Bitcoin has taken the investing world by storm. It’s an unprecedented financial phenomenon, and the first of the cryptocurrencies to catch on and keep up with – and in some cases, even outpace – traditional investment opportunities. However, the path of bitcoin has been extremely volatile. Bitcoin value isn’t really tied to any real-world aspects, so the value is controlled almost entirely by supply and demand. Due to these risks, investing heavily in bitcoin is seen more as a gamble than a smart investment opportunity. Egypt’s top Imam isn’t a fan of cryptocurrency, and has endorsed a potential bitcoin trading ban.
Bitcoin Trading Ban
Sheikh Shawki Allam, the Grand Mufti in Egypt, has said that the cryptocurrency is forbidden by Islam, stating that it carried risks of “fraudulence, lack of knowledge, and cheating.”
As mentioned above, there aren’t many checks in place to keep the value of bitcoin from growing or falling exponentially. While the value of bitcoin started 2017 below $1000, it skyrocketed to over $20000 before the end of December.
However, those huge jumps are often followed by huge drops. In the course of a week, the value of bitcoin dropped more than 25%, sending many of those who invested recently during the bitcoin boom into a panic.
A bitcoin trading ban in Egypt would be unprecedented, and it’s interesting to question whether a cryptocurrency can truly be against the tenets of a religion. The Grand Mufti’s main gripe with the currency is the lack of regulation, which could potentially cause major issues for a wide range of peoples.
The fatwa, as reported by the Egyptian daily Ahram, states that “Bitcoin is forbidden in Sharia as it causes harm to individuals, groups, and institutions.”
This potential bitcoin trading ban comes very soon after the first bitcoin exchange opened back in August of 2017. Within a couple of months, the currency was declared a problem by authorities.
The country’s religious leadership also has some concerns that extend beyond the risk of individual and collective damage. With instability in the region, the lack of regulation with bitcoin worries the government, citing concerns that the cryptocurrency may be able to be used to fund terrorism.
Bitcoin and Islam
As mentioned above, the Grand Mufti believes that bitcoin is against the teachings of Islam. Governments with religious influences that are so concentrated in the day to day operations of the country are largely found in Muslim nations, and its possible that religious concerns may hold businesses and the people of the country back from a potentially groundbreaking investment opportunity.
While it’s the duty of the government to look out for the best interests of its people, the fact remains that many of the restrictions put into place by Muslim countries stifle innovation and economic growth in an effort to preserve culture and religious influence.
Whether this tradeoff is worth it depends on who you ask. As a country with deep religious roots, a bitcoin trading ban in Egypt may make sense. A bitcoin trading ban may not have far reaching effects in Egypt, but it sets a precedent that religion is prioritized over financial growth.
However, there have been some major steps towards inviting industry into Muslim countries such as Saudi Arabia, with the crown prince purging religious corruption and taking large leaps towards social and cultural advancement with decisions to let women drive and allow cinemas to operate within the country’s borders.
A bitcoin trading ban may protect Egyptian markets from volatility, but it also removes the important aspect of individual choice. A bitcoin trading ban so soon after the opening of the first exchange is no doubt unfortunate.