Banking Special Report

Bitcoin for Investment Islamic Banking

Bitcoins are created according to the source code of the software, as payment for transaction processing. Some users use their computational power to check, record and secure transactions in the blockchain. This activity, called mining, allows participants to be paid, for each newly validated block, newly created bitcoins and transaction fees processed. Bitcoins can then be exchanged for other currencies, goods or services. The price of cryptocurrency, is set primarily on specialized market places and fluctuates according to the law of supply and demand.

As a means of payment, Bitcoin is accepted by a growing number of merchants, prompted by transaction fees generally below the 2-3% charged by credit card organizations and oscillating, for the Bitcoin system, between 0 and 2 % of the transaction amount. Unlike credit cards, the potential costs are borne by the buyer (not the seller), who chooses to pay voluntarily. A bitcoin transaction is irrevocable and can not be cancelled. Despite a growth of 500% in the number of merchants accepting bitcoin in 2014, cryptocurrency is not yet well established in the retail trade but continues to gain a foothold in trade.

Since its creation in 2009 and until the closure by the American authorities of Silk Road in 2013, Bitcoin has been used mainly as a means of exchange by criminal networks for cash games, to buy illicit substances and databases. pirated data. Cryptocurrency has attracted the attention of financial regulators, legislative bodies in various countries, including the United States and the media. Nevertheless, in recent years, cryptocurrency has matured and an increasing number of studies conclude that these illegal activities, although they still exist as in any payment system, represent only a minority share of trade in the economy.  The US Senate also recognizes that bitcoin can provide perfectly legitimate financial services to integrate it into the regime of Islamic finance as a virtual currency usable and consistent with the principles of shariaa, we will have to give a small summary on the currency in Islam, and you know very well that money has a place important and many economics experts ignore the crucial role that money plays in so-called Islamic finance.

 

Find Out More in Our Next Coming Issue 26

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