristics, we take for case study the two celebrated cryptocurrencies before we will see how Shariah perceives cryptocurrencies and how cryptocurrencies are being regulated. Thereafter, we highlight issues and challenges, and we put forward our recommendations and the way forward for the issues and challenges surrounding the cryptocurrencies.

Suggested Citation

  • Hurriyah Islamy, 2021. "The Challenges of Cryptocurrencies and the Shariah Paradigm," Springer Books, in: Mohd Ma’Sum Billah (ed.), Islamic FinTech, edition 1, chapter 0, pages 407-428, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-45827-0_22
    DOI: 10.1007/978-3-030-45827-0_22
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