Cryptocurrency: A Currency or Investment Asset?

Abstract

As most countries use currencies to denote paper money created as a medium of exchange for buying and selling goods or services. Nevertheless, there are attempts from several entities to create a crypto asset named cryptocurrencies which aims to replace the functions of paper money. The issue arises whether cryptocurrency is valid to be used as a currency or investment asset according to Shariah’s perspective. This article aims to clarify the Shariah views on the legality of cryptocurrency, analyze the suitability of cryptocurrencies as a currency or investment assets, and finally, suggest that cryptocurrency is one of the investment assets or commodities in line with the requirements of Shariah. The research adopts pure legal research methodology utilizing content analysis on the primary and secondary sources. The research findings revealed that Islamic scholars have conflicting views regarding the legality of cryptocurrency as a means of exchange to replace the function of paper money and as an investment asset. Nevertheless, cryptocurrency and crypto assets are required today because of Maqasid Shariah, maslahah, and qawaid fiqhiyyah. Future research should focus on the usage and practice of cryptocurrency worldwide and its legal application in specific countries.
 Keywords: cryptocurrency, currency, investment