Cryptocurrency and Islam


Ahmad Umair, Bachelor of Commerce


A journey that started from a barter system and reached ATM bank cards; banking has taken yet another turn. A so-called currency that is completely decentralised (works through a peer-to-peer network), not backed by any physical valuable entity, unlike traditional currencies, has appeared: cryptocurrency. 

To understand it, let me point out some of its key features:

1. Cryptocurrency is completely decentralised. Its transactions are made through a peer-to-peer network, just like torrents which transfer data from one computer to another without passing through the central body.

2. Traditional currencies are backed by the respective governments and it was said that governments keep an equal amount of gold or silver amounting to their currency in their reserves. But unlike traditional currencies, cryptocurrencies are not backed by any physical asset. Hence, in reality, cryptocurrency has no value at all. Its value depends solely on supply and demand or people’s need for it.

3. Cryptocurrency uses cryptography to secure its transactions and records. This means that cryptocurrency transactions are encrypted and records are also kept in encrypted form.

There are more than 1,000 cryptocurrencies and the cryptocurrency which has the most market value is called bitcoin. At the time of writing this, one bitcoin has a value of US $37,835. 

The value of these cryptocurrencies is unpredictable. As written above, the value of these currencies depends on their demand. This is the reason why we see a single tweet plummeting or skyrocketing the value of a cryptocurrency. It solely depends on the confidence of the people (investors). Nowadays we see more and more people inclining towards “investment” in cryptocurrencies.

From an Islamic perspective, there are several verses that forbid us to invest our money solely based on luck and chance. In the Holy Quran, the basic principle concerning permissible and forbidden things is mentioned, as Allah the Almighty says:

يَسۡـَٔلُوۡنَكَ عَنِ الۡخَمۡرِ وَالۡمَيۡسِرِ ؕ قُلۡ فِيۡهِمَاۤ اِثۡمٌ كَبِيۡرٌ وَّمَنَافِعُ لِلنَّاسِ ۫ وَاِثۡمُهُمَاۤ اَكۡبَرُ مِنۡ نَّفۡعِهِمَا ؕ وَيَسۡـَٔلُوۡنَكَ مَاذَا يُنۡفِقُوۡنَ ؕ قُلِ الۡعَفۡوَ ؕ كَذٰلِكَ يُبَيِّنُ اللّٰهُ لَكُمُ الۡاٰيٰتِ لَعَلَّكُمۡ تَتَفَكَّرُوۡنَ

“They ask thee concerning wine and games of chance. Say, ‘In both there is great sin and harm and also some advantages for men; but their sin and harm are greater than their advantage.’ And they ask thee what they should spend. Say, ‘Spend what you can spare.’ Thus does Allah make His commandments clear to you that you may reflect.” (Surah al-Baqarah, Ch.2: V.220)

The above verse has mentioned the basic principle regarding forbidden things that “their sin and harm are greater than their advantage.” This is exactly what happens while investing in cryptocurrencies: It is causing more harm than good. 

It’s human nature that no matter how much we already possess, the struggle for accumulating more wealth continues, as the Holy Quran points out:

زُيِّنَ لِلنَّاسِ حُبُّ الشَّهَوٰتِ مِنَ النِّسَآءِ وَالۡبَنِيۡنَ وَالۡقَنَاطِيۡرِ الۡمُقَنۡطَرَةِ مِنَ الذَّهَبِ وَالۡفِضَّةِ

“Beautified for men is the love of desired things – women and children, and stored-up heaps of gold and silver […]” (Surah Aal-e-Imran, Ch.3: V.15). Consequently, many fraudsters are exploiting this basic human tendency and rendering people penniless in the name of investing in crypto. They lure innocent people by giving them hope of high profits and promises of overnight riches. 

Our beloved Imam, Hazrat Mirza Masroor Ahmad, Khalifatul Masih Vaa has warned Ahmadis to avoid investments and businesses related to cryptocurrencies. Moreover, many Ahmadis have suffered losses due to the high risk associated with these investments. The recent guidance from the markaz in the UK was to warn and protect those Ahmadis that were investing in such currencies from the unusually high risks associated with them. (“Safeguarding the institution of Khilafat: Webinar by MKA USA”, in Al Hakam, 18 June 2021, p. 9)

It is clearly stated in the aforementioned verse that gambling is also forbidden. In gambling, we are solely dependent on luck and chance. Our efforts don’t matter. The same is the case with cryptocurrencies. The value of cryptocurrencies is not backed by anything physical like traditional currencies. Its value solely depends on people’s demands. Our efforts have nothing to do with it. This increases the risk tremendously.

During a mulaqat with a delegation from Sweden on 13 March 2020, Hazrat Khalifatul Masih V, Mirza Masroor Ahmadaa replied to a question regarding stocks and shares by saying:

“If someone says ‘Now that the market has gone up, I will sell my shares’, or ‘Now that the market has come down, I will buy some shares’ and constantly remains occupied in keeping a keen eye on when a particular share in the market goes up or down from morning till evening, then this comes under gambling and one should refrain from doing this.”

Here, there’s a clear instruction of our beloved Imamaa that it comes under gambling to first invest and then wait hazardously for the market to go up or down and remain completely occupied in it. The same goes for “investing” in cryptocurrencies, people desperately look at the rise and fall of the market, being oblivious of even their families in some cases.

In a nutshell, cryptocurrencies are highly unpredictable and investment carries high risk. Moreover, investment in such currencies is against the teachings of the Holy Quran and the guidance of the Khalifa of the time. Therefore, it is for our benefit that we should safeguard ourselves from such things and to protect ourselves and our progenies from such satanic deceptions, we should form a solid bond with Khilafat-e-Ahmadiyya. May Allah enable us to do so. Amin

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  1. Traditional currencies are not backed as well. In fact, it used to be backed by gold, but not anymore. Therefore, the traditional currencies are called fiat, i.e not backed

  2. Agree; nonetheless traditional currencies have the backing of their respective governments where you know full well that very often governments pump millions of dollars into the currency system to stablize their currencies from undue or unexpected fluctuations.


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