Cryptocurrencies from Islamic Perspectives: A Systematic Literature Review

Abstract

This paper takes into view the conditions that render an investment or transaction forbidden in Islam and relates them to cryptocurrencies through a literature research methodology. Furthermore, elements that exist in the cryptocurrency ecosystem such as tokens, initial coin offerings (ICOs) and cryptocurrency derivatives are assessed to check as to whether they are compatible with Islam. The difference between Bitcoin and its alternatives is also recognized by analyzing their underlying technology and how they could be a major tool in defining whether or not a cryptocurrency falls in the Islamic permissibility criteria. It concludes that although the technology of cryptocurrencies in itself is permissible; different aspects contribute in deciding whether the specific digital currency in question is permissible or forbidden. Future research is needed on a couple of key issues related to Proof of Stake protocol which has been discussed.