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Virtual Currencies

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On 12/19/2017 at 2:21 AM, Ashvazdanghe said:

The Grand Ayatullah Sistani (preserves him Allah Almighty):

Supreme Marja does not allow this activity.

As a result, it is forbidden to enter into such transactions for the his followers.

Where has he mentioned this. Please provide references when you are referring to something being forbidden or not forbidden preferably directly from his website.

22 hours ago, notme said:

I don't understand. What is the value of Bitcoin based on? As far as I can tell, it's just a concept, not based on any actual physical material of value. Is my perception accurate? 

You are right, it is an asset with no physical value. Stocks have dividends, Bonds have coupons but bitcoins value are solely based on the fact that people believe the price will rise. When people buy more than what can be produced (amount people can mine) & with speculation the price quickly shoots up. It's like the Tulip Mania in 1934.

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http://sraj.ir/fa/index.php/node/1205-2017-06-07-05-56-23

[2] استفتاء شفاهی از نجف اشرف / بحث مطرح شده در جلسه هم اندیشی در دفتر معظم له با حضور نمایندگان ویژه ایشان و مجتهدین معظم (حفظهم الله تعالی)

[2] Oral Suggestion from Najaf Ashraf / discussed at a joint meeting in the Supreme Maraja Office with the presence of his Special Representatives and the Great Mujtahedin (preserve them Allah Almighty)

http://www.iribnews.ir/fa/news/1912392/بررسی-مباحث-فقهی-بیت-کوین2

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50 minutes ago, Ashvazdanghe said:

[2] Oral Suggestion from Najaf Ashraf / discussed at a joint meeting in the Supreme Maraja Office with the presence of his Special Representatives and the Great Mujtahedin (preserve them Allah Almighty)

Thank you for the reference but I will email his office directly and inquire about the issue as I do not understand Farsi/Arabic (when I get an answer I will post it here).

Are you aware of why they would be impermissible?

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On 12/19/2017 at 10:27 AM, notme said:

I found this answer to my question:

Source

So as far as I can tell, it's basically an elaborate scheme to sell something of no value. Like US dollars, but worse. 

Is it a bad option for people living in Venezuela, where the currency keeps losing value and savings can become worthless?

I think Bitcoin is a work of genius. If you study it technically, you will see that it is a very impressive thing. It can take a long time to appreciate it, and even some famous software experts said it took them months to understand it.

Why should Bitcoin (or things like it) have value? Because it's scarce and has utility:

  • The supply is limited.
  • Doesn't take up much space unlike Gold.
  • Almost instant transactions.
  • It is virtually impossible to fabricate a fake Bitcoin (unlike the USD).
  • It can be used for micro-transactions (look at the BAT project).
  • It has very cheap fees. Try sending $200 cash to a poor African labourer for 1 cent.
  • It's not controlled by banks and thus you don't need them or another third party to send it to anyone.
  • It is anonymous (well Monero is and others are working on that too).
  • Smart contracts (e.g. Ethereum, Neo etc).
  • It can be integrated into dapps (e.g. Golem tokens to buy computing power). Look at: https://www.youtube.com/watch?v=-6H4_59W1oY  and https://www.youtube.com/watch?v=OS-BxuVRyy0
  • What happens when we get another financial crisis and there is a bank run?

Some of the points I listed above are no longer applicable to Bitcoin because the devs throttled it. But other blockchains can do those things and Bitcoin may be replaced by them.

This is the biggest thing since the Internet but most people who buy it don't understand it and only want to make money. I think in 20 years this world is going to be very different because of this technology.

https://news.bitcoin.com/iranian-government-bitcoin-use/

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On 12/21/2017 at 7:15 PM, Muhammed Ali said:

Is it a bad option for people living in Venezuela, where the currency keeps losing value and savings can become worthless?

I think Bitcoin is a work of genius. If you study it technically, you will see that it is a very impressive thing. It can take a long time to appreciate it, and even some famous software experts said it took them months to understand it.

Why should Bitcoin (or things like it) have value? Because it's scarce and has utility:

  • The supply is limited.
  • Doesn't take up much space unlike Gold.
  • Almost instant transactions.
  • It is virtually impossible to fabricate a fake Bitcoin (unlike the USD).
  • It can be used for micro-transactions (look at the BAT project).
  • It has very cheap fees. Try sending $200 cash to a poor African labourer for 1 cent.
  • It's not controlled by banks and thus you don't need them or another third party to send it to anyone.
  • It is anonymous (well Monero is and others are working on that too).
  • Smart contracts (e.g. Ethereum, Neo etc).
  • It can be integrated into dapps (e.g. Golem tokens to buy computing power). Look at: https://www.youtube.com/watch?v=-6H4_59W1oY  and https://www.youtube.com/watch?v=OS-BxuVRyy0
  • What happens when we get another financial crisis and there is a bank run?

Some of the points I listed above are no longer applicable to Bitcoin because the devs throttled it. But other blockchains can do those things and Bitcoin may be replaced by them.

This is the biggest thing since the Internet but most people who buy it don't understand it and only want to make money. I think in 20 years this world is going to be very different because of this technology.

https://news.bitcoin.com/iranian-government-bitcoin-use/

But how about the downsides? For example stealing by hacking which already happend if I am not mistaken

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Just now, Mohammed-Mehdi said:

But how about the downsides? For example stealing by hacking which already happend if I am not mistaken

Yes this is the one major downside. Solutions are already in use (e.g. multisig and hardware wallets) and in the future I think there will be better solutions. If they don't solve it then these currencies will remain the niche of those capable enough of securing them.

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Salam,

Cryptocurrencies are at least better than fiat currencies, such as dollar, because the latter are essentially digital money too nowadays and the problem with the fiat money is that central banks control and manipulate it so that in the long term people always lose out, as they can be easily devalued.  

Crytopcurrencies, such as bitcoins, on the other hand, are not controlled by central banks and as such cannot be manipulated.  Essentially they work because people agree to use these currencies as a form of exchange to enable the buying and seeing of goods and services.  They are, in a way, the same as fiat money, but without the middle man, i.e. the banks, who can devalue and crash currencies.  

I think one should look into it carefully to understand what it is and also to understand the risks, for example, the risk of hacking and losing one's bitcoins.

For those who do not like taking risks, I would advise that they buy other currencies, that are likely to grow.  Consider for one moment that had you bought only £10 worth of bitcoins in 2009 you would be a millionaire today.l  Do you own calculation - at on point bitcoin was worth 1p.  There are a few cryptocurrencies costing less than 1p so they are worth buying. 

But look into it carefully, bearing in mind that bitcoin and others are successful only because there is a limit to the circulation and there are enough people that agree to buy and sell using these currencies.  It is these reasons why the value of bitcoin is likely to go up to maybe £500,000 per £1 and even go as high as £2m in the future, as it is being more widely used than ever before, and there is no middle magic central bank to devalue it deliberately.

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4 hours ago, Muhammed Ali said:

Yes this is the one major downside. Solutions are already in use (e.g. multisig and hardware wallets) and in the future I think there will be better solutions. If they don't solve it then these currencies will remain the niche of those capable enough of securing them.

I would buy and sell rather than keep forever!

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7 hours ago, Hameedeh said:

Too risky. South Korean investigators say North Korea might be responsible for hacking one of the country's bitcoin exchanges. 

The investors, if knowledgeable would have a sizable sum in their hardware wallets instead of on the exchange and their money would have been safe. Depends you can also use bitcoins to mitigate risk, recently investors have been investing in crypto currency to hedge against risks in the regular stock exchanges and balance out their portfolio. That way, if the stock exchange crashes, crypto currency prices will rise and vice versa.

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10 hours ago, Hameedeh said:

Too risky. South Korean investigators say North Korea might be responsible for hacking one of the country's bitcoin exchanges. 

Decentralised exchanges and atomic swaps would solve this. In the future people will no longer use centralised currencies, thus there will be no need for centralised exchanges.

I know some of these words are meaningless to many of you, but I decided to post in this thread to demonstrate that this subject should not be treated with over simplicity.

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I'd like to understand Bitcoin and other virtual currency, but I think it takes more dedication to understand than I'm prepared to put into it at this time. So for me, it's too complicated, too risky, but for others it seems to be working. 

To a casual observer, it looks like a giant pyramid scheme. Hopefully to those with knowledge it's a fair and just medium for exchange. 

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3 hours ago, notme said:

I'd like to understand Bitcoin and other virtual currency, but I think it takes more dedication to understand than I'm prepared to put into it at this time. So for me, it's too complicated, too risky, but for others it seems to be working. 

To a casual observer, it looks like a giant pyramid scheme. Hopefully to those with knowledge it's a fair and just medium for exchange. 

To me, virtual currency is not only high-risk, but appears to be not a pyramid or Ponzi scheme, but a "pump and dump".

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Neither fiat currency nor cryptocurrency represent a fixed amount of a tangible commodity, e.g. gold, silver, wheat, barley, dates. Therefore both are two faces of the same coin as it were.

All the gains and millionares being made through this means many will also have to lose. At the end of the day investors are investing in fiat dollar and interested in returns in fiat dollar.

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Bitcoin's "rise" from `$1000 to nearly $20,000 and then a drop of ~40% in 1-22Dec2017.

The virtual coin's hyper-inflation is such a short time is speculation but all paper currencies not only experience inflation --devastating to the retired and the infirmed-- but eventually go into hyper-inflation also.

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I remember talking to a friend in 2012 about buying a bitcoin miner, just months before it hit the news. Never went thru with it, maybe I should have had but I still am not quite sure what it is that makes the value of it go up or down, hard to understand.

The only unique selling point cryptocurrencies have over other currencies is that it has absolute anonymity which is something more and more valuable by the day. I think what causes the value increase is partially the increase of the general publics interest in the concept, the hype, as well as different government recognizing the currency. The day the currency will crash is the day that the governments of different countries will regulate it so much so that it will be like any other currency, so no more anonymity, no uniqueness. 

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People buy it for FOMO. Bitcoin is, in many senses, obsolete. Digital currencies on the other hand are the future.

It's a very risky market, yet if you have time to invest in it, and you enjoy learning about such stuff, I believe it can be a good experience.

Nonetheless, remember that there are better investments in life than bitcoin. Don't waste important time and efforts in it if you can dedicate it to learning, improving your academic and professional skills, enjoying time with your dear ones. If the FOMO is killing you, put 1000€ and forget about it.

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On 12/30/2017 at 5:43 AM, .InshAllah. said:

I was curious so I sent a bunch of emails.  Sayid Sistani (via najaf.org), Sheikh Fayyath, and Sayyid Kamal haidery say its halal.  Sayid Khamenei said he's not sure (at least his office did) and Sheikh Makarem said its not permitted.

Could you post it here , the emal of Sayid Sistani for example ?

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On 12/30/2017 at 5:43 AM, .InshAllah. said:

I was curious so I sent a bunch of emails.  . . .  and Sheikh Makarem said its not permitted.

What is his rational?

Personally, without knowledge of any fatwa, my religious view is that the volatility is so high as to be to similar to gambling PLUS there is no physical material underlying anything thing that can be valued. Worse than a derivative.

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Sayyid Sistani:

Question: Is it halal to buy and sell electronic currency such as bitcoin?

--

In the Name of Allah, the Beneficent, the Merciful

yes

Wassalamu Alaykum

Shaykh Fayyath:

image.png.b64d9e9d437eca06b9643de8c12590de.png

Sayid Khamenei:

 
What is the Sayids opinion on buying and selling electronic currency such as bitcoin?
Salamun `alaykum wa Rahmatullahi wa Barakatuhu
Since transaction's details are unknown, we are sorry for not being able to answer this question.
Director of the site's fiqh section
 

Sheikh Makarem:

Answer:  To trade and buy bitcoin is not permissible because of too much ambiguity. 
 

Sayyid Kamal:

النقود الالكترونية
سماحة السيد كمال الحيدري، هل يجوز شراء وبيع النقود الالكترونية كالبيتكوين؟ جزاكم الله خير
 

 

بسم الله الرحمن الرحيم

وعليكم السلام ورحمة الله وبركاته

لا إشكال في هذه المعاملة والحصول على الاموال من خلال تداول النقود الالكترونية ضمن الموازين الشرعية.

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