Browsing by Author "Muhammad Muaz Ashraf"

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    Sharia Analysis of Fiat Money and Cryptocurrency
    (UMT, Lahore, 2020-09) Muhammad Muaz Ashraf
    The world has witnessed the time where different goods were used as medium of exchange and then finally currency came into the existence in different kinds. The most commonly used currency today is fiat money which can be found in shape of coins and banknotes. There was a time when fiat money was backed by gold and represented its true value. Now, it is nothing but a piece of paper and its real value is far less than face value. Currently, there is another emerging currency which is being called and known as ‘cryptocurrency’. It is being considered a type of digital currency which is not being issued by the central authorities and has no physical existence and totally based on cryptographic technology. These advancements and development of monetary system led us to the door of new researches especially from the Sharia perspective. Therefore there was a dire need to conduct a research on these currencies from the Islamic point of view. The focal point of this study is to analyze and determine the Sharia status of fiat money and especially cryptocurrency. When fiat money lost its intrinsic value it became debatable among Sharia Scholars and a number of opinions and Fatawa have been issued by the institutions and individuals about its legality and status in Islam. The case of Cryptocurrency is not different, its complex nature and mechanism is the reason that it is one of the most debatable topics nowadays. On the basis of Islamic rules we have analyzed four famous Sharia opinions regarding fiat money and their effects. We found that only two type of opinions are acceptable and are currently implemented in Islamic Financial matters. As far as Cryptocurrency is concerned, in consideration of the facts about Cryptocurrency and analysis of different opinions, Sharia rules, requirements and parameters, this study established that Cryptocurrency in its current state cannot be considered as a legal currency or asset (Mal) in Islamic Sharia.