Cryptocurrency Position in Islamic Financial System: A Case Study of Bitcoin

Nur Rizqi Febriandika, Raditya Sukmana

2018

Abstract

The development of cryptocurrency is quite impressive. In 2017 at least there are 1148 types of cryptocurency emerging spread in 5632 market sector. Bitcoin became the starting point for the development of new applied cryptocurency science that is distributed ledger technology (DLT). It can be said that the world of cryptocurrency entered a new era since the appearance of Bitcoin. This research is purposed to find out how cryptocurrency position in islamic financial system, especially Bitcoin. This study uses library research methods; its resources are taken from secondary sources in the form of books, journals and fiqh rules related to cryptocurrency. This paper uses descriptive analysis and content analysis method. The results of this study indicate that usefulness of Bitcoin is: 1) online shopping (for outlets, web, and merchants that accept Bitcoin as a medium of exchange), 2) payments (for countries that legalize Bitcoin), 3) asset investment, and 4) trading. Bitcoin does not qualify either as money, commodity, or financial assets. In Islam, it should not intentionally seek profit from the margin of buying and selling currency, because it is included in the category of riba. One of the functions of Bitcoin is as a trading tool, it is clearly not allowed in Islam because it contains the elements of maisir (gambling). If Bitcoin is regarded as commodity then it causes a gharar because there is no intrinsic use / function contained in Bitcoin. Bitcoin also cannot be said to be a financial asset because it has no underlying assets. Its value is based solely on market schemes (supply-demand) and trust. Based on fiqh, Bitcoin contains a lot of syubhat and is not recommended for use.

Paper Citation

in Harvard Style

Rizqi Febriandika N. and Sukmana R. (2018). Cryptocurrency Position in Islamic Financial System: A Case Study of Bitcoin.In Proceedings of the 2nd International Conference Postgraduate School - Volume 1: ICPS, ISBN 978-989-758-348-3, pages 159-163. DOI: 10.5220/0007539401590163

in Bibtex Style

@conference{icps18,
author={Nur Rizqi Febriandika and Raditya Sukmana},
title={Cryptocurrency Position in Islamic Financial System: A Case Study of Bitcoin},
booktitle={Proceedings of the 2nd International Conference Postgraduate School - Volume 1: ICPS,},
year={2018},
pages={159-163},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0007539401590163},
isbn={978-989-758-348-3},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 2nd International Conference Postgraduate School - Volume 1: ICPS,
TI - Cryptocurrency Position in Islamic Financial System: A Case Study of Bitcoin
SN - 978-989-758-348-3
AU - Rizqi Febriandika N.
AU - Sukmana R.
PY - 2018
SP - 159
EP - 163
DO - 10.5220/0007539401590163