191. Bitcoin and Islamic Law with Muaawiyah Tucker
Oct 17, 2023
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Muaawiyah Tucker, Bitcoiner, programmer, and Islamic scholar, discusses how Bitcoin is compatible with Islamic law and the problems faced by Muslim countries due to fiat currency. They highlight the unique properties of Bitcoin, emphasizing its fairness and non-controlled nature. The chapter also explores the challenges of tokenization and the concept of Zakhar in Islamic law.
Bitcoin is compatible with Islamic law as it offers an alternative to fiat money tied to interest (riba) and its harmful effects on society.
Living entirely on Bitcoin allows Muslims to exit the fiat system, follow Islamic principles, and minimize involvement in interest-based debt creation.
Islamic arguments discourage using fiat loans to buy Bitcoin as it could harm others and contribute to inflation, contrary to the principles of Islamic finance.
For Muslims, embracing Bitcoin provides a halal solution to avoid the riba system, find alternatives, and escape the harm caused by traditional banking and fiat currencies.
Deep dives
The Islamic perspective on fiat money
From an Islamic perspective, the main objection to fiat money is that its creation, issuance, and destruction is tied to interest (riba). The process of mining fiat involves creating debt, which goes against Islamic principles. Additionally, fiat money is issued without any work or effort, which raises questions about its legitimacy and ownership. Islamic scholars have issued fatwas allowing the use of fiat money as a medium of exchange if it is agreed upon by the people and follows the rules and regulations of gold and silver. However, the current fiat system involves interest-based debt creation and is considered harmful to society as a whole.
Living on Bitcoin as an alternative
Some Muslims choose to live entirely on Bitcoin as a way to avoid participating in the fiat system. By converting their fiat income directly into Bitcoin and finding ways to spend Bitcoin, they minimize their involvement in the fiat system. This decision reflects their desire to follow Islamic principles and exit the fiat system, even if it comes with challenges and potential price volatility. They believe that staying within the fiat system contributes to its harm and choose to actively seek alternatives.
Speculative attacks on fiat
While some may argue for using fiat loans to buy Bitcoin as a form of speculative attack on the fiat system, there are Islamic arguments against this approach. Participating in such attacks could harm others and contribute to inflation, which is seen as detrimental to the collective. Islam emphasizes minimizing harm and choosing the lesser of two evils. It is believed that such attacks contribute to the overall harm caused by the fiat system and go against the principles of Islamic finance.
Limitations of fighting the fiat system from within
The idea of fighting the fiat system by leveraging loans and buying Bitcoin may not be compatible with Islamic principles due to the involvement of interest and potential harm caused to others. It is believed that true change requires pursuing alternatives outside of the fiat system and minimizing participation in it as much as possible. Muslims are encouraged to actively seek ways to exit the system and live within the bounds of Islamic finance.
The Benefits of Embracing Bitcoin in the Muslim Community
Bitcoin offers a solution for Muslims looking to avoid the riba system and live halal lives. By forcing Muslims to live in Bitcoin, it encourages them to find halal alternatives and solutions. Embracing Bitcoin keeps Muslims from becoming complacent and encourages them to seek out alternatives to traditional banking systems. Renting is presented as a halal alternative to mortgages, as it avoids the interest-based riba system. Bitcoin is seen as the way out of the fiat system, which has caused harm to many Muslim countries. It offers an opportunity to escape interest-based credit systems and embrace a fairer and more equitable financial system. Bitcoin is seen as a halal option that can provide a solution to the problems Muslims face with fiat currencies.
The Importance of Bitcoin as a Halal Option
Bitcoin is considered halal by default, as it falls under the general rule in Islam that everything is permissible unless proven otherwise. Bitcoin is viewed as a way to exit the fiat system and avoid interest-based loans. It is seen as a solution to the problems caused by fiat currencies and inflation. Bitcoin's ability to transact instantly and securely across borders is highlighted as a benefit, compared to the inefficiencies and restrictions of traditional banking systems. Bitcoin is also seen as a fair and neutral currency, with no privilege or control conferred to any holder. It is seen as a currency that can be used by anyone, regardless of their political leanings or ideology.
Why Bitcoin's Volatility Is Not a Dealbreaker
The volatility of Bitcoin is compared to the volatility of other currencies, such as silver. The argument is made that if Muslims accept the volatility of silver as a currency, they should also accept the volatility of Bitcoin. Islamic teachings emphasize the importance of embracing volatility and allowing market forces to determine prices. It is argued that volatility is a natural feature of markets and should not be a reason to dismiss Bitcoin as a viable option. Islam recognizes that prices fluctuate and that volatility is inherent in market transactions.
Using Gold as a Measure to Pay Zakat with Bitcoin
In Islamic tradition, Zakat is the practice of giving a portion of one's wealth to those in need. The threshold for paying Zakat is traditionally measured in gold and silver. Due to the volatility of silver, it is suggested that the value of gold can be used as a measure for paying Zakat with Bitcoin. Gold has maintained a relatively stable value over time, making it a suitable reference point. The value of silver, on the other hand, has significantly changed, making it less practical as a measure for paying Zakat. By using the value of gold, Muslims can effectively determine the amount of Zakat owed when transacting with Bitcoin.
Bitcoiner, programmer, and Islamic scholar Muaawiyah Tucker joins to discuss his journey into Islam and bitcoin, why bitcoin is compatible with Islamic law, and why fiat is not.
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