Digital currency trading has been on the rise, considering that last December the value of Bitcoin surpassed the $20,000 mark. However, the Grand Mufti of Egypt, Shawki Allam, has issued a Fatwa against Cryptocurrencies, saying it is forbidden in Islam. The reason he gives is that trading in cryptocurrency is like gambling. However, trading in cryptocurrency has its challenges, one of them being that the value of cryptocurrencies fluctuates unpredictably, which means you can make or lose money. Remember that by 3 January, the price of bitcoin was $15,000. In this post, we will look at reasons why many people are cautious about trading in cryptocurrencies.
When it comes to dealing with cryptocurrency, you should remember that many people and regulators don’t understand it, which means it difficult for them to deal with it or carry out regulation. Many individuals prefer dealing with things that have been approved by governments and can be regulated, which isn’t the case with cryptocurrencies. These reasons could be the reason why the Shawki Allam issued a Fatwa against Cryptocurrencies. Remember that he’s not the first Muslim cleric to criticize cryptocurrency. Saudi cleric Assim Al-Hakeem ruled in December digital currencies are ambiguous, which means that Islamic law bans them.
The cryptocurrency market plunged in 2014 after the then largest bitcoin exchange platform; the Tokyo-based Mt. Gox announced that hackers had breached it. It subsequently filed for bankruptcy. The cryptocurrency market went down again in 2016, August after hackers managed to steal $69 million from Bitfinex, which is based in Hong Kong. These issues raise safety questions about the benefits of trading in cryptocurrency, which has led people like Shawki Allam to denounce it. On the other hand, its supporters say the benefits of trading in the digital currency outweigh the risks.
For more than a year now, the digital currency trading community can’t agree on how best to upgrade the blockchain. The fees and time required to verify cryptocurrency transactions have risen to record highs, meaning that businesses are finding it hard to use digital currency as a means of payment. The good news is many companies are supporting plans to speed up the transactions. Remember that for religious authorities such as the Grand Mufti of Egypt, it’s essential that financial operations are transparent and verifiable, which prevents incidences of money laundering and illegal gain.
The Fatwa against Cryptocurrencies, which was issued after consultations with economic experts, may be based on the assumption that digital trading is a bubble about to burst. That’s because history shows that markets autocorrect. For example, studies and events have demonstrated that speculative markets will usually run out of steam after some time. Cryptocurrencies are gaining value at an alarming rate, which has led experts to question whether it’s just a bubble.
The Fatwa against Cryptocurrencies may result in significant effects on the digital currency market. However, as with any other major announcement, buyers and sellers of Cryptocurrencies are waiting to see its impact, keeping in mind governments and other Islamic leaders are voicing their concerns.