Saturday, February 21, 2015

Fiat currency is not permissable for Muslims. Bitcoin is.

I am definitely not an Islamic jurist. But I've probably logged a few hundred hours of conversation with pretty savvy Muslims. I teach English as a Second Language, and I've come to believe that most money is haram (forbidden), even if the average savvy Muslim (just like the average savvy non-Muslim) doesn't understand the global monetary system well enough to be offended by it.

If you ask a Muslim student (well, at least my Muslim students), there are no Muslim governments on earth. My Muslim students look down on all the "Muslim" kings and presidents of the current Arab world, saying they have all given into a form of capitalism that is strictly forbidden by Islam.

"Riba", or interest, is their key complaint. A Jordanian/Emirati student of mine has told me stories of the boom-bust cycles in Dubai, entailing speculation-unto-insanity and consequent tricky government intervention that even a jaded American would gasp at, and he blamed it on the greedy monarchs abandoning the will of Allah for personal gain.

Apparently, Islam does not permit interest. This is why you find "Islamic Banks" in London.

These banks cater to traditional Muslims by figuring out ways to serve their customers without charging interest. They will, for example, construe a loan as an investment in a business, wherein the bank possesses a non-controlling stake. This way a businessman can receive capital to expand his business, and the bank can (on average) profit, without reckoning things according to the time value of money.

This is halal (permissible).

Here's the problem, as I see it:

While the Islamic Bank of Britain offers no-interest loans to its observant customers, it still offers these loans denominated in British pounds. Where do these pounds come from? The Bank of England. At an interest rate of 0.5%.

Now the Muslim observant usually don't take their due diligence so far as understanding the horrifyingly obfuscated realm of monetary policy, just as some vegetarians eat skittles without asking where the gelatin comes from. To understand the whole world of human events that enmeshes you is an inhumanly difficult thing these days, and Allah knows what Congolese wars I've supported with the occasional unwitting grocery store purchase.

But if we were to do our inhuman feat of diligence, and examine all things, I think that we would find bitcoin to be the leading, most stable halal currency the world has got right now.

And that's something that I think bitcoin adopters and banking-aware Muslims should be telling their friends.

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