Bitcoin
Crypto Overview
Understanding the Intended Utility
Bitcoin was created by Satoshi Nakamoto in 2009 as a peer-to-peer electronic cash system, designed to enable direct online payments without requiring a financial intermediary. The whitepaper presents Bitcoin as both a medium of exchange and a store of value that operates on a decentralized network.
Bitcoin's current primary use has evolved to become a store of value, often referred to as 'digital gold.' While it continues to function as a medium of exchange, its finite supply of 21 million coins and deflationary nature have made it more prominent as a value storage mechanism.
Actual Utility Assessment
Bitcoin demonstrates significant real-world adoption and utility: As of 2024, it is accepted by thousands of merchants globally, has been adopted as legal tender in countries like El Salvador and the Central African Republic, and maintains an active network of approximately 450,000 daily transactions. Major institutions, including BlackRock and Fidelity, now offer Bitcoin ETFs, indicating mainstream financial acceptance.
The Bitcoin network is secured by a robust proof-of-work consensus mechanism, with hundreds of thousands of miners globally contributing to network security. The development activity remains strong, with improvements like the Lightning Network enabling faster and cheaper transactions.
Founder Enrichment Analysis
Bitcoin's creation demonstrates unique characteristics that strongly indicate it was not designed as a scheme to enrich its founder(s): Satoshi Nakamoto's estimated 1 million BTC (approximately 5% of total supply) has remained untouched since creation, and the founder disappeared from public view in 2010 without monetizing their holdings. The initial distribution was fair, with no pre-mine or ICO, and mining was open to anyone from day one.
Additional Sharia Considerations
Bitcoin's proof-of-work mining system involves real work and resource expenditure, aligning with Islamic principles of earning through effort. The network doesn't involve interest (riba) in its base layer, and its transparent, immutable ledger promotes honest transactions. While speculative trading exists, the underlying asset transfer is real and not zero-sum.
Crypto Impact
To assign a comfort level investing in Bitcoin from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Bitcoin.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
We will review your contribution for accuracy before publication.
Importantly, you can review listed contributions and vote on which one you think has the greatest impact, positive or negative.
You only have one vote per asset so use it wisely.
You can change your vote if you change your mind.