Islamic economics view toward digital currencies

Abstract

The study aims to identify the Islamic economy’s view of digital currencies, and whether the Islamic economy encourages dealing with them and permits their trading, or prohibits dealing with them and prohibits their circulation. This is done by knowing what digital currencies are, and analyzing the potential economic effects of dealing with digital currencies, leading to a statement of the legal ruling in dealing with them. In order to achieve the goal of the study and to test the main hypothesis of the study, we relied on the descriptive analytical approach, in describing the study variables and analyzing the potential economic effects of dealing with digital currencies with the use of the inductive approach in explaining the Sharia ruling in dealing with them, In order to achieve the goal of the study and to test the main hypothesis of the study, we adopted the descriptive-analytical approach, in describing the study variables and analyzing the potential economic effects of dealing with digital currencies, with the use of the inductive approach in explaining the legal ruling in dealing with them. The study concluded: (1) Digital currencies crowd out traditional currencies, which increases the money supply, and thus reduces the effectiveness of monetary policy because central banks do not take digital currencies into account when setting monetary policy, which affects economic policy as a whole. (2) There are many conditions that must be observed when issuing and circulating money in Islam, which have not been achieved in digital currencies so far, which made them rejected by many jurists and economists. (3) All fatwas issued regarding the legal ruling on dealing with digital currencies are nothing but individual jurisprudence, in the absence of a clear collective fatwa that agrees on a single legal ruling.

Keywords: Digital currencies, Islamic economy, electronic currencies, money, cryptocurrencies, Shariah ruling.