Fintech, Digital Currency and The Future of Islamic Finance: Strategic, Regulatory and Adoption Issues in The Gulf Cooperation Council Nafis Alam

Fintech, Digital Currency and the Future
of Islamic Finance: Strategic,

Regulatory and Adoption Issues in the
Gulf Cooperation Council Nafis Alam
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Edited by
Nafis Alam
Syed N. Ali
Fintech, Digital
Currency and the
Future of Islamic
Finance
Strategic, Regulatory
and Adoption Issues in
the Gulf Cooperation
Council
Fintech, Digital Currency and the Future of Islamic
Finance
Nafis Alam • Syed Nazim Ali
Editors
Fintech, Digital
Currency and the
Future of Islamic
Finance
Strategic, Regulatory and Adoption Issues
in the Gulf Cooperation Council
Editors
Nafis Alam Syed Nazim Ali
School of Accounting and Finance College of Islamic Studies
Asia Pacific University of Technology Hamad Bin Khalifa University
and Innovation (APU) Doha, Qatar
Kuala Lumpur, Malaysia
ISBN 978-3-030-49247-2 ISBN 978-3-030-49248-9 (eBook)

https://doi.org/10.1007/978-3-030-49248-9
© Gulf Research Centre Cambridge 2021

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Foreword
FinTech has garnered an increasing amount of interest in recent years.

Banks and financial institutions are taking steps to catch up with the digital
and FinTech wave. At the outset, the new trends that are emerging in
financial communities, such as digital banking, have been challenging the
hegemony of the incumbent banks whose business model has remained
constant over several years despite the changing industry landscape.
Simultaneously, AI (Artificial Intelligence) is key to the future of digital
banking, and more importantly, ethics in AI application is a recurring
theme in the literature. Likewise, microfinancing, through the use of
FinTech technologies, has opened up the banking sector to an entirely
neglected part of the business sector. Recently due to the COVID-19
pandemic, digital finance has garnered much support from the users in
GCC and beyond and FinTech will further drive the digital transformation
of the financial services industry.
Islamic finance institutions in GCC countries see much promise in this
development because of its potential to promote financial inclusion
through its various innovative solutions, for example, crowdfunding,
blockchain, peer-to-peer lending, and so on. It is by and large aligned with
the principles of maqasid al-shari‘ah and maslaha. It has also attracted
stakeholders from both theoretical and applied fields to study, analyse, and
utilise this technology as in GCC is apparent where technology advance-
ment always precedents over the others. As FinTech is rapidly expanding
its footprints globally, both in academia and industry, many academic
institutions are planning to introduce FinTech courses and training pro-
grammes in their course curriculum. This effort will help to meet the
v
vi Foreword
challenge of building the human capital needed with the proper expertise
to employ this technology efficiently.
In the State of Qatar, Qatari banks and financial institutions are taking
steps to catch up with the digital and FinTech wave. Qatar Development
Bank (QDB) has been appointed by Qatar Central Bank (QCB) to head
the FinTech taskforce. They are in the process of launching a specialised
Fintech Islamic Finance programme with Hamad Bin Khalifa University.
Qatar Financial Centre (QFC) Authority is keen to promote the business
aspect of it, where we are continuing to facilitate Fintechs on the QFC
platform via a Fintech services provider licence to enable Fintechs’ access
to Qatar’s lucrative market. Additionally, Qatar Fintech Hub has been
designed as a central entity to mobilize and promote the FinTech ecosys-
tem in Qatar, and this is being executed in collaboration with QCB, QFC,
and QDB.
Furthermore, the Gulf Research Forum (GRM) engagements with this
niche topic and its relevance to GCC are to be commended. The chapters
included in this volume provided a special treatment that helps to form a
knowledge nucleus on the subject. The chapters are written by experts
dealing with cryptocurrencies, bitcoins, blockchains, smart contracts, and
so on, and are all discussed within the framework of shari‘ah-compliant. I
believe this is the first written volume of its kind that provided special
attention to the GCC region with regards to FinTech as a potential tool
for financial institutions and will serve as a reference tool for those who are
interested in FinTech.
I wish to congratulate the editors and all the contributors for their
scholarly work and wish the readers a stimulating read.
Doha, Qatar Yousuf Al-Jaida

Contents
1 Introduction: FinTech and Islamic Finance in the Gulf

Cooperation Council (GCC) 1
Nafis Alam and Syed Nazim Ali
2 A Critical Analysis of Bitcoin from an Islamic Legal

Perspective 9
Farrukh Habib
3 Combining Islamic Equity Portfolios and Digital

Currencies: Evidence from Portfolio Diversification 31
Abdelkader O. El Alaoui, Amina Dchieche, and
Mehmet Asutay
4 The Potential of Smart Contracts for Murabahah Home

Financing: Toward an Integrated Model 49
Mohamed Cherif El Amri, Mustafa Omar Mohammed, and
Ruslan Sabirzyanov
5 The Application of Fintech in Microtakaful as a Means of

Digital Financial Inclusion: Insights from the GCC 77
Muhammad Ashfaq and Najeeb Zada
vii
viii Contents
6 Gharar-Free ReBittance: Powered by Blockchain107

Lokesh Gupta
7 Regulatory Issues in Cryptocurrency Usage127

Abdolhossein Zameni and Nafis Alam
8 Beyond the Jurisprudential Quagmire: Perspectives

on the Application of Digital Currencies and Blockchain
Technology in Islamic Economics and Finance147
Evren Tok
9 Does FinTech Revolution Lead to the Disintermediation

of Banks? A Study into Islamic Bank Income169
Ruhaini Muda, Mohd Saifulizwan Mohd Lateff, Roshayani
Arshad, Arif Azhan Rashdan, Ibrahim Abiodun Oladapo,
and Jaizah Othman
10 Utilizing Blockchain Technology for Post-Trade

Securities Settlement: A Framework for Islamic Capital
Markets in the GCC Region187
Leisan Safina and Umar A. Oseni
11 Any Luck with Bitcoin in Saudi Arabia?209

Umara Noreen, Zaheer Ahmad, Ohoud Saud Mohammed
Alfirm, and Nouf Ahmad Hamad Alhomoudi
12 Strategic Assessment of Islamic Fintech in

GCC Countries223
Tariq Gulrez
Index243
Notes on Contributors
Zaheer Ahmad is an assistant professor of Finance at the Department of

Business Administration, Iqra University (IU), Karachi, Pakistan. He
completed his PhD from the University of Technology Malaysia (UTM),
Johor Bharu, Malaysia, in 2019. He has been awarded three distinc-
tions including Best Thesis Award, Best Student Award, and Dean
List Award on his PhD convocation. His area of specialization is
behavioral finance. He has two refereed and indexed journal publica-
tions. He has six conference presentations and proceedings during his
PhD study. He has also 5 years’ private and 14 years’ public sector
industry experience in Pakistan.
Nafis Alam is Professor of Finance and Head of School of Accounting
and Finance at Asia Pacific University of Technology and Innovation
(APU), Malaysia. His research focuses on FinTech, banking regula-
tion, corporate finance, and Islamic banking and finance. He is a
research affiliate of the Cambridge Centre for Alternative Finance
(CCAF) at Judge Business School, University of Cambridge, UK and
contributes regularly to a global industry report on FinTech and
financial regulation. His scholarly articles have been published in
leading journals including The World Economy, Emerging Markets
Review, Pacific-Basin Finance Journal, Journal of Asset Management,
among others. He has also coauthored numerous books on Islamic
Finance and FinTech.
Ohoud Saud Mohammed Alfirm obtained an MBA in the year 2018
from Prince Sultan University, Riyadh, Saudi Arabia. He is a professional
ix
x NOTES ON CONTRIBUTORS
with 13 years’ experience in both the private and government sectors.

Currently, he holds a position in the Human Resources Department at the
Head Quarters of Riyadh 2nd health cluster that oversees a group of hos-
pitals, medical centres and primary healthcare centres located at the north
and east of the Riyadh region.
Nouf Ahmad Hamad Alhomoudi is a Saudi citizen, born and raised in
Riyadh, Saudi Arabia. She is an MBA graduate from Prince Sultan
University, Riyadh. Nouf studied for two years focusing on courses such as
HR, finance, marketing, and general business administration. Nouf has a
BA in Translation from PSU. After graduating she worked at the Saudi
Electronic University for two years as a translator, blackboard editor, as
well as researching different topics related to education and business.
Syed Nazim Ali is Research Professor and Director, Research Division,
at College of Islamic Studies, Hamad Bin Khalifa University, Qatar. He
has spent the last 30 years spearheading interdisciplinary research in
Islamic finance and faith-based initiatives in finance as well as community
development. He is the founding director (former) of the Islamic Finance
Project at Harvard University and Acting Executive Director of the Islamic
Legal Studies Program at Harvard Law School. He was also a visiting fel-
low (2014–2017) at the Prince Alwaleed bin Talal Islamic Studies Program
at Harvard University, where he played a lead role in organizing several
conferences and seminars by observing global trends and creating forums
for intellectual debates.
Roshayani Arshad is Professor of Accountancy at the Accounting
Research Institute, Universiti Teknologi MARA, Malaysia. Her research
interests are in financial accounting and reporting, good governance prac-
tices, and impact assessment. Her current research projects focus on the
development of sustainable social sector ecosystems.
Muhammad Ashfaq is widely recognized as an outstanding and experi-
enced business and finance expert with more than 13 years’ international
experience. He is Professor of Finance and Accounting at the IUBH
University of Applied Sciences, Economics & Management in Germany.
Ashfaq is the author of the book Islamic Banking and Finance in Europe:
The Case of Germany and the United Kingdom. Ashfaq has spoken on the
topic of Islamic banking and finance, digital transformation, and business
ethics at conferences in more than 30 countries worldwide. He holds
NOTES ON CONTRIBUTORS xi
a PhD from the University of Tübingen, Germany and an MBA in Financial

Management from Coburg University in Germany.
Mehmet Asutay is Professor of Middle Eastern and Islamic Political
Economy and Finance at the Durham University Business School, UK;
Director of the Durham Centre for Islamic Economics and Finance;
Director for MSc in Islamic Finance and MSc in Islamic Finance and
Management programs; and also the Director of the Durham Islamic
Finance Summer School. Mehmet’s research and publication, teaching
and supervision of research are all in Islamic moral economy/Islamic
economics, Islamic finance and banking, Islamic political economy,
Islamic governance and management, and the Middle Eastern political
economies.
Amina Dchieche is Professor of Statistics, Financial Engineering,
Finance, and Islamic Finance at the International University of Rabat,
Rabat Business School, Morocco. After obtaining a bachelor’s degree in
mathematics and informatics and a master’s in financial mathematics at
University Mohammed V of Rabat, she wrote her doctoral thesis at
Mohammadia School of Engineering on hedging contracts in Islamic
finance. In parallel, she followed studies in Shari’ah and recently obtained
a master’s degree in Islamic sciences and construction of civilizations. Her
research is situated in the field of applied mathematics in finance,
with a special focus on Islamic finance.
Abdelkader O. El Alaoui is a visiting academic (Research Fellow) at
OCIS-Oxford University, UK and Associate Professor of Finance at ESCA
Ecole de Management, Morocco where he was Director of Research. His
current research, publication, and teaching areas include corporate finance,
capital markets, portfolio selection, risk management, and Islamic finance.
He has published several chapters in international books and articles
in SSCI-indexed journals. Abdelkader (PhD in Islamic Finance,
INCEIF – Malaysia) held the position of visiting research fellow at Durham
Business School, UK, and has previously taught at the Paris Dauphine
University, International University of Rabat, and CESAG, Senegal.
Mohamed Cherif El Amri is an assistant professor at the Faculty of
Business and Management Sciences, Islamic Economics and Finance
Department, at the Istanbul Sabahattin Zaim University. He obtained a
bachelor’s degree in Islamic Studies from Ibn Tofail University in Morocco.
He holds a master’s in Islamic Jurisprudence and its principles, while his
xii NOTES ON CONTRIBUTORS
PhD in Islamic banking and finance is from the International Islamic

University, Malaysia. He has industrial exposure to and experience in
several Islamic financial institutions internationally. He is also a
member of various international journal editorial and reviewer pan-
els. He has several research publications and presentations in the field
of Islamic Economics and Finance.
Tariq Gulrez is a senior analytics and consulting professional with rich
experience in designing custom research, modeling, indexing, and inter-
national benchmark and market progress monitoring. He is a member of
policy advisory boards at the Social and Economic Survey Research
Institute at Qatar University and Informatics Data Services. Presently,
Tariq is engaged with Foresight as a Managing Partner—Indicators
and Analytics services and focuses around Computer vision,
Blockchain-based solutions and Artificial Intelligence. Mr. Gulrez
holds two master’s degrees—MBA and MSc. He was trained by
UN-ITU and UNCTAD in developing ICT usage and attitude indi-
cators among households, individuals, and businesses.
Lokesh Gupta has more than 18 years’ experience in the sector of
Financial Technology in Conventional and Islamic Banking Domain as a
Techno-Functional. He is also the cofounder and CTO of RM
Applications Sdn Bhd (www.rma.com.my) based in Kuala Lumpur,
Malaysia. He leverages experience in the areas of payments, remit-
tance, digital channels, data management, regulatory reporting, ana-
lytics and, project management for IT solutions for financial
institutions in the South East Asia region. He has also coauthored
books and published papers focusing on Islamic Banking and Finance
in various magazines.
Farrukh Habib is the cofounder and managing director of Alif
Technologies, Dubai, UAE. He is an expert in Shari’ah (Islamic law),
finance and FinTech, focusing on advisory, consultancy, corporate train-
ing, educational programs and product development in FinTech and the
halal digital economy. He has developed his own proprietary Shari’ah-
screening criteria for crypto assets. Previously, he was a Researcher at
ISRA, a research institute under the Central Bank of Malaysia (BNM). He
holds a PhD in Islamic Finance from INCEIF, Malaysia and is a m aster
(MSc) in banking and finance from Queen Mary University of London, UK.
NOTES ON CONTRIBUTORS xiii
Mohd Saifulizwan Mohd Lateff is a senior executive in the Channel

(Virtual Delivery) Department at the biggest Shariah Co-operative Bank
in Malaysia. His interest lies in digitalization for SME (Subject Matter
Expert) in the Islamic banking industry.
Mustafa Omar Mohammed is presently an associate professor at the
Department of Economics, and the Director of Islamic Economics at the
International Islamic University, Malaysia [IIUM]. He has won several
quality academic awards. He has published more than 50 refereed journal
articles and presented more than 80 papers; he has supervised more than
50 dissertations. He is also a journal editorial and reviewer panel member
to 11 academic entities. Mustafa has conducted several training work-
shops on Islamic economics, banking, and finance. He holds a bach-
elor’s degree and a master’s in Economics from IIUM and a PhD in
Finance from USM.
Ruhaini Muda is a research fellow at the Accounting Research Institute,
Universiti Teknologi MARA, Malaysia and a visiting researcher at the
Centre of Islamic Studies, University of Cambridge, UK. Her primary
research interest is in the development of ethical and sustainable Islamic
social finance, with a particular focus on the impact assessment and finan-
cial technology.
Umara Noreen is an assistant professor in the College of Business
Administration, Prince Sultan University, Riyadh, Saudi Arabia. She com-
pleted her PhD from Foundation University Islamabad, Pakistan in 2010.
She has an extensive teaching experience of 22 years at tertiary levels. She
has 25 refereed and indexed journal publications, 15 conference pro-
ceedings, and a published book to her credit. She has also developed
a training manual for nonprofit organizations under The Asia
Foundation USAID project at CIIT. She has delivered training pro-
grams to the executives of Riyadh Bank and the Elite Monsha’t PSU
program to entrepreneurs in Saudi Arabia.
Ibrahim Abiodun Oladapo is an assistant professor at the College of
Business Administration, Imam Abdulrahman Bin Faisal University,
Dammam, Saudi Arabia. He draws on his research background to examine
good governance practices and its relationship to the development of
inclusive human policies.
xiv NOTES ON CONTRIBUTORS
Umar A. Oseni is Chief Executive Officer of the International Islamic

Liquidity Management Corporation (IILM), a multilateral financial insti-
tution headquartered in Kuala Lumpur, Malaysia. Prior to this, he was
Executive Director and Acting Chief Executive Officer of the same
multilateral financial organization. At some point in his career, Umar
was an associate professor of Law and Regulation of Islamic Finance.
Umar was also a visiting fellow at the Islamic Legal Studies Program
of the Harvard Law School, Harvard University. Umar has also published
widely in refereed journals and books on Islamic finance and law.
Jaizah Othman is Lecturer at Dublin City University Business School,
Ireland. Her research interest lies in Islamic microfinance and financial
distress in Islamic banks.
Arif Azhan Rashdan is a graduate student at the Department of
Accountancy, International Islamic University, Malaysia. His research
interest is in data science and auditing.
Ruslan Sabirzyanov works in the Abu Dhabi Islamic Bank (ADIB) in
UAE. He holds a diverse educational background in Shari’ah, Computer
Science, and Islamic Finance from leading universities in their respective
countries. He is a highly qualified Islamic Finance professional with exper-
tise in Shari’ah compliance, review, structuring, and documentation.
He has a strong knowledge of Islamic banking processes as well as
extensive experience of advising on a range of transactions across the
globe. He has a strong academic focus in Shari’ah and its application
to commercial transactions. This is evidenced in several academic
publications on the subject as well as membership in editorial boards
and professional associations.
Leisan Safina was a treasury officer in Hayat Kimya, Russia. She was also
an intern at the Islamic Cooperation for the Development of the Private
Sector (ICD), IDB Group. She received her degree from Kazan Federal
University (Russia) and later completed her master’s degree in Islamic
Banking and Finance from the International Islamic University,
Malaysia. Her area of interests is Islamic banking and finance,
FinTech, particularly Blockchain for Islamic finance. She has pre-
sented several papers in conferences across the world including a
coauthored paper presented in Tehran, the Islamic Republic of Iran
on “Utilizing Blockchain Technology for Post-Securities Settlement: A
framework for Islamic Capital Market in Iran.”
NOTES ON CONTRIBUTORS xv
Evren Tok is Associate Professor and Assistant Dean for Innovation and
Community Advancement, Program Coordinator for Islam and
Global Affairs Program at College of Islamic Studies, Hamad Bin
Khalifa University, Qatar. He is the coeditor of Policy Making in a
Transformative State: The Case of Qatar, published by Palgrave
Macmillan, 2016. His recent publications are Global Governance and
Muslim Organizations published by Palgrave Macmillan and Innovating
South-South Cooperation by University of Ottawa Press in 2020. He is
the Lead Project Investigator for Qatar National Research Fund
Priority Program for 3 years on “Localizing Entrepreneurship
Education in Qatar.”
Najeeb Zada is Head of Shari’ah Advisory Board at Amanah Institute of
Islamic Finance and Economics (AmanahIIFE). He is a faculty member in
the Faculty of Religious and Legal Studies, Islamia College University,
Pakistan. He holds a PhD in Islamic finance from the International
Centre for Education in Islamic Finance (INCEIF), before which he
obtained master’s degrees in Islamic Studies, Arabic, and English lin-
guistics, respectively. Najeeb’s areas of research include insolvency,
bankruptcy, restructuring as well as the legal, regulatory, supervisory,
and Shari’ah aspects of Islamic finance in general and Sukuk in
particular.
Abdolhossein Zameni is a senior lecturer and program leader of a few
programs at Graduate School of Business, SEGi University. Previously, he
was attached to Henley Business School-UoRM. In 2014, he was awarded
a PhD in Finance by the National University of Malaysia. Zameni has
experience in the fields of finance, accounting, and industry. His research
interests are in the areas of IPOs, including Malaysia’s IPO perfor-
mance and lock-up provision, FinTech, and cryptocurrency. He is the
coauthor of Fintech and Islamic Finance, Digitization, Development and
Disruption, featured by BookAuthority among the top 15 FinTech
books in 2020.
List of Figures
Fig. 2.1 Types of crypto-assets. (Source: Author’s own) 10

Fig. 2.2 Taxonomy of Bitcoin as a currency. (Source: Authors’ own) 14
Fig. 3.1 Returns for DJ Islamic Indices from 2013 to 2018 38
Fig. 3.2 Returns digital currencies from 2013 to 2018 39
Fig. 3.3 Volatility for the Dow Jones Islamic indices from 2013 to 2018 40
Fig. 3.4 Volatility for the three digital currencies from 2013 to 2018 40
Fig. 3.5 Correlation between DJ Islamic GCC and its 4 counterparts
from 2013 to 2018 41
Fig. 3.6 Correlation between Bitcoin and its 2 counterparts from 2013
to 2018 42
Fig. 3.7 (a) Returns for the Dow Jones Islamic indices portfolio from
2013 to 2018; (b) Returns for the digital currencies portfolio
from 2013 to 2018; (c) Returns for the combined portfolio
from 2013 to 2018 from 2013 to 2018 43
Fig. 3.8 (a) Volatility for the Dow Jones Islamic indices portfolio from
2013 to 2018; (b) Volatility for the digital currencies portfolio
from 2013 to 2018; (c) Volatility for the combined portfolio
from 2013 to 2018 from 2013 to 2018 44
Fig. 4.1 Murabahah to the purchase orderer home financing contracts 62
Fig. 4.2 The general process of Blockchain technology 63
Fig. 4.3 Proposed smart contract model for the Islamic banking FinTech 65
Fig. 5.1 Number of mobile phone users worldwide from 2015 to 2020
(in billions). (Source: Authors own. Adapted from Statista
(2019))89
Fig. 5.2 Use of mobile phones in microinsurance processes. (Source:
Adapted from Oza, Mukherjee, and Ruchismita (2013)) 89
xvii
xviii List of Figures
Fig. 5.3 Potential use of Fintech in microtakaful: enhancing consumer

experience. (Source: Authors’ own compilation) 95
Fig. 5.4 Payments and claim processing in takaful on blockchain via
smart contracts. (Source: Authors own. Adapted from World
Economic Forum (2016)) 97
Fig. 5.5 Digital financial inclusion: some regulatory Concerns.
(Source: Authors’ own) 100
Fig. 6.1 The flow for cash-to-cash service. (Source: Author own) 111
Fig. 6.2 The Flow of Direct Credit to Bank Account via
MTO. (Source: Author own) 112
Fig. 6.3 The Flow of Direct Credit to Bank Account via
SWIFT. (Source: Author own) 114
Fig. 6.4 The Flow of Mobile to Mobile. (Source: Author own) 117
Fig. 6.5 The Flow of Mobile to Cash. (Source: Author own) 118
Fig. 6.6 The Rebittance Transaction Flow using Cryptocurrency and
Blockchain. (Source: https://fintuned.net/. Adapted and
enhanced further to illustrate the process) 120
Fig. 11.1 Awareness of virtual currency by age and gender 215
Fig. 11.2 Awareness of Bitcoin 216
Fig. 11.3 Awareness of Bitcoin by education and income 216
Fig. 11.4 Reasons for non-adoption of Bitcoin. (Note: This graph shows
the breakdown of responses when asked about the reasons for
non-adoption of Bitcoin) 217
Fig. 11.5 Adoption of Bitcoin. (Note: This graph shows the breakdown
of responses when asked “Do you currently have or own any
Bitcoin?” and answered with “Yes”) 218
Fig. 11.6 Payment method 219
Fig. 11.7 Bitcoin trust 219
Fig. 11.8 Future of Bitcoin 220
List of Tables
Table 3.1 Excess average returns for digital currencies (daily and annual) 46
Table 3.2 Variance covariance matrix for digital currencies 46
Table 3.3 Excess average returns for Islamic stock indices (daily and
annual)46
Table 3.4 Variance covariance matrix for Islamic stock indices 46
Table 3.5 Optimal portfolio return and risk for Islamic indices and
digital currencies 47
Table 4.1 The interview questions 67
Table 4.2 Profile of the experts 68
Table 4.3 Main themes and interview questions 69
Table 5.1 Characteristics of microtakaful products 83
Table 5.2 General challenges in digital financial inclusion via microtakaful99
Table 8.1 Definitions of mal as per different school of jurisprudence 156
Table 8.2 Cryptocurrency legal permissibility in Islam 158
Table 8.3 Counter arguments against cryptocurrency impermissibility 159
Table 9.1 Summary statistics of all variables used in the model for
Islamic banks, conventional banks; and Islamic and
conventional banks from 2009 to 2016 177
Table 9.2 POLS, fixed effects and random effect models. Panel A:
Islamic banks; Panel B: Conventional banks and Panel C:
Pooled data for Islamic & conventional banks 179
Table 11.1 Major characteristics of bitcoin as of March 6, 2020 211
Table 11.2 Countrywide status of bitcoins: All-time country volume
leader board (USD) as of March 6, 2020 214
xix
CHAPTER 1
Introduction: FinTech and Islamic Finance

in the Gulf Cooperation Council (GCC)
Nafis Alam and Syed Nazim Ali
Introduction
Technology is changing the landscape of the financial sector by rapid
changes in the way customers interact with financial service providers.
Financial tasks once handled by humans across banking branches are now
being completely transformed by technological innovation. Financial
startups with innovative financial products and services are posing a threat
to incumbent financial services institutions (FSIs) including Islamic finan-
cial institutions (IFIs). The business models of these startups which work
on data-driven models and require very little capital and fixed assets are
aiding them to disrupt traditional financial institutions and gain market
share quickly.
N. Alam (*)
School of Accounting and Finance, Asia Pacific University of Technology and
Innovation (APU), Kuala Lumpur, Malaysia
e-mail: nafis.alam@apu.edu.my
S. N. Ali
College of Islamic Studies, Hamad Bin Khalifa University, Doha, Qatar
e-mail: snali@hbku.edu.qa
© Gulf Research Centre Cambridge 2021 1

N. Alam, S. N. Ali (eds.), Fintech, Digital Currency and the Future
of Islamic Finance,
https://doi.org/10.1007/978-3-030-49248-9_1
2 N. ALAM AND S. N. ALI
FinTech is a relatively recent term, and there is no specific definition for

FinTech yet, but the online version of the Oxford dictionary defines
FinTech as “computer programs and other technology used to support or
enable banking and financial services”. FinTech comprises of two words,
Finance and Technology. In general, FinTech is the term assigned to
financial service companies whose products or services are fabricated on
technology, much resulting in highly innovative, disruptive and pioneer-
ing services. FinTech firms are trying to shift the finance industry’s activi-
ties from physical premises to cloud-based services to make efficient
financial services accessible and available to everyone. Many existing finan-
cial institutions are implementing FinTech solutions to improve and
develop their services, as well as gaining an improved competitive stance.
Another comprehensive definition for FinTech would be “FinTech is the
new applications, processes, products, or business models in the financial
services industry, composed of one or more complementary financial ser-
vices and provided as an end-to-end process via the Internet” (Sanicola,
2017). These financial products and services could be categorized as lend-
ing, personal finance, retail and institutional investments, equity financing,
consumer banking, and several others.
Traditional banks and financial institutions are getting disrupted and
transformed by the emergence of FinTech startups (Alam et al. 2019). For
instance, basic financial activities such as payment and remittance are get-
ting felicitated by the advent of mobile apps that can facilitate financial
transactions at almost negligible service charges giving traditional FIs run
for their money. Fintech sector mostly is dominated by start-ups and
financial accelerators who are emerging or transforming new technologies
to change the way financial markets traditionally operate around the globe.
Fintech in the GCC

GCC nations are well-positioned to adopt FinTech in their financial ser-
vices landscape as noted by S&P Global Ratings report (S&P global
Ratings, 2019). The report noted that customer preference for digital
banking, access to capital and public policy reforms are driving the growth
of FinTech in GCC states.
FinTech ventures in the GCC helped to speed up payments, remit-
tances and strengthen underlying monitoring systems that record such
transactions. Remittances sector has been the biggest contributor to the
growth of Fintech platform in the region due to its large expatriate
1 INTRODUCTION: FINTECH AND ISLAMIC FINANCE IN THE GULF… 3
workforce which represents 37% of the total workforce in the GCC. The
opportunities for remittance platform can be gauged from the fact expatri-
ates in the GCC sent US$120 billion back home by the end of 2017 (S&P
global Ratings, 2019).
GCC governments, particularly of the UAE, are building on the infra-
structure and providing incentives to startups to encourage a region-wide
FinTech adoption by connecting a multitude of different stakeholders to
support financial innovation. For example, the Dubai International
Financial Centre (DIFC) rolled out a US$100 million FinTech fund in
2017, to help get start-ups off the ground and help businesses grow.
Likewise, Bahrain Development Bank and the Economic Development
Board of Bahrain also launched two separate funds of US$100 m each to
support FinTech in the region.
A report by Bloomberg Intelligence (Bloomberg Research arm) noted
that Fintech startups in the Middle East & North Africa (MENA), which
include GCC, are expected to expand from 96 startups in 2019 to 465 by
2020 and the venture capital investment in fintech sector will jump to
US$2.28 billion by 2022 from US$287 million in 2019. The same report
noted that the UAE with 67 tops the list of countries in the region with
the highest number of Fintech startups to date. MENA Research Partners
(https://www.mena-rp.com/), a leading research company in the region
also noted that the UAE and Saudi Arabia are expected to play a key role
in unlocking the GCC growth potential and shaping the MENA fintech
sector. Both nations are contributing to fintech transformation in the
region. For instance, the banks located in the UAE have already embarked
on FinTech. One such example is the Emirates NBD which has stationed
itself as the leader of the technology by releasing the Emirates NBD Future
Lab. And along with this, they have also declared their commitment to
invest AED 1 billion (USD 272 million) in the space.
Some other notable developments for Fintech in the GCC region
include:
1. Central Bank of Bahrain (CBB) introduced the Fintech regulatory

sandbox to enable foreign and domestic startups and financial institu-
tions to test out technology-based products and services. The Sandbox
application process is open to both existing CBB licensees and other
companies which may include financial sector companies as well as
technology and telecom companies intending to test an innovative
product or service, professional service firms which partner with or
service financial institutions, or any other type of applicant working

within the financial services industry deemed acceptable by the CBB
(https://www.cbb.gov.bh/fintech/).
2. Many GCC Financial authorities such as CCB, Dubai Financial Services
Authority (DFSA) and Abu Dhabi Global Market (ADGM) are part of
the Global Financial Innovation Network (GFIN) (https://www.fca.
org.uk/firms/innovation/global-financial-innovation-network). The
GFIN, which is a global network of 28 global organizations including
the UK’s Financial Conduct Authority (FCA), is committed to sup-
porting financial innovation in the interests of consumers. The GFIN
seeks to provide a more efficient way for innovative firms to interact
with regulators, helping them navigate between countries as they look
to scale new ideas. This includes a pilot for firms wishing to test innova-
tive products, services or business models across more than one juris-
diction. It also aims to create a new framework for cooperation
between financial services regulators on innovation and sharing differ-
ent experiences and approaches.
3. The Saudi Monetary Authority (SAMA) has launched an initiative,
Fintech Saudi (www.fintechsaudi.com), to promote and develop the
Fintech industry in the Kingdom. It acts as a catalyst for the develop-
ment of the financial services technology industry in Saudi Arabia, to
transform the Kingdom into a global Fintech hub. Through the initia-
tive, SAMA aims to promote the small and medium enterprises sector,
diversify the local economy, and create job opportunities. The initiative
is aiming to achieve several objectives, like, launching the first version
of the Kingdom’s fintech system; educating individuals and inspiring
them to develop their knowledge and skills in the fintech field; and sup-
porting local banks, international fintech companies, and partners to
establish diverse fintech activities in the Kingdom.
4. The UAE government has announced plans to utilize blockchain for
50 percent of federal government transactions by 2021. Dubai is show-
casing increased focus on blockchain initiatives with the establishment
of the Global Blockchain Council which has been launched by Dubai
Future Foundation, a UAE government initiative (www.dubaifuture.
gov.ae). The council consists of 46 members, all of which are potential
key players in the Blockchain industry, and are shaping the market day
by day. They include government entities, international companies,
leading UAE banks, free zones, and international Blockchain technol-
ogy firms, including Microsoft, Du, SAP, IBM, Cisco among others.
5. In line with its vision and aim to encourage and adopt innovation in
FinTech, the Central Bank of Kuwait (CBK) (www.cbk.gov.kw) has
issued the Regulatory Sandbox Framework which encourages both
companies and individuals looking to provide innovative products and
services in the financial services industry. The startups will be associated
with the electronic payment of funds and that utilize new technology
or existing technology innovatively, to test their innovations within a
methodology that ensures the safety and soundness of the financial and
banking sector.
6. Qatar Central Bank (QCB) is also taking a lead in developing Fintech
strategy for the country. In late 2018, the QCB and the Qatar
Development Bank (QDB) met with Swedish fintech institutions in
Stockholm to discuss plans to open the Doha Fintech Hub. QDB has
also launched Qatar Fintech Hub (https://fintech.qa) in 2018 as part
of its fintech vision and ambitions. The Qatar Fintech Hub has been
established as a global fintech hub with the purpose to support the
development of the fintech industry in Qatar. It aims to facilitate col-
laboration among the participants and stakeholders of the fintech eco-
system and develop local and global relationships that will advance the
bank’s fintech vision.
7. The Central Bank of Oman (CBO) has constituted a task force to for-
mulate a comprehensive strategy to support the growth and uptake of
Fintech in the Sultanate. In this regard, the Central Bank of Oman has
approved the request of Bank Muscat, the leading financial services
provider in the Sultanate, to establish a $100 million (appr. OMR38.5
million) nationwide, strategic Fintech investment program.
Fintech and Islamic Finance in the GCC

Islamic finance is one segment of the finance industry which offers a lot of
potential for digital transformation due to a tremendous amount of oppor-
tunities available for Islamic finance institutions (IFIs) to embark on to
achieve multiple strategic objectives. With the help of digitalization, IFIs
can achieve financial inclusion, offer customer-oriented financial services,
operation excellence and gain a competitive advantage over their peers.
Crowdfunding, peer-to-peer model and payment platforms, smart con-
tracts and blockchain, cryptocurrencies, cybersecurity and so on are among
a few emerging channels of digital transformation that could be utilized in
the Islamic finance industry. Even though Islamic banks are at par with
their conventional counterpart when it comes to technological develop-
ment, the Shariah aspect of the financial transaction can be a hurdle to
digitalize the process. Knowhow about the blockchain or the permissibil-
ity of cryptocurrency can deter the adoption of Fintech within the Islamic
finance industry.
In a recent survey of 103 global Islamic bank managers by the General
Council for Islamic Banks and Financial Institutions (CIBAFI) found that
70% of the respondents’ view digital transformation as an extremely
important strategic area (CIBAFI, 2018). Many banks in the Middle East
and Africa are launching technology departments and forming joint ven-
tures with FinTech firms, with almost 45 per cent of respondents planning
to increase or launch digital branches in the future.
According to Marmore’s report on ‘Fintech in GCC’, one of the big-
gest potential impacts of Fintech will be on Islamic finance. Fintech could
potentially increase the reach of Islamic financial services and provide
more choices that suit individual needs at a competitive cost (Marmore,
2019). SMEs that find it hard to obtain sharia-compliant bank funding
from IFIs could look to Fintech firms to fill that gap. Some of the Islamic
finance players that have ventured into Fintech include Abu Dhabi Islamic
Bank (ADIB), Dubai Islamic Bank (DIB), and National Bonds, a shariah-
compliant savings and investment firm. ADIB has teamed up with IBM to
build a digital studio that will work on digital innovation projects across
the bank. Conventional Islamic banks seek to expand their presence in the
Fintech space by adopting technology in their service offerings.
Developments in the GCC Islamic Fintech startup space can be classi-
fied into two categories: Fintech startups that obtained Shariah compli-
ance and those which were developed with Shariah mindset from the
inception stage. The first category of Islamic Fintech startups comprised
of companies that obtained Shariah compliance to partner with IFIs, for
example, Beehive P2P, Stellar and Ovamba. While in the second category,
Fintech startups were conceptualized with Shariah mindset such as Wahed,
Haseed and OneGram, and so on. New York-based Wahed is a Shariah-
compliant Robo-advisor. Wahed Capital is an America-based Halal-
focused investment firm which claims its Wahed Invest (www.wahedinvest.
com) platform is the first Sharia-compliant Robo-advisor aimed toward
Muslim investors. The platform allows users in over 130 countries to start
investing with as little as US$100. Haseed is an Islamic Robo-advisor
coming out of Saudi Arabia and listed in DIFC Fintech Hive. Haseed
(https://www.haseedinvest.com/), which is still in its testing stage, aims
to provide investment experience with a fully automated digital financial
advisor and will invest in Sharia-compliant assets Another example is the
launch of UAE-based OneGram (https://onegram.org/) Shariah-
compliant cryptocurrency backed by gold. Each OneGram unit is backed
by physical gold stored in a vault, a feature that aims to address speculation
and price volatility. The tokens are paired for trading against Bitcoin, and
the company plans to add pairings to several hard currencies. OneGram
has sold around $400 million worth of its gold-backed tokens over the
past year.
It has to be noted that Fintech startups which are compatible with
Islamic Finance principles in GCC should take advantage of the IFIs infra-
structure, experience, regulatory relationships, customer and business net-
works, and databases. Complimenting the services of IFIs,
Shariah-compliant Fintechs can offer their innovative technology and ana-
lytics to reach international markets and provide a better customer experi-
ence at lower operating costs. With a huge customer base for Islamic
financial services, GCC countries can drive innovation and maintain
healthy talent supply in Fintech within Islamic finance space by collaborat-
ing, creating tie-ups and organizing events that serve as a good platform
for academia, training institutes, and industry practitioners.
Conclusion
Fintech firms have already made their presence felt across the globe, with
innovations such as digital remittances, Robo-advisory, algorithmic trad-
ing, and P2P insurance and lending platforms. To realize the full potential
of Fintech, financial services players including IFIs, both globally and in
particular in GCC, should develop strategies to realize the full potential of
FinTech and understand the financial risks and opportunities arising from
it. In the GCC, where FinTech ecosystems are yet to realize their full
potential, governments will have to play a more significant role than in
established markets. GCC governments have to play an important role in
estimating the financial benefits of establishing a conducive Fintech eco-
system and governance structure to promote Fintech development in the
region. The regulators and policymakers should prioritize the type of
startups the government wants to promote by setting up a zone of
development for an innovation hub and establish a set of criteria to guide

the best use of the regulatory sandboxes and fintech hubs in the region.
References
Alam, N., Gupta, L., & Zameni, A. (2019). Fintech and Islamic Finance. Springer
International Publishing.
CIBAFI. (2018). Global Islamic Bankers’ survey 2018. Available at: http://cibafi.
org/ControlPanel/Documents/Library/Pdf/EnglishGIBS2018-Final-
Online.pdf. Accessed 15 Mar 2020.
Marmore. (2019). Fintech in GCC. Available at www.e-marmore.com › media ›
FINTECH-in-GCC-Executive-Summary. Accessed 15 Mar 2020.
S&P Global Ratings. (2019). Fintech’s prospects in the Middle East and Africa.
Available at https://www.spglobal.com/en/research-insights/articles/fin-
tech-s-prospects-in-the-middle-east-and-africa. Accessed 15 Mar 2020.
Sanicola, L. (2017, February 13). What is FinTech? HuffPost. Available at:
https://www.huffingtonpost.com/entry/what-is-fintech_us_58a20d80e4b0
cd37efcfebaa. Accessed 15 Mar 2020.
CHAPTER 2
A Critical Analysis of Bitcoin from an Islamic

Legal Perspective
Farrukh Habib
Introduction
Crypto-asset is a form of digital or electronic asset, which was introduced
with the inception of Bitcoin in 2009. The authors’ own definition of
crypto-asset is that “it is a digital representation of value that uses crypto-
graphic encryption technique”. Before delving into the main discussion, it
is crucial to mention at the very beginning of this chapter that according
to the author, the term ‘cryptocurrency’ is a misnomer, and a nomencla-
ture which is used inappropriately. Neither all types of crypto-assets are
‘currencies’, nor ‘cryptocurrencies’ are the only type of crypto-assets.
Actually, cryptocurrencies are a subset of crypto-assets, while there are
many other types of crypto-assets. The only reason for the popularity of
the term ‘cryptocurrency’ for all types of crypto-assets is that the first
crypto-asset, Bitcoin, and other early-stage crypto-assets, Namecoin,
Litecoin, Peercoin, and others were created as currency. Most of the
crypto-assets are hybrid, because they have features of currency as well as
other types of asset, hence it is difficult to draw a clear line of distinction
F. Habib (*)
Alif Technologies, Dubai, UAE
© Gulf Research Centre Cambridge 2021 9

N. Alam, S. N. Ali (eds.), Fintech, Digital Currency and the Future
of Islamic Finance,
https://doi.org/10.1007/978-3-030-49248-9_2
10 F. HABIB
Examples: Bitcoin, Litecoin,

Currency Coins/Tokens
Peercoin, Namecoin, etc.
Crypto-Assets Utility Tokens Example: FileCoin, HLC
Equity Tokens Example: DAO
Commodity Tokens Example: OneGram
Hybrid Tokens Examples: Ether, Petro, etc.
Fig. 2.1 Types of crypto-assets. (Source: Author’s own)
among different classes of crypto-assets. However, the proposed classifica-

tion is still useful in acquiring a better understanding and presenting the
discussion in a less confusing manner. Therefore, a classification of crypto-
assets, along with the Bitcoin, is given in Fig. 2.1 below.
Therefore, unlike the general trend, in this chapter, the term ‘crypto-
currency’ is only used for the currency-tokens, and not for all types of
crypto-assets. For the general class, the term ‘crypto-assets’ is preferred
and used throughout the chapter, which is technically and logically more
appropriate and less confusing for such type of asset class.
Generally, the introduction of internet, e-commerce, mobile network
and smart devices has greatly contributed in changing the shape of mon-
etary and financial services. However, the inception of Bitcoin, and other
crypto-assets, has been among the greatest influencers and strongest cata-
lyst for disruption. Although, the crypto-asset class, like Bitcoin, is still at
its infancy stage; experts have already regarded its impact and effect as the
beginning of a new technological revolution, particularly relevant to the
financial services sector.
Money has a history of transformation through several items; shells,
wheels, beads and even cows. Broadly, commodity money was made of a
substance that had its own value such as gold and silver coins, unlike a
representative money which is a certificate or a debt receipt. While fiat
2 A CRITICAL ANALYSIS OF BITCOIN FROM AN ISLAMIC LEGAL PERSPECTIVE 11
currency does not have intrinsic usage or benefit and does not represent
an underlying asset in a vault somewhere. Money has indeed already
recorded a significant transformation. Today, digital money in the form of
virtual-currency as represented by Bitcoin and other currency-tokens is
another significant milestone in the transformation of money. While the
value of fiat currency comes from being recognized as legal tender by the
government of the issuing country which then leads to its acceptance by
the people, Bitcoin’s value emanates from the recognition of stakeholders
in the participating community. In other words, it is derived from general
people’s trust in the system and the economic principle of demand and
supply of Bitcoin.
Bitcoin has been mainstreaming gradually in the major financial dis-
course and multi-billion-dollar financial technology industry away from its
obscure origin as a monetary experiment of a small group of Techno-
Libertarians. It is being accepted in a growing number of online and
offline stores as a form of payment. This increasing acceptability of Bitcoin
has gravitated the interest of many financial stakeholders to this virtual
currency. There is growing need and calls by and on policy makers for a
well-analyzed and robust Shariah and regulatory positions for this billion-
dollar industry. Islamic economists and finance practitioners are also
expectedly concerned about the Shariah perspective of this new asset class.
Thus, this chapter seeks to and presents a critical analysis of bitcoin from
an Islamic legal perspective. While doing so, it hopes to offer a significant
contribution in this direction.
Historical and Recent Developments

A crypto-asset is developed using cryptography, which is the technique of
encrypting information for the sake of its secured exchange, and algo-
rithms designed to solve difficult computational problems as the proof-of-
work. The underlying technology of crypto-assets in general is referred to
as Blockchain. It is the technology of digital distributed ledger, where
information is saved in the form of blocks with the help of cryptographic
security (Wyk, 2013).
There are presently over 4946 crypto-assets which could be broadly
classified into Bitcoin and alternative coins, or altcoins in short
(Coinmarketcap.com, 2019). According to this classification, every
crypto-asset, other than Bitcoin, is called altcoin. As of December 2019,
12 F. HABIB
there were over 18.1 million bitcoins in circulation with a total market
value of USD 120.9 billion (Coinmarketcap.com, 2019).
Following the global financial crisis, in 2008, Satoshi Nakamoto (a
pseudonym), introduced the idea of digital peer-to-peer (P2P) payment
system in the form of Bitcoin and suggested reducing the intermediary
role of financial institutions in the financial transactions. The system was
introduced as an alternative to building trust among the parties of a trans-
action at a distributed network while maintaining their anonymity, and
that too without having a third party to establish that trust (Nakamoto,
2008). After initiating the idea, Satoshi Nakamoto also developed the sys-
tem and uploaded it as an open source program in 2009.
Altcoins are the alternative crypto-assets launched after the success of
Bitcoin. They are projected as better substitutes to Bitcoin by trying to
target any perceived limitations of Bitcoin and develop newer versions
with competitive advantages. They include Litecoin (LTC, launched in
2011), Ethereum (ETH, launched in 2015), Zcash (ZEC, launched in
2016), Dash (originally known as Darkcoin, launched in 2014), Ripple
(XRP, launched in 2012), and Monero (XMR, launched in 2014), and
many others (Bajpai, 2017).
Policy decisions of nations toward Bitcoin are multifarious; while some
are friendly such as Estonia, the United States, Denmark, Japan, Sweden,
South Korea, the Netherlands, Finland, Canada, UK, and Australia (Scott,
2016), some have adopted ban on Bitcoin; which include Bangladesh,
Bolivia, China, Ecuador, Iceland, India, Russia, Thailand, Vietnam (Smart,
2015). Others remain indecisive. Examples of such nations include
Malaysia (De, 2017). In many of these states, the journey of their regula-
tory development on Bitcoin has been long and, in some cases, still con-
tinuous. Japan, for instance, approved a law regulating Virtual Currencies
on May 25, 2016, which was promulgated on June 3, 2016. On September
30, 2017, the Financial Services Agency (FSA) of Japan granted its first
licenses for digital currency exchanges to 11 companies. On April 1, 2017,
it enacted a new law authorizing the use of digital currency as a method of
payment, essentially granting it the same legal status as any other currency.
The law follows months of debate which ultimately brought Bitcoin
exchanges under anti-money laundering (AML) and know-your-customer
(KYC) rules and resulted in the categorization of Bitcoin as a kind of pay-
ment instrument.
Bitcoin Explained
Crypto-assets got to financial lime light since 2008 just towards the end of
the global financial crisis, and the first was Bitcoin in 2009 developed by
Nakamoto. Bitcoin is a concept of an encrypted virtual currency using the
Blockchain protocol to perform financial transactions. In the aftermath of
the financial crises in 2008, Bitcoin was developed as an alternative to
traditional currencies (Deloitte, 2015).
In a strict sense, the definition of Bitcoin can be given as:
Bitcoin is a collection of concepts and technologies that form the basis of a digi-
tal money ecosystem. (Antonopoulos, 2015, p. 1)
Another definition is given as:
Bitcoin is a decentralized digital currency. (Franco, 2015, p. 3)
The meaning of decentralized is that Bitcoin is neither controlled by

central authority nor issued, endorsed, or regulated by any central bank or
monetary authority. It also means that it is not tied to any country.
Consequently, it is not under the control of any central bank, nor can it be
minted by a centralized authority. Instead, bitcoins are created through a
computational process known as mining. The blockchain technology
behind it tracks and records data across a digital ledger, which is distrib-
uted on a network made up of participating parties, called nodes. The
distributed ledger system means that instead of data being kept only by
two counterparties or in a central repository, it is verified and stored across
hundreds or thousands of computers across the globe (Deloitte, 2015).
In other words, Bitcoin, the system,1 exists in the form of copies of a
distributed digital ledger containing all the transactions of Bitcoin that is
stored and updated through the nodes that communicate with each other
over the internet. The copies—that are updated continuously—contain
the record of every transaction that has been completed within the system
since its inception, creating an immutable history (Nakamoto, 2008).
1
Throughout this chapter, the term ‘Bitcoin’ with capital ‘B’ refers to the system or the
underlying blockchain ledger itself, which is only one, hence, it is not correct to use this term
in plural form with an ‘s’. On the other hand, the term with small ‘b’ or in plural form with
an ‘s’ is used for the currency units generated by the system in the form of digital tokens.
14 F. HABIB
The feature of decentralization also means that it does not need any
centralized clearing house or third party to verify money supply and trans-
actions. Rather, it is built on a network of computers toward the singular
purpose of validating and clearing transactions on the Bitcoin system. The
distributed and decentralized network allows each individual user (miner)
to verify the validity of individual transactions and the system through the
cryptographic protocols. All this data is stored by each miner on a distrib-
uted ledger known as the Blockchain. Blockchain—a distributed ledger—
is stored locally on the computer hard drive or any other storage device
of every miner running a full version of the Bitcoin software (Kaye
Scholer, 2016).
It is also important to understand the categorization of Bitcoin in the
context of currency. Therefore, Fig. 2.2 below summarizes the taxonomy
of Bitcoin as a currency.
According to Fig. 2.2 above, the currency or money can be divided
into: (1) physical currency; and (2) digital currency. Physical currency is
what is available in the form of paper notes or bills and coins issued by a
national government as a legal tender. Examples of such currency are US
dollar bill, a note of Malaysian ringgit, etc. On the other hand, digital cur-
rency does not have any physical form, because it is stored, seen and trans-
ferred through electronic system. This can be divided into: (1) electronic
money; and (2) virtual currency. Electronic money is simply a digital rep-
resentation of the physical currency. Therefore, it is centralized, issued by
a government, has the status of legal tender, and pegged and represented
in the same units as physical currency. The example of electronic money is
the balance in a bank account shown in an online system. If someone has
Bitcoin and other

Cryptocurrency
currency tokens
Virtual Currency
game credits, air miles,
Non-Cryptocurrency
Currency
Digital Currency loyalty points, etc.
Fiat money stored in a

Electronic Money
bank account
Fiat money, i.e. USD,

Physical Currency
GBP, MYR, Etc.
Fig. 2.2 Taxonomy of Bitcoin as a currency. (Source: Authors’ own)

deposited USD 10,000 in a bank account, the same amount is represented

in the online account system. If the depositor withdraws USD 3000 from
the account, the online system will then show only USD 7000 as the
account balance. This means that it is a simple digital reflection of the
physical money.
The second form of digital currency is virtual currency which is, unlike
electronic money, not issued by a government, hence it is not a legal ten-
der. It may not be pegged or represented in the same unit as physical cur-
rency. This category can be further classified into: (1) non-cryptocurrency;
and (2) cryptocurrency. Non-cryptocurrency, as the name suggests, does
not use cryptographic technique for encryption; and they are not particu-
larly created as a ‘currency’ in a strict sense. Their usage is limited to a
certain organization, specific service or discount. Examples of such cur-
rency are credits of an online gaming community; loyalty points of a spe-
cific company which can be used for special discounts or to purchase
special gifts; airmiles which are offered to a frequently flying member by
an airline company; and many others.
Lastly, it is the cryptocurrencies which can be issued and used as a
medium of exchange as well as a representation of certain type of digi-
tal asset.
Current Resolutions and Fatwas on Bitcoin:

A Critical Analysis
Shariah opinions are diverse on Bitcoin. Some Islamic legal verdicts hold
impermissibility of Bitcoin based on its volatility and intangibility among
other reasons. Some scholars either consider it permissible while others are
indecisive. Even among Shariah scholars holding the position of imper-
missibility, some isolate Bitcoin while others generalize it to encompass
other crypto-assets. Few of these opinions are presented here.
Scholars Who Are against Bitcoin
1. Turkey’s Directorate of Religious Affairs (Diyanet), which is the top

state organization dealing with religious matters, has ruled that digi-
tal currency, Bitcoin, is not appropriate according to Islam. The
directorate’s head said: “the purchase and selling of digital currencies
is not appropriate according to [Islamic] religion at this point due to
16 F. HABIB
the fact that they are open to speculation in terms of value and they can
easily be used mostly in illegal deeds such as money laundering. They
are also far from state auditing and supervision” (Hurriyet Daily
News, 2017).
2. Egypt’s Dar Al Iftaa (the office of the Grand Mufti of Egypt) issued
a Fatwa (Islamic ruling) that deems Bitcoin as forbidden by Islam.
“Bitcoin could be harmful to the country’s social and economic secu-
rity”, Dar Al Iftaa said, stressing that the currency could break
through the national security and central financial system. The
Egyptian Grand Mufti’s Counsellor, Magdy Ashour, said that the
currency “is used directly to fund terrorists” explaining that its trans-
actions threaten major damage to the economy. Moreover, the sys-
tem has no set rules, which is considered as a contract annulment in
Islam, that is why it is forbidden, Ashour added (Middle East
Monitor, 2018).
3. Dar al-Ifta, the Supreme Fatwa Council of Palestine, holds that
Bitcoin is not a price because it is against the foundation of being a
price. At the same time, it cannot be considered a commodity
because bitcoin does not satisfy any desire in humans from con-
sumption perspective. So, its essence can be explained as: it is an
electronic program which is used as a tool to get rich. It sometimes
takes the function of currency in some places and in some countries.
Thus, the mining of bitcoins is also prohibited because it consists of
grave uncertainty (gharar) and entails the essence of gambling
(qimar). It is similarly not permissible to buy and sell bitcoins
because until now it is a currency with unknown issuer with no guar-
antor. It is also too volatile and risky and prone to attack on its sys-
tem. It similarly gives a great space to hardship, fraud and deception
(Dar Al-Ifta‘Al-Falasteeniyya, 2017).
A critical analysis of these fatwas reveals that most of them are based on
misunderstanding, like the Palestinian fatwa mentioned that Bitcoin is
merely a program serving as a short-cut to get rich, which is not the case.
The Bitcoin program is a complete system of P2P payments; it is not an
aimless program. Moreover, mining process requires huge amount of
resources, which is not easy for an ordinary individual to establish, operate
and maintain in an economically beneficial manner. Similarly, some of the
fatwas are not based on juristic objectivity, and are biased towards unau-
thentic news and misconceptions. For instance, some fatwas express that
Bitcoin is only used in illegal activities, or it is used by money launderers.

This argument is not based on correct facts.
Scholars Who Are in Favor of Bitcoin

Datuk Dr. Mohammad Daud Bakar, a prominent Shariah scholar in
Malaysia, offers the following arguments in favor of bitcoin:
1. The presumption of Shariah on new issues and realities is permissi-

bility until and unless there is sufficient evidence to prove otherwise.
This permissibility should be extended to digital currencies (crypto-
assets) such as bitcoin, Ethereum, etc.
2. Digital currencies, in their current forms are the most secured form
of currencies, even much more than some printed monies in circula-
tion. This is due to high-level algorithm coding and enhanced secu-
rity which makes digital currencies non-hackable and
non-comprisable.
3. Speculation constitutes a major pivot upon which many prohibit
cryptocurrencies; however, this argument is questionable because
mere existence of speculation may not provide sufficient ground for
impermissibility, unless it is proved to be manipulative and unjust.
4. There should be a differentiation between gharar (uncertainty) and
khatar (risk). While the former is prohibited element in the Islamic
law, the latter is required to justify liability and profit. Both cannot
be simply equated to each other. Hence, huge risk due to price vola-
tility and fluctuation in value may not inevitably mean the presence
of gharar in Bitcoin.
5. Due to the fact that Bitcoin is not a legal tender, this has become
one of the main reasons of its impermissibility, according to various
shariah scholars. However, this is an administrative issue, not a sha-
riah issue. It may be a concern for a state or national government,
but it is not a basic shariah requirement for a currency (Bakar, 2018).
In order to further clarify the nature, features and usage of Bitcoin to

support its shariah ruling, it is crucial to objectively analyze it from purely
Islamic jurisprudential perspective. In view of that, the next section dis-
cusses the topic in the light of principles of classical Islamic
jurisprudence.
18 F. HABIB
Islamic Legal Criterion for Mal and Bitcoin

Many scholars have criticized Bitcoin and other crypto-assets on the basis
of their intangibility and express that due to their digital nature, they can-
not become price in a transaction. It will be clarified later in the chapter.
However, it is important to mention that if all the prohibitive elements are
avoided, crypto-assets can become mal mutaqawwam (legit or valid asset).
Similarly, being a type of crypto-asset, this can be also true for Bitcoin.
However, it is pertinent to specifically discuss whether Bitcoin qualifies as
mal mutaqawwam and whether it is a currency or commodity. Hence, the
discussion also delves into the legal criterion of money and currency in
shariah focusing on the nature of Bitcoin.
Is Bitcoin Mal?
According to the famous Arabic dictionary ‘Lisan Al-Arab’, the literal
meanings of mal is something which can be possessed (Ibn Manzur,
1975). However, Islamic jurists differ in defining mal from the fiqh per-
spective. Hanafi scholars define mal in a different manner. Ibn Abidin
(1992), a Hanafi scholar, states:
‫ َوالتَّ َق ُّو ُم يَثْبُ ُت بِ َا َو ِب َب َح ِة ِالنْ ِتفَاعِ ِب ِه‬،‫ َوالْ َما ِل َّي ُة تَثْبُ ُت ِب َت َم ُّولِ النَّ ِاس َكف َّ ًة � ْأو ب َ ْع ِضه ِْم‬،‫الط ْب ُع َويُ ْم ِك ُن ا ِ ّدخ َُار ُه ِل َو ْق ِت الْ َحا َج ِة‬
َّ ‫الْ ُم َرا ُد ِبلْ َمالِ َما ي َ ِمي ُل إ�ل َ ْي ِه‬
‫ِإ‬
‫ َو َذا عُ ِد َم ْ َأالم َْر ِان ل َ ْم يَثْبُ ْت َوا ِح ٌد ِمنْ ُ َما‬،ِ‫ون ُمتَ َق ِّو ًما َكلْ َخ ْمر‬ُ ‫ون َم ًال َك َح َّب ِة ِحن َْط ٍة َو َما يُ َت َم َّو ُل ب َِل � َإب َح ِة انْ ِتفَاعٍ َل يَ ُك‬ ُ ‫شعًا؛ فَ َما يُ َب ُاح ب َِل تَ َم ُّولٍ َل يَ ُك‬ َْ
‫َك َّدل ِم‬ ‫�إ‬
“The meaning of ‘mal’ is [something which] the [human] nature inclines
towards [due to its worth], and its [physical] storage is possible for the time of
necessity. The worth [of something] is established by people’s worth [by having
them considering it as worthy] either all of them or few of them [consider its
value]. Meanwhile legitimacy [of something] is established by its value and its
permissibility to benefit from it in sharia. Hence, whatever is permissible [to
benefit from in sharia] without any commercial value is not mal, e.g. a single
grain of wheat; and whatever is valuable without permissibility of usage is not
a legit asset, e.g. wine; if both the elements [commercial value and permissibil-
ity] are absent [in something], then both cannot be established [to prove it as
mal], e.g. blood.” (Ibn Abidin, 1992, vol. 4, p. 501)
The main features of mal are: (1) ownership can be established on it;
(2) it can be possessed; (3) it can be stored; and (4) it can be used at the
time of necessity. Contrary to the Hanafi jurists, the majority scholars
opine that mal refers to everything which has value and be compensated if
it is destroyed (Al-Zuhayli, 2010). For example, Al-Suyuti (1983) quotes

the definition of mal from Imam Shafi that mal refers to something which
has value, is used as consideration in trade, must be compensated for if
destroyed, and that people do not behave as if it is a valueless thing. For
non-Hanafi scholars, there is no distinction between mal mutaqawwam or
ghayr-mutaqawwam. For them, the permissibility of usage of something
or benefitting from it is a fundamental element of value itself. If shariah
does not allow to use something, it cannot be considered as mal at all.
It is clear from the earlier explanation of Bitcoin that a bitcoin can be
easily stored in digital or electronic devices through special computer pro-
grams called ‘e-wallet’, ‘bitcoin-wallet’, or ‘crypto-wallet’. Bitcoins exist
in the form of unique and separate digital tokens or units on the block-
chain; in this way, they are distinguishable among each other. Through the
private key of the wallet, ownership can be established; additionally, they
can be spent or transferred with private and public key at the time of
necessity. Therefore, it can be said that all these main features of mal are
present in Bitcoin.
In addition, it is also noticed that mal should have commercial value in
order to be considered as worthy; and it should not fundamentally contain
any impermissible element, in order to be mutaqawwam (legit asset). If
these two conditions are met, it can be considered as mal by the non-
Hanafi scholars, and mal mutaqawwam by Hanafi jurists.
From the above definition, it is observed that Hanafi jurists put a condi-
tion of being commercially valuable or worthy to be considered as mal.
However, mal then can be divided into mutaqawwam, which means valid
or legit asset from shariah perspective too. In other words, if shariah allows
people to benefit from or use it then it is mutaqawwam. For example, a
car, a house, an apple, and so on are types of mal mutaqawwam. On the
contrary, if something has value among people, but shariah does not per-
mit to use it or benefit from it, then it is called mal ghayr-mutaqawwam
(invalid asset). For example, wine is a valuable asset; however, Muslims are
not allowed to use it or benefit from it in any way, hence, it is mal ghayr-
mutaqawwam for them.
Nevertheless, it is crucial to note that in sharia, mal ghayr-mutaqawwam
is usually something which is intrinsically impermissible. In other words,
that thing is either prohibited itself due to its nature, or fundamentally
contains an element which is prohibited. However, something does not
become mal ghayr-mutaqawwam due to external factors. For example, if
someone steals an apple, it is not permissible for the thief to consume it,
20 F. HABIB
not because the apple is mal ghayr-mutaqawwam, it is still mal mutaqaw-

wam, but because it was acquired through illegal means by the thief.
To establish the commercial value of a bitcoin, its value in terms of fiat
money can be considered. According to Coinmarketcap.com (2019), one
bitcoin was worth USD 6664.50, on December 18, 2019. It means that
people who demand it or suppliers (the buyers and the sellers) are ready to
pay or accept USD 6664.50 as the price for a bitcoin. Moreover, currently
bitcoin can be used to buy presents with gift cards, via Gyft or eGifter. It
can be used to pay for flights and hotels, through Expedia, CheapAir and
Surf Air. Microsoft accepts bitcoin in its app stores, where the products
offered, like movies, games and app-based services, can be downloaded.
Some musicians (Bjork, Imogen Heep) let their customers download their
music in exchange for bitcoins. Additionally, Overstock was one of the first
big retailers to start accepting bitcoin, back in 2014. Sharps Pixley, APMEX
and JM Bullion let their customers exchange bitcoin for bullion gold.
Some fast food restaurants, like KFC Canada, Subway, PizzaforCoins also
accept bitcoin as a mode of payment. Several private and public universi-
ties in the USA as well as a couple of New York preschools accept bitcoin
as tuition fee. Some legal and accounting firms also accept payment for
their services in the bitcoin. Some charities or crowdfunding sites, such as
BitHope, BitGive or Fidelity Charitable accept bitcoins for fund transfer
(Acheson, 2018).
According to Spendbitcoins.com (2019), over 100,000 merchants
around the world accepted bitcoin as a mode of payment as on December
18, 2019. Those merchants offered a huge and diverse set of goods and
services in exchange of bitcoins. All this data demonstrate that bitcoins do
have commercial value. With bitcoins one can buy valuable goods and
services. However, one can still argue that only few people accept and
perceive the commercial value of bitcoins, but this argument does not
hold weight. Because as mentioned in the definition of Ibn Abidin (1992)
earlier, even few people’s acceptance is sufficient to establish commercial
value of mal or asset. Similarly, it is sufficient for bitcoins to be considered
as valuable asset.
As for the taqawwum or permissibility of usage and benefits, it can be
said that bitcoins are unique digits generated through a computer pro-
gram as a result of mining, which consists of validating and endorsing the
transactions, and keeping the ledger secured and updated. The miners
compete with each other in completing the blocks containing records of
transactions first because whoever completes the block faster than others
gets the reward in the form of newly generated bitcoins as well as the fees
of the transactions within that block. Once all the bitcoins are mined, the
miners would still receive incentive in the form of transaction fee.
Therefore, the main features of Bitcoin, the process of issuance and distri-
bution, the blockchain platform, the equipment and resources required to
mine bitcoins do not consist of any element which is fundamentally imper-
missible in sharia. One of the Islamic legal maxim supports this analogy as:
‫ْ َأال ْص ُل ِف ْ َأال� ْش َيا ِء ْال َب َح ُة َح َّت يَدُ ُّل َّادل ِلي ُل عَ َل التَّ ْحر ِِمي‬
‫ِإ‬
“The original principle in [shariah ruling of] things [or transactions] is
permissibility, unless an evidence [from the shariah sources] proofs its imper-
missibility.” (Al-Suyuti, 1983, p. 60)
Damad Affandi (n.d.), a Hanafi scholar, explains in his famous book,

‘majma al-anhar’, the approach of Islamic jurists as:
‫{كوا ِم َّما‬ُ ُ ‫] َوقَا َل‬29 :‫الل تَ َع َال {ه َُو َّ ِالي َخلَ َق لَ ُ ْك َما ِف ا َأل ْر ِض َ ِجي ًعا} [البقرة‬ ُ َّ ‫َواع َ ْْل � َّأن ْ َأال ْص َل ِف ْ َأال� ْش َيا ِء ُ ِكّهَا ِس َوى الْف ُُروجِ ْال َب َح ُة قَا َل‬
‫ش ٌء ِم ْن ادلَّ َلئِلِ الْ ُم َح ّ ِر َم ِة فَه َِ�ي عَ َل‬ ِ ‫] َو ن َّ َما ِإتَثْبُ ُت الْ ُح ْر َم ُة ِب َع‬168 :‫ِف ا َأل ْر ِض َحالال َط ِ ّي ًبا} [البقرة‬
َْ ْ‫ارِض ن ٍَّص ُم ْطلَ ٍق � ْأو خ َ ٍَب َم ْرو ٍ ِّي فَ َما لَ ْم يُو َجد‬
‫ْال َب َح ِة‬ ‫�إ‬
‫ِإ‬
“Note that the original principle in all the things, except private parts, is
permissibility, because Allah said: ‘it is He who created for you all that the earth
contains’ (Al-Baqarah, 29); and he said: ‘O people, eat permissible good things
out of what lies in the earth’ (Al-Baqarah, 168). And the impermissibility can
only be established with either general textual evidence or narration. So, when
proofs pointing towards impermissibility are not found, the things remain per-
missible.” (Damad Affandi, n.d., vol. 3, p. 568)
Based on this discussion, it can be said that it is generally allowed to use

and benefit from bitcoins as mal from shariah perspective. Hence, Bitcoin
can be considered as mal mutaqawwan for Hanafi jurists, and simply mal
for non-Hanafi jurists.
Is Intangibility a Shariah Issue for Bitcoin?

As mentioned earlier, bitcoins are a form of digital asset, they are intangi-
ble. They do not have corporeal form (ayn), therefore, one may argue that
it is not shariah compliant due to non-existence. This argument is flawed,
because there is a huge difference between non-existent thing and intan-
gible thing. Electricity and mobile airtime are also an intangible form of
assets, but it does not mean that they do not exist. Similarly, bitcoins do
22 F. HABIB
exist on the blockchain platform. They can be created, stored, transferred,

owned, possessed, spent and destroyed; that is why, it can be said that they
have existence. However, the question is whether shariah recognizes
intangible assets as valid or not. The answer is that shariah recognizes
intangible assets as mal mutaqawwam. Internationally recognized con-
temporary shariah authorities, like Islamic Fiqh Academy of the
Organisation of Islamic Cooperation (OIC) and Accounting and Auditing
Organisation of Islamic Financial Institutions (AAOIFI), have also
resolved that intangible or virtual assets are property of inherent monetary
value that entitles them to legal protection and that any violations of prop-
erty rights associated with them are punishable (IDB & IFA, 2000,
Resolution No. 43 (5/5); AAOIFI, 2015, Article no 3/3/3/1).
Subsequently, the exchange of electricity and airtime is valid. In the same
vein, intangibility does not affect the ruling of bitcoins.
Islamic Legal Criteria of Money and Bitcoin

According to Investopedia.com (2018), money is an official legal tender
issued by a state government which is circulated as medium of exchange.
Generally, it consists of notes and coins. Consequently, upon this tradi-
tional concept, many economists have narrowed the perception of money
to only the widely popular fiat money issued by national governments.
Nevertheless, from shariah perspective, all these characteristics may not be
required, making the perception about money wider.
From an economic perspective, money has three main functions: (1)
store of value, it should provide stability to the value for future use; (2)
medium of exchange, it should be widely accepted for easily exchanging
goods and services; and (3) unit of account, it should serve as a measure
of value of other goods and services. The third function as unit of account
cannot be established for a money, unless it is a stable store of value and a
widely used medium of exchange. In other words, the first two conditions
are prerequisite for the third one.
In order to perform these three main functions, and to become a good
money, money should have various characteristics. For example, it should
be: (1) durable, so it is easily storable; (2) portable, so it can be easily
transferred or transported anywhere; (3) divisible, so all types of transac-
tions in small denomination can be easily performed; (4) uniform, so it
can be easily replaceable with the same unit of money; (5) limited in sup-
ply, so it can avoid inflationary effect; (6) hard to counterfeit, so fraud can
be avoided; (7) valuable, so it can be exchanged for other valuable goods

and services; (8) widely acceptable, so transactions can be performed with
it anywhere; and (9) legal tender, so the counter-party can be forced to
accept it which gives trust to the money.
In the case of Bitcoin, it is observed that it has all the attributes of a
good money, except that it is not a legal tender, and it has not yet acquired
wide acceptance by general people. Nevertheless, it is too early to expect
that Bitcoin should acquire such level of wider acceptance.
Definition of Money in Islamic Law

According to Al-Mausuah Al-Fiqhiyyah (2007), in literal terms, money is
a currency made of gold, silver or any other thing which is dealt in as cur-
rency. Technically, money can be anything which is used as a medium of
exchange, whether it is gold, silver, petal, skin or paper and so on, if it gets
general acceptability among people. According to Turkamani (1988),
money refers to anything which is widely acceptable as a medium of
exchange and store of value in sharia, it does not matter what is the nature
and form of that thing. It goes without saying that the element used as
medium of exchange should be shariah compliant. In other words, as a
basic requirement, it has to be mal mutaqawwam.
Taqi Usmani (2015), a contemporary Hanafi jurist, says that money
refers to something which has following three attributes:
1. Medium of exchange;
2. Unit of account; and
3. Store of value.
These definitions of Islamic scholars are similar to what economists say

with regard to the definition of money and what common people under-
stand. For instance, Merriam-Webster dictionary defines money as: “some-
thing generally accepted as a medium of exchange, a measure of value, or a
means of payment” (Merriam-Webster, 2018). It may be summarized
based on these definitions that money is something which has the follow-
ing attributes:
1. Medium of exchange;
2. Accepted as a mean of payment;
3. Store of value; and
4. Unit of account.
24 F. HABIB
Bitcoin, as stated earlier, has been created to be a medium of exchange

or a mean of payment (Nakamoto, 2008). In fact, this is the only purpose
or intrinsic usage or benefit of Bitcoin, as it cannot be used for any other
purpose. It is understood from the discussion of classical scholars that a
good form of money should not be used for any other purpose than to be
used as a medium of exchange. This is actually the fundamental criteria for
money. Ibn Taymiyyah (1995) writes about gold and silver coins:
‫َو َّادل َر ِ ُاه َو َّادلنَ ِن ُري َل تُ ْق َصدُ ِلنَ ْف ِسهَا بَلْ َِه َو�سِ ٌَيل � َإل التَّ َعامُلِ ِ َبا َو ِله ََذا َكن َْت أ�ثْ َمانً ؛ ِب َل ِف َسائِ ِر ْ َأالم َْوالِ فَ َّن الْ َم ْق ُصو َد ِالنْ ِتفَا ُع ِ َبا ن َ ْف ِسهَا؛‬
‫�إ‬
“Dirhams and dinars are not intended per se, they are a tool to acquire
other things. That is why, they become price [or money, in an exchange transac-
tion], unlike all other [types of] assets [like goods and services] as the purpose [of
acquiring them] is to derive benefit from themselves.” (Ibn Taymiyyah, 1995,
vol. 19, p. 252)
Moreover, the exponential growth in the acceptance level of Bitcoin as

a mode of payment by various market participants also supports this fea-
ture. As for the features of store of value and unit of account, it is too early
to expect Bitcoin to have such attributes.
Differences Between Money and Commodity

It is pertinent to discuss the differences between money and commodity
here because money is not equivalent to commodity according to sharia.
Shariah emphasizes to treat money just for its basic purpose, that is, as a
medium of exchange and measure of value. Ibn Taymiyyah (1995) explains
that dirhams and dinars (gold and silver coins) have no intrinsic use and
purpose, but they are created just to be used as a medium of exchange.
The same explanation is given by Ibn Qayyim (1973) that money is not
desired for itself, but rather it is created to facilitate the trade of goods. So,
if money itself is treated as a good or commodity, this would lead to
destruction because then there would be no reliable measure of value.
Hence, money is subject to shariah rules of exchange (sarf ) and inter-
est (riba).
On the other hand, commodities or goods warrant a different set of
shariah rules and criteria because they have intrinsic use and purpose.
Usmani (2005) deliberates the differences between money and
commodity in a conclusive manner by explaining the following three fun-

damental differences between money and commodity:
1. Money has neither an intrinsic usage, nor it is capable of directly fulfill-

ing needs of human beings, such as eating, drinking and wearing etc.
On the contrary, the commodity has an intrinsic usage, and can be
utilized directly without the need of exchanging it with something else.
2. The commodities may have different qualities and attributes. But
money has no quality except it is a medium of exchange and measure
of value. That is why, all the units of money have same value and equal
to each other. There is no difference between dirty note of USD 100
and a new note of USD 100, both are equal in value.
3. A particular commodity can be specified in an exchange transaction by
stipulation. For example, if someone purchases a particular car, the
seller has to deliver that particular car; he cannot change it with another
car. Contrary to this, money cannot be specified in a transaction of
exchange by stipulation. For example, it does not matter if a buyer
shows a particular note of USD 100 to the seller, and then pays with
another note of USD 100; the transaction is still valid from shariah
perspective.
With this understanding, it can be argued that Bitcoin seems to fulfil

the criteria of money, rather than commodity. However, it is pivotal to
understand that if Bitcoin is money or currency, which type of money it is?
Types of Money in Shariah

The Islamic jurists classify money into mainly two types: (1) natural money
(thaman haqiqi); and (2) customary money (thaman hukmi).
Natural Money
According to the scholars, gold and silver are natural money, because these
metals have served the purpose of being a medium of exchange through-
out human history. Their monetary value is naturally understood by
human beings. Therefore, it is perceived that their value has not been
established through artificial means. In fact, many scholars hold that their
value intrinsically exists regardless of their form. Due to such status, the
famous jurist, Imam Ghazali (2004) says that Allah the Almighty created
gold and silver to be circulated among people and become standards of
26 F. HABIB
measurement for different assets or other goods and services. They are
means to acquire all other assets. They are precious and valuable in the
eyes of people, but not desired for their own sake; they are rather used as
a means to obtaining other assets.
Customary Money
Customary money refers to the money which receives the status of money
due to custom and acceptability of people. It is originally not meant to
serve the purpose of money, but people accept it widely as a medium of
exchange. Commodities other than gold and silver used as money are
common forms of customary money. The customary money does not
intrinsically have the quality of money (thamaniyyah), rather such feature
is assigned to it through artificial factors. Customary money can be further
divided into two types: (1) commodity money; and (2) fiat money.
Commodity money is used as a medium of exchange, but this feature is
not natural. In other words, it does not have thamaniyyah by default.
However, it has other intrinsic usage or benefits. Thus, it can be used for
other purposes. Fiat money, on the other hand, refers to a currency that
neither has thamaniyyah by default, nor it has any intrinsic usage or ben-
efit. The reason for such money to have value is due to an artificial or
external factor. For example, national currencies are backed by govern-
ments, and counter-parties are bound by law to accept such currencies in
their specific jurisdictions by virtue of the status of legal tender. In this
way, fiat currency derives its value.
With this understanding, it can be argued that Bitcoin is a customary
money. It has some resemblance with the natural money in the sense that
it can only be used as a medium of exchange, and it does not have any
other benefit. But due to the fact that its value has been established by the
custom of the people, unlike gold and silver, it is more appropriately a
customary money. If people stop perceiving that bitcoins have value, they
would become useless electronic numbers and mere digits stored on a
blockchain platform.
Shariah Rulings for Dealing in Bitcoin

In general, it can be said that it is allowed to buy, sell and invest in bit-
coins. However, based on the Shariah Standard of AAOIFI (2015) on
trading in currencies, some most fundamental shariah rulings can be pro-
posed as:
• When bitcoins are exchanged for fiat money, gold, silver or any other
shariah compliant currency token, both parties must take possession
of the counter-values before the end of exchange session.
• The possession of counter-values should be in full amount.
• Since bitcoins are in digital form, their possession cannot be in physi-
cal form. Therefore, their constructive possession is acceptable.
• When bitcoins are exchanged for bitcoins, they must be equal in
amount. However, if bitcoins are exchanged for other types of cur-
rencies, then equality in amount is not required.
• When exchanging bitcoins for other types of currencies, there should
be no stipulation of deferment regarding the delivery of any
counter-value.
• Forward or futures contract for bitcoin exchange, either with bit-
coins or with other types of currencies, is not allowed.
Conclusion
A famous Islamic legal maxim is stated as:
‫ال ينكر تغري أالحاكم الاجهتادية بتغري أالزمان‬

“Changes in ijtihad-based rulings due to changed circumstances should not
be objected to.” (Al-Ghazzi, 2003, vol. 8, p. 1100)
Latest advancements in technology have posed many challenges to

Islamic scholars in seeking shariah opinions for unprecedented cases.
Things get changed, due to different dynamics and unique circumstances;
subsequently, their shariah rulings that are based on ijtihad also keep
changing in order to accommodate their altered characteristics.
Riding on the same waves of evolution, money has transformed from
gold, silver and commodities to digital money and cryptocurrencies.
However, the most important thing is to analyze the exact nature and fiqhi
characterization of cryptocurrencies without entertaining any confusion in
the light of the fundamental shariah principles. This is the main key to
understanding this advanced phenomenon and finding its shariah
solutions.
Based on the discussion presented in this chapter, it can be argued that
Bitcoin qualifies for mal mutaqawwam (valid asset) in the eyes of sharia.
Furthermore, it can be categorized as customary money (thaman hukmi).
Subsequently, in dealing with Bitcoin, shariah rules of currency exchange
and interest (riba) should be strictly adhered to.
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copies in it. The woman had, however, left her stand, so this opportunity of doing good
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his steps, which he did, though with scarcely the faintest hope of success; glancing vainly
down on every side, asking bystanders the question which always received the same
discouraging answer. All the glories of the illumination were lost upon him; he could think
of nothing but his lost bank-notes."
"Weary and sad, he returned to his home, where he had to wait for an hour—a most
painful hour it was—till his master returned from seeing the illumination. The confession of
his loss was frankly made, with every expression of heartfelt regret; but the anger of the
haberdasher was beyond all bounds, and he treated my unhappy father as though the
money had not been lost but stolen by him. Whether the master had indulged too freely in
drink that night, I know not, but I think it more than probable; he abused my father in
violent terms, dismissed him from his service, refused to give him even a character, and,
for his own convenience alone, allowed him to remain beneath his roof until he could
procure some one to supply his place."
"My father retired to his little room with an almost breaking heart. I have often heard him
say that this was the bitterest moment of his life. To lose his place was misfortune enough;
but his character—that which was dearer than life! He could scarcely restrain his burning
tears! But he laid his troubles before his God; he remembered that the Almighty afflicts
not in vain, that the Lord would yet make his innocence clear before all, if not in this world,
yet in the kingdom which is to come."
"As he was rising from his knees, Sands entered the room, having heard of the misfortune
of his companion. Sands was a kind-hearted fellow, and really liked my father, and tried in
his rough way to comfort him.
"'I am heartily sorry that you are going,' he said, in conclusion; 'I assure you, Viner, that I
would do anything for you.'"
"'Then you will not refuse this little remembrance from a friend,' said my father, placing in
his hand one of the books in gold and blue, from which he had just himself been drawing
counsel and comfort. 'For my sake, you will read this little work through, and God bless
you, Sands, and reward you for the kindness which you have shown to a friend in
disgrace!'"
"And did Sands read it?" inquired Walter.
"I believe that he did. I remember seeing him as a gray-headed old man, and he then
showed me his little copy in gold and blue, looking very much the worse for wear; and he
told me that he thought that if there were any good in him, he owed it to the example and
advice of my father."
"And was your father obliged to leave his situation?"
"Some delay occurred in supplying his place; he was, therefore, allowed to remain about
ten days longer. He felt very sad and low on the Sunday evening on which he was to pay
his last visit to his little school, for as he had as yet been unable to get another situation in
London, he intended to return to his mother."
"He found his young pupils ready for him as usual; but a cloud of sorrow was over them,
for they know that they were to welcome their kind teacher no more. My father tried to
improve to them even the occasion of their mutual distress; he spoke to them of the place
where there is no more parting, of the unending joys prepared for God's servants when His
kingdom of glory shall come. He concluded by placing before the children his last
remaining copy of the book in gold and blue, and offering it as a prize to the most
industrious pupil, on condition of his reading it aloud to his companions."
"'Oh! That is just like the book which makes my mother sad!' cried a little barefooted boy
from a corner of the room."
"My father started at the words, for he thought of that which he well remembered having
placed in his lost pocket-book!"
"'Where did your mother get one like this? How long has she had it?' he cried eagerly."
"'I don't know where she got it,' replied the child, looking down. 'I think that she has had it
about a week; she laughed when she began to read it, but, before she had done, she was
crying as I never saw her cry before.'"
"After the lesson was over, and my father had received the oft-repeated farewells and good
wishes of his pupils, not unmixed with tears, which went warmer to his heart than all the
praises of man could have done, he laid his hand on the arm of the barefooted boy, and
gently drew him along with him down the steep staircase, until they stood together in the
street."
"'I should like to see your mother,' he said to the boy."
"'She lives quite near, just round the corner; I will take you to her if you wish it,' replied
the child."
"'Am I foolish to indulge this strange hope?' thought my father, as he followed his little
guide. 'But nowhere else have I seen any books like my three, and it may be that the
Almighty has granted me a clue by which to find out the lost property of my master, and
clear my own character from suspicion.'"
"With a heart beating faster than usual, my father was led by the boy to a neighbouring
house, as low and dirty as the one which they had just quitted. They ascended to a room
upon the second floor, where a woman sat alone, engaged in reading. At the first glance
my father recognised the book which she held in her hand. It is that, Walter, which you
now see in the possession of his son."
"The exclamation which he uttered startled the woman; she turned round hastily with an
expression of fear on her face—the book dropped from her hand as, gazing wildly on my
father, she exclaimed, 'It is he! Oh what strange fortune has brought him here!'"
"'Not fortune,' said my father with emotion, as he raised the little book, 'but, as I believe,
a gracious Providence, who will surely bring both guilt and innocence to light.'"
"'I knew it—I knew it!' cried the woman, clasping her hands. 'Since the night when I
robbed you I have had no peace; that book has been like a sword in my conscience—I
would have restored what I had taken, had I known where to find its owner, and see—see
my own child has led him to my door!' Hastening to a corner of her room, with trembling
hands she opened a deal box, and frees the very bottom of it, under heaps of rags and
rubbish, she drew forth my father's lost pocket-book!"
"Think, only think, how much delighted he must have been to see it!" cried Nelly.
"He could scarcely believe that he was not in a dream when the wretched woman placed it
in his hand; and when on opening it he saw the two bank-notes, a feeling of overpowering,
thankfulness filled his soul, and made him unable to speak."
"'Take it—it is just as when you lost it—I dared not change the notes,' said the woman;
'and oh I have mercy on a wretched creature; do not give me up to the police! It was my
first theft; indeed, indeed it was, and I will never be guilty of one again!'"
"Did your father give her up to punishment?" inquired Walter, with interest.
"No; he was full of compassion for the unhappy woman, and never, as long as she lived,
lost sight either of her or her son. He was able to procure for her a little employment from
his master—set her thus in the way of honestly earning her living, and had reason to hope
that that Sabbath evening was the turning-point of her life."
"And your father, I suppose, kept his situation after all?"
"He kept it for many years, and lived respected even by those who were strangers to the
principles by which he was guided during life. He was, indeed, as the faithful servant,
ready girded, and watchful for the coming of his Lord. Happy those who thus watch and
wait for His appearing, who expect it not with fear, but with hope and joy; God's kingdom
has already begun in their hearts, they count no effort great to win souls to His service,
and the acts of their lives, as well as the words of their lips, seem to say:
"THY KINGDOM COME!"
CHAPTER IV.
"Thy will be done on earth as it is in heaven."
THE Sabbath dawned upon the village of E—, the day which the Lord has appointed for His
own, that day which, when kept holy to religion and rest, leaves an especial blessing
behind it. About two hours before the time for attending morning service, Viner took his
little Bible in his hand, and walked with his daughter to the sea-beach, where, seated on a
shelving shingle, with the wide ocean heaving and sparkling before them, they enjoyed
together a quiet time for reading and speaking of the things of God.
On their return, to their utmost surprise, they found the shop open, the shutters down,
and Walter placing some vegetables on the board.
"O father!" exclaimed Nelly, "Has Walter forgotten what day it is?"
"What are you doing?" said Viner, as he entered. "My shop always is closed upon Sundays;
I thought that I had mentioned this to you before."
"Yes," replied the boy, "you did so, but look there!" And he pointed to the tempting display
in Goldie's window. "Is he to have all the custom and the cash, he who is ten times richer
than you are!"
"What he has—what he does is no excuse for me; it is not for him that I must answer
before God. Put up those shutters again, Walter."
Walter obeyed sullenly, with a look which told that he was not at all convinced of the
wisdom of the order. Viner then drew him into the shop, and said, "Is not one of the Ten
Commandments, given from the mouth of the Lord God Himself amid the flames and
thunder of Mount Sinai, 'Remember that thou keep holy the Sabbath day; in it thou shalt
do no manner of work'?"
Walter nodded assent.

"Is there not a blessing for those who obey this command? Look here," said Viner, opening
his Bible, and pointing to these words from the fifty-eighth chapter of Isaiah: "If thou turn
away thy foot from the Sabbath, from doing thy pleasure on My holy day; and call the
Sabbath a delight, the holy of the Lord, honourable; and shalt honour Him, not doing thine
own ways, nor finding thine own pleasure, nor speaking thine own words: then shalt thou
delight thyself in the Lord; and I will cause thee to ride upon the high places of the earth,
and feed thee with the heritage of Jacob thy father: for the mouth of the Lord hath spoken
it."
"That may have been so once, but I don't believe that it is so now," said Walter.
"God knows no variableness, neither shadow of turning, He is 'the same yesterday, to-day,
and forever!'"
"I only know," muttered Walter, "that the way in which you go on is the way to starve."
"Do you believe that our Heavenly Father ever suffers any one to starve for obeying His
commandment?"
"I can't tell," replied Walter, still rather surlily.
"Do you believe that He, to whom all the treasures of earth and heaven belong, who
created the world and every living thing upon it, is able to provide for our wants?"
"I believe that the Almighty is able."
"But you doubt that He is willing?"
Walter was silent.
"I must speak to you again from His Word, that Word which can never be broken." Viner
turned to the thirty-third Psalm and read—"'Behold, the eye of the Lord is upon them that
fear Him, upon them that hope in His mercy; to deliver their soul from death, and to keep
them alive in famine.' Again, in the thirty-seventh Psalm it is written—'Trust in the Lord
and do good; so shalt thou dwell in the land, and verily thou shalt be fed. A little that the
righteous man hath is better than the riches of many wicked. I have been young, and now
am old, yet have I not seen the righteous forsaken, nor his seed begging bread.'"
"Oh! Remember the word of the Lord Jesus Christ—'Take no thought, saying, What shall
we eat, or what shall we drink, or wherewithal shall we be clothed? for your Heavenly
Father knoweth that ye have need of all these things; but seek ye first the kingdom of
God, and His righteousness, and all these things shall be added unto you.' Walter, God will
more than make up to us for all that we may lose for His sake!"
"You'll never convince him! You'll never convince him!" cried Goldie, who, passing the
shop, had overheard the last words, and now stood leaning his stout person upon Viner's
little gate. "You can't persuade him but that I am growing rich, and that you are growing
poor; that I am getting on, you going back in the world. All your preaching won't shut his
eyes to that. Why, here am I able to send my son to a first-rate school, able (I grant that
it's a hard pull on my purse, but yet somehow I can manage it) to place him with an
engineer, where, with talents like his, he is pretty sure at last to make his fortune! I shall
see him one of these days riding in his own carriage, for I have let no idle fancies, no silly
superstition, prevent me from doing the best for my family, and that is the way to grow
rich."
"'The blessing of the Lord, it maketh rich, and He addeth no sorrow thereto,'" murmured
Nelly.
Viner turned and smiled on his daughter.
"I wonder that you don't think of your child," said Goldie, "if you don't care about starving
yourself."
"I do think of her," said the father earnestly, "and in obeying and trusting my God, I feel
that I am doing the best thing for her both in this world and the next."
"We shall see," said Goldie as he walked away.
"Yes, we shall see," repeated Viner quietly.
"Do you really think," asked Walter, as soon as the fruiterer was beyond hearing, "that God
would be angry with you just for selling upon Sunday when He knows that you are so
poor?"
"When a parent gives a command, is he content that it should be disobeyed? When a

friend makes a promise, is he content that it should not be believed? When a king passes a
law, is he content that it should be broken?"
"Ah! But this law may be easy for the rich, but it is so very, very hard for the poor!"
"Is it hard," replied Viner gently, "that we should give up something for Him who has given
us all? Let us remember the grace of our Lord Jesus Christ, who, though He was rich, yet
for our sakes, He became poor! He was rich, indeed, for the Son of God sat on the throne
of heaven; He became poor indeed, for the Son of Man had not where to lay His head! 'He
was in all points tempted like as we are, yet without sin; and inasmuch as He suffered
being tempted, He is able to succour them that are tempted.' He knows—He feels for our
trials!"
"The faith of His early followers was far more severely tried than ours. They had to endure
not only want, but tortures, mockings, cruel deaths, for the sake of the Master whom they
loved. And do you think that any martyr at the stake then, or any saint on his death-bed
now, thought or thinks that he has done or given up too much for the Saviour who gave
His life for him?"
"Oh no!" exclaimed Nelly, "Never! Only think of the glory and the crown! It is better to
walk barefoot on a thorny way, and know that we will come to a kingdom at the end of our
journey, and be happy for ever and ever, than to roll along in a golden carriage, and to feel
that every minute brings us nearer and nearer to misery that never will end! We never can
be really happy but when we do God's will like the angels!"
"How do the angels do God's will?" said Viner.
The child paused a moment to think, then replied, "Faithfully, readily, joyfully."
"But the angels have not to suffer God's will as well as to do it," observed Walter.
"No," replied Viner, "in this, man alone has the honour of following the steps of his Lord!
We only are able, in this our short life, to imitate Him who in agony prayed, 'Not my will
but Thine be done!'"
Walter had nothing to answer; he remained silent, though scarcely convinced. The
convict's son could not feel the full force of the Scripture:
"What shall it profit a man if he gain the whole world and

lose his own soul? Or what shall a man give in exchange for his soul?"
Nor knew he yet how much is comprised in the prayer:
"THY WILL BE DONE ON EARTH AS IT IS IN HEAVEN!"
CHAPTER V.
"Give us this day our daily bread."
I WILL now pass over a space of ten years, with all its joys and sorrows, its hopes and
fears, and take my reader once more to E—.
The village has grown into a town: tall rows of houses stretch along the coast, on one side
a square is commenced, and though "the season" is now nearly over, enough of life and
bustle remain to denote a flourishing watering-place. There is, however, little change to be
seen in the small humble dwelling of Viner, and almost as little alteration in the appearance
of its master, who, save a few more gray hairs, a few more furrows on his cheek, looks
much the same as when he appeared before us last. We shall, however, scarcely recognise
Nelly in the tall, delicate girl, who has almost grown into the young woman; or the
convict's son in the powerful youth, who still serves in the shop of his benefactor.
How has time passed with them during these long years? They seem to have made little
progress in the road to fortune—has the promise of the Lord been to them in vain? No;
though life has been a struggle with poverty and care, it has been a struggle cheered by
love and hope; the bread earned by virtuous industry has been so sweet, the sleep after
labour so calm; unkind words, peevish complaints have in that dwelling been unheard, the
peace of God rests like sunshine upon it!
I cannot, however, say that Walter's spirit never fretted against poverty, that he never
longed to place those whom he loved above all danger of want. He had learned much of
religion beneath Viner's roof; he had seen its power to comfort the soul under trials, but he
was yet young and impetuous in all his feelings, his faith was weak, his will unsubdued; in
life's school he had yet much to learn.
And never had his faith been more tried than now, for Nelly, without any apparent
complaint, seemed gradually losing all strength and colour, and looked like a flower fading
away. She had for some years taken in needlework, to eke out her father's scanty living;
she had worked early and late with cheerful industry, and perhaps overtasked her powers.
With deep anxiety, Viner and his adopted son watched her pale cheek and drooping form,
and the gentle smile which seemed to belong rather to heaven than to earth.
Viner consulted a doctor for his daughter, who shook his head, said that she had been
overworked and under-fed, and prescribed as necessary for her recovery nourishing food
and rest. Oh! How Walter longed for riches then—how Viner felt the cross of poverty lies
heaviest when those whom we love are in want!
The father laid his trial before his Lord; he earnestly prayed, with a child-like faith, for a
sufficiency of daily bread! He rose from his knees submissive and calm; he had placed his
sick child at the feet of his Saviour, and while he determined that no lawful means should
be left untried to increase her comforts, he rested his hopes upon Him who once said,
"According to thy faith be it unto thee."
But to Walter it was more difficult thus to pray and wait, to let patience have its perfect
work. Nor was it want of faith in God's promises alone that gave bitterness to the spirit of
the young man. One passion that struggled in his breast robbed him entirely of that inward
peace which lightened the burden of Viner. It was with feelings of mingled resentment and
envy that Walter regarded Ned Goldie, the fruiterer's son. From him, he had received,
when he first came to the village, that insult which still rankled in his mind, an insult
followed by many others; for Ned was reputed a wit in E—, and the cheapest way of
making people merry is by laughing at and ridiculing others. There was no end of Ned's
jests upon the convict's son, which amused for a moment, and were then forgotten by all
but him at whose expense they were made.
And Ned was in a position to raise some envy amongst those of his own class in life.
Singularly favoured by nature—handsome, intelligent, full of health and spirits—Ned was a
favourite with all. Often would he drop in to spend a half-hour at Viner's quiet home. Nelly
could not but own that he was a very pleasant companion; his playful words (in her
presence they were never ill-natured) often brought a smile to her pale face. Viner liked
and felt interested in the merry-hearted lad; to Walter alone his society was as wormwood
and gall.
Then it was known that Ned was to succeed to his father's prosperous business, as his
elder brothers were already provided for. Aleck had risen in the world even beyond his
father's hopes. Possessed of uncommon talents, he now shared his master's business; a
bridge that he had planned had made his name well-known, and he had just formed a
marriage, which had raised him at once to fortune, with the only daughter of a retired coal
merchant. The words of Goldie, spoken ten years before, had been verified, he had lived to
see his son have a carriage of his own!
Mat had been apprenticed to some business in London. It was noticed in the town that his
parents spoke less frequently of him, that inquiries after his prospects were answered
shortly by his father, and made his pale, sickly mother look sad. People could not forget his
unchecked habit of gambling, his profane language, his love of bad company: it was even
rumoured that he had got into some scrape in London, but nothing certain was known
upon the subject. This, and Mrs. Goldie's feeble state of health, seemed, however, the only
drawbacks upon the prosperity of the fruiterer; his increasing stoutness and the ruddiness
of his face told of comfort, good living, and an easy life.
It was at this period, when to win money for Nelly was almost the first desire of Walter's
heart, haunted his dreams by night, was his first thought on waking, that a thin old
gentleman, in a snuff-coloured coat, that looked a good deal the worse for wear,
flourishing in his hand a little carved stick, passed along the street of E—. He stopped
opposite Goldie's shop, and looked in, as if studying the prices on the fruit, then turned
round and glanced at Viner's humble window, hesitated, twisted his stick round and round,
and then chose the poorest and cheapest-looking shop.
He was the first visitor who had come that day, and unpromising a customer as he looked,
his entrance was a welcome sight to Walter, who was serving alone in the shop. The
youth's patience, however, was not a little tried, as, after a half-hour spent in questioning
and bargaining, and trying to beat down the price of what already scarcely yielded any
profit, the old gentleman departed with a bag of nuts, leaving one fourpenny piece on the
counter.
"He must be either terribly poor or terribly stingy," thought Walter. "His face looked as
sharp as the monkey's head carved upon his stick; that's a man, I'll answer for it, who will
never let himself be cheated out of a farthing!"
Walter busied himself in rearranging the fruit, which he had displaced to show to his
troublesome customer. His mind was full of painful reflections, and it was not for a little
time that he perceived that the old gentleman had left his pocket-book behind. It was an
old worn-looking article, that might be of the same date as the snuff-coloured coat; Walter
went to the gate to look out for its owner, but the gentleman was nowhere to be seen.
"Perhaps his name and address may be written inside," thought Walter; "I had better open
it and look."
He unclosed the book, and in the pocket found, indeed, a note directed to Mr. Sharp,
Marine Row; but there was something else that Walter found in that pocket, something on
which he fixed his gaze with a strange emotion, till his hand trembled and his heart beat
fast! It was a bank-note for £50 wrapped round some money! The pocket-book almost fell
from the grasp of the youth, a thought of Nelly and her poverty flashed across his mind;
here were riches before him, dare he touch them!
When the convict's son first came beneath Viner's roof, he would not have hesitated to
grasp the fortune placed within his reach, the strong temptation would at once have
mastered conscience! Walter would have rushed on the fatal career of the thief! But the
Spirit of God had touched his heart; weak, imperfect as his religion might be, at least it
was sincere and true. Walter dared not be guilty of the fatal error of presuming on God's
mercy by committing wilful sin; he dared not hazard his immortal soul for gold! Hastily, he
thrust the book into his bosom, colouring with shame, all alone as he was, at having
harboured for one moment the thought of theft. He unclosed the little door which led to
the parlour, asked Nelly to supply his place at the counter, then, without venturing one
look at her thin, pale face, lest the sight of it should shake his resolution, he took down his
hat from a peg in the wall, and hastened towards the lodging of the owner of the note.
"And is it possible that one who for the last ten years has lived, as it were, under the wing
of piety, could have felt—almost acted as a thief!" thought Walter, as he walked on with
rapid strides, more pained at having meditated a crime, than he once would have been to
have committed it. "And I have blushed for my unhappy father, have been ashamed at
bearing his name, have presumed to think that in his place my conduct would have been
better, have almost dared to condemn him in my secret soul! Had he had the advantages
with which I have been blessed, who can say that I might not have looked up to him now
as my guide and example through life! Oh! May God forgive me, forgive my pride and
hardness of heart, my foolish reliance on my own feeble strength, my cold forgetfulness of
my unhappy parent! And have mercy upon him, O gracious Lord! Watch over him, save
him, lead him back to Thyself, and grant that I may meet him, if not here below, yet in the
kingdom of our Father in heaven!"
The lodging of the old gentleman was at no great distance; it looked small, uncomfortable,
and mean. A slip-shop, untidy girl answered Walter's ring, and was desired by him to tell
her master that some one wished to speak with him upon business. While she shuffled up
the steep staircase, Walter's eye rested, at first unconsciously, upon the little curved stick
which Mr. Sharp had carried, and which was now placed upon nails in the hall.
"I think that I might cut out something like that," he said to himself, "I shall have plenty of
time in the long winter evenings; I wonder if an assortment of things carved in wood
would be likely to sell well in the season." The idea pleased him; there seemed to be an
opening for hope; he might yet, by the work of his hands, be enabled to gain some
comforts for Nelly!
From the top of the narrow staircase, the servant-girl called to him to step up. Walter
obeyed; and in a small, ill-lighted room, where dust lay thick on the table, and darkened
the panes, and the window-curtain looked as though it had never been white, Walter found
the sharp-featured old man. His look was restless and uneasy, an expression of mingled
hope, fear, and suspicion was in his eye, as he recognised the face of Walter Binning. That
expression changed to one of childish delight as the youth drew from his breast the well-
known pocket-book; the old man snatched it with feverish impatience from his hand,
opened it with fingers that trembled from eagerness, and not till he had examined and re-
examined its contents, looked at the note on this side and that, and counted the money
again and again, did he appear to have a thought to give to him whose honesty had
restored it.
"It's all right—quite right," he muttered at last, "two sovereigns, a half-crown—four and
six. You have behaved very well, young man, very well; will you accept—" the miser
hesitated, fumbled with money, seemed to find difficulty in making up his mind, and then,
as if quite with an effort, held out a sixpence to Walter!
The convict's son stepped back, a half-smile on his face, and, bowing to the miserable old
man, left the room with this reflection, "It is better to want money than the heart to spend
it."
And had Walter known more of Mr. Sharp, he would have been but strengthened in this
opinion.
The miser had begun life without a shilling, but possessed with one strong desire to grow
rich. He hoarded his small earnings till they became great, not from an honest wish to be
independent in old age, but from that love of money for its own sake which the Bible tells
us is the root of all evil. And now he had his desire—he was rich, he had money, he
possessed, but he did not enjoy it! Life was to him like the feast given by a queen of
ancient time, where not only the dishes, but all their contents, were of gold, and the
wondering guests rose unsatisfied and hungry from their magnificent repast!
Mr. Sharp almost grudged himself his necessary food; he could never ask a blessing on his
daily bread; his very soul seemed buried in his heaps of treasure. And now he was drawing
near to his grave, and that treasure must be left behind! No one loved him, no one would
mourn for his loss; he knew but too well that his money would be far more prized than
ever he himself had been. God had dealt with him as with the Israelites of old—He gave
them their desire, but sent leanness withal into their soul; and the man who possessed
wealth without a blessing was poor and miserable indeed!
So Walter gave back the pocket-book and its rich contents, and gained nothing at all by his
honesty?
Do you call it nothing to tread earth with a free, fearless step, to dread looking no man in
the face? Do you call it nothing to have a character unstained, to hear the voice of an
approving conscience, and to be able to ask in prayer for those blessings which we have
taken no guilty means to obtain?
The thoughts of Walter were full of new plans of industry, while he more slowly returned to
his home. As he approached the little gate of Viner's shop, some one came out of it into
the street, bidding a cheerful good-bye to those within. It was with a feeling of annoyance
that Walter saw the only being on earth whom he really disliked—Ned Goldie, the
fruiterer's son.
The youth nodded to him as they met, with a sort of free-and-easy, patronising air, which
was intolerable to Walter Binning.
"I am glad to find Nelly so much better to-day," said Ned.
"She does not look better to my eyes," replied Walter gloomily. "She seems daily weaker,
and it is my conviction—"
"Your conviction!" exclaimed Ned, with a loud burst of mirth. "Oh! I did not know that
things had come to that pass! I was aware that Viner had kept you ten years on your trial,
but never heard of your conviction till now!"
"Insolent boy!" cried Walter, clenching his hand, his blood mounting to his temples, his eye
flashing fire! Ned might have had reason to repent his idle jest, had not Viner, who had
overheard the words that passed, laid his hand firmly upon the arm of Walter, and drawn
him away within the gate.
"Would you be the slave to your passions?" he said in a low voice, "And show the world
that a Christian can neither bear nor forbear."
"I could forgive neglect," muttered Walter, "could forgive wrongs; but this contempt, this
scorn, this ridicule! I wonder," he exclaimed, almost indignantly, "that you, who value only
wisdom and virtue, can endure this trifling, silly, conceited—"
"Yet generous-hearted boy," said Viner, pointing to a fine hare that lay upon the counter.
"He has kind thought for others with all his faults, he know that nourishment was ordered
for my Nelly."
Walter started, and felt angry with himself that the sight of food so much needed should
give him an emotion of pain rather than of pleasure. But to Viner, who, even in the smaller
events of life, recognised the hand of an overruling Providence, the timely gift from the
kindness of an earthly friend seemed an answer sent to his earnest prayer:
"GIVE US THIS DAY OUR DAILY BREAD!"

CHAPTER VI.
"Forgive us our trespasses, as we forgive them
that trespass against us."
"NELLY, what are you thinking of—you look sad?" inquired Walter on the following morning,
which happened to be Sunday.
"I was thinking of you," she replied gravely.
"And was that a thought to give you pain?" said Walter, sitting down at her side, "Tell me,
Nelly, what were you thinking of me?"
"I am afraid—perhaps you would be vexed or angry—"
"Vexed I may be, but angry with you, never! Have I done anything to displease you?"
"It is not so much what you do, Walter, as what I fear that you feel. It seems to me—I
trust that I am wrong—but it seems to me that you almost hate Ned Goldie."
"It is natural that I should—he is always insulting me!"
"It is natural, Walter; but is it right? Father has so often told us that the adopted children
of God must struggle against and overcome their evil nature, must try, with God's help, to
gain a likeness to their Father—to be merciful as He is merciful, forgive as He forgives; if
we do not try this, with faith and with prayer, we have no right to think ourselves God's
children at all."
"Can you prove that from the Bible?" said Walter.
"I think that I can," replied Nelly, after a moment's thought. "It is written, 'If any man
have not the Spirit of Christ, he is none of His. Whosoever doeth not righteousness is not
of God, neither he that loveth not his brother.'"
"That last verse has brought another into my mind, Nelly, which has often given me a
feeling of uneasiness. It is from the same chapter, I believe. 'Whoso hateth his brother is a
murderer; and ye know that no murderer hath eternal life abiding in him.'"
"O Walter! You who know so well what is right, can you, in the face of such words, still
nourish hatred!"
"Nelly, I have no more power to love that boy than I have to move the cliffs into the sea!"
exclaimed Walter.
"Ask for power—ask in faith; remember the Lord's promise, 'By faith ye shall remove
mountains,'—'All things are possible to him that believeth.' O Walter!" continued Nelly,
speaking rapidly and earnestly, till the blood rose to her pallid cheek, "this is not a work to
be set aside or delayed; remember that until you forgive you cannot be forgiven, that as
long as you live in hate, you are living in danger, that your very prayer is turned against
yourself when you say, 'Forgive us our trespasses as we forgive them that trespass against
us!'"
Walter leaned his brow upon his hand, and remained for some moments buried in thought;
then raising his head he said, "I believe that I might like Ned Goldie better if you and your
father liked him less; but to see you welcome and speak kindly to one who does not even
pretend to be religious, who is thoughtless, worldly, vain—"
"O Walter! Only think how he has been brought up! How could you expect him to be
otherwise!"
"He is certainly likely to learn little good at home."
"And would you have us drive him away when he comes in a spirit of kindliness to the
house of a man like my father, whose words and example may, by little and little, draw him
to better things."
"Perhaps you are right, Nelly," said Walter, with a sigh, "and I have not acted the part of a
Christian in either feeling or speaking as I have done. When I recall what I myself was—
what I am still—I take shame for my own harsh, uncharitable spirit. I will ask for help from
above, to struggle against this besetting sin."
"And pray for him too!" said Nelly earnestly. "We never are sure that we have forgiven our
enemies till we are able heartily to pray for them."
"I will," answered Walter with an effort.
"And you will forgive me for speaking so plainly to you, brother?" said the girl, holding out
her thin, wasted hand.
His reply was a silent press.
It was now time to attend church, and accompanied by Viner, they proceeded on their way
towards the house of God. On the road they met Ned, who was going down to the beach,
his back turned towards the place of worship. He stopped to wish Viner and his daughter
good morning, but took no notice whatever of the convict's son.
"Where are you going, Ned?" said Viner.
"Down to the boat," replied the youth. "I shall take a sail while the sunshine lasts, I have
not had one for the last three days."
"I wish that you would come with us to church," said Nelly, in her gentle persuasive tones.
"No, no! The morning service is so long—maybe I shall in the afternoon. Mind, I make no
rash promises," laughed the boy; "I am no great churchgoer, you know!"
"I wish that I could persuade you, Ned," said Viner gravely but kindly, "that the only way
to real happiness is to fear God and keep His commandments."
"Let me be happy in my own way for a while," cried Ned. "I dare say that I shall think like
you one of these days, when I am a sober, gray-headed old man."
"Life is uncertain," interrupted Viner.
"Therefore I'll enjoy it while I can!"
"And death—"
"Oh! I've time enough to think about that!" cried the youth, waving his hand as he sprang
down the shingle, so light and agile, so full of health, and strength and spirit, that it
seemed as though many years were indeed before him.
Walter fulfilled his promised to Nelly; he prayed fervently and humbly for the Spirit of
grace, that Spirit which God has promised to all who ask in faith—that Spirit whose fruits
are long-suffering and love. A peace seemed to come into his heart as he prayed, a peace
to which his soul had long been a stranger—he could think of his enemy without bitter
feeling, and even ask for a blessing upon him.
While the congregation were yet in the church, the violent rattling of the windows told of
the sudden coming on of a storm; and as soon as the door was opened at the close of the
service, the blast of cold air which swept in was so strong, that but for the help of her
father's arm, Nelly could scarcely have stood against it. The whole sky was covered with
dark leaden clouds, sweeping on rapidly one after another; the wind had swelled into a
gale, while the broad dashes of foam over the whole extent of waters, and the waves that
rolled on and broke upon the beach, flinging high in the air their showers of white spray,
showed the fury of the raging storm!
"I hope and trust that Ned Goldie is not on the sea!" exclaimed Nelly.
A crowd was collected on the shore, which was now increased by the greater part of the
late congregation. Every eye was strained in one direction, where a little boat was seen,
tossed like a nut-shell on the foaming waves, and many an exclamation of pity or of fear
burst from the anxious lookers-on.
"I'd not for a hundred guineas be in that boat!" said one. "He'll never get her into shore."
"I thought she'd have capsized then!" exclaimed another. "Why on earth does he not take
in the sail?"
"Isn't it Ned Goldie?" said Mrs. Winter, who, prayer-book in hand, stood one of the
foremost in the crowd. "He'd better have been listening in his place in church than taking
his Sunday pleasure, poor fellow!"
"Heaven have mercy upon him!" faltered Nelly, clasping her hands, and looking with terror
upon the little boat, which seemed half swallowed up amidst the swelling billows.
"It is he! It is my boy! Oh! Can no one save him?" shrieked the voice of his wretched
mother, as she stood with arms extended wildly towards him, the wind blowing back the
hair from her pale horror-stricken face—watching the boat that held the idol of her heart.
Another awful gust. The boy was seen in the boat, vainly trying to furl the fluttering,
struggling sail; then there was a cry heard even above the roaring storm.
"She's over! She's down! He's lost!" The mother lay senseless on the beach—her son was
struggling in the midst of the waves! "God have pity on him! He cannot swim!" cried Mrs.
Winter.
Nelly had closed her eyes in horror, a word from her father made her look round in new
fear.
"Is it not madness to attempt it?" said Viner.
Walter had stripped off his coat and waistcoat, and was preparing to plunge into the surf.
"O Walter!" exclaimed Nelly, stretching out her hand; but she dared not utter the entreaty
that rose to her lips—she dared not stop him in the course of duty.
"Pray for me!" whispered Walter. There was no time to say more—the next moment she
saw him battling with the waves.
Motionless as a statue the young girl stood, able to utter no word, but pouring out her
whole soul in fervent agonised prayer! Now a head and outspread arms were seen on the
waters, then were lost again, as a huge swelling billow rolled on, as though to sweep away
the swimmer, or bury him beneath its weight!
Nelly was like one in a terrible dream; she heard nothing of anything that passed around
her but the rush of the wind and the roar of the waves; she saw nothing but the wild
tossing waters, save when she caught a moment's glimpse of Walter. Happy was it for
Ned's wretched mother that she was beyond reach of either hearing or seeing!
When Mrs. Goldie recovered from her swoon, she found herself in the nearest house, which
happened to be that of the baker. Her wild passionate inquiries received no reply but looks
of sorrow and pity; and unable to endure the terrible suspense, the poor woman sprang
from the bed on which she had been laid, and in the strength of her despair,
notwithstanding every effort to detain her, rushed back to the spot where the sight of an
assembled crowd directed her impetuous steps.
Alas! For the sight that awaited her. Viner was kneeling upon the shingle, supporting on his
bosom the head of a youth, into whose colourless lips he was pouring some spirits, and
Nelly, at his side, with trembling eagerness, was watching the signs of returning animation.
Mrs. Goldie gave one wild, searching look, and passed on—the face was not that of her
son. A little farther on lay a corpse, in which life had for some time been extinct. Stiff and
cold he was stretched in death, the young, the beautiful, the strong—oh! How changed! In
vain every method to restore him had been tried—the heart and the pulse had ceased to
beat, the sparkling eye was glazed, the laughing lip silent; in the midst of his pleasures,
his follies, his sins, Ned Goldie's spirit had been summoned to appear before his Maker!
We will dwell no longer upon a scene so sad—no words can paint the anguish of the
desolate mother! We will rather reflect upon the comfort which it was to Walter, when
following the poor youth's remains to the grave, to feel that Heaven had enabled him to
triumph over his better feelings, and even to hazard his life for the sake of one whom he
had once regarded with hate. His efforts to save Ned had been in vain, he had only
succeeded in dragging the body to the shore; but he had done all that it was in his power
to do; he had treated an enemy as he would have treated a brother; and he no longer felt
self-condemned by his own words when he prayed:
"FORGIVE US OUR TRESPASSES AS WE FORGIVE THEM

THAT TRESPASS AGAINST US."
CHAPTER VII.
"Lead us not into temptation."
E— was now becoming completely emptied of visitors. Every lodging put up its hopeless
label—"To let"—in the reading-room no one thought it worth while to attend; the shore was
left to the fishermen, and scarcely a bonnet was seen in the streets!
Walter worked busily and well at his new occupation. He had really a taste for carving, and
every article that he made was an improvement upon the last. It was a great pleasure to
him to hear Nelly admire his elegant sticks and beautiful boxes, and suggest little
alterations and amendments.
But still there could be no sale for anything that he made until the season when visitors
should return, and with the long dreary winter and bleak spring before him, Walter began
seriously to consider whether he should not leave E—, and seek for employment
elsewhere. In vain he tried to persuade himself that he was wanted in the shop; Viner's
business was so small that he could well manage it himself. The scanty gains were hardly
sufficient for the bare support of three; were Walter in another situation, he might increase
the little store.
Very dear had his quiet home become to Villa's adopted son, he could hardly bear to leave
it; and as he found by inquiry that there was little hope of obtaining employment near E—,
he knew that to seek it, he must go to some distance, and be separated, perhaps for many
years, from those whom he most loved upon earth.
The thought of this lay like a weight upon his heart, and often made him sigh heavily as he
sat at his work. As yet he had not spoken on the subject either to Viner or Nelly, but he
knew that the time was come when it would be necessary for him to do so.
Three days after the funeral of poor Ned, Mrs. Winter entered the little gate; Viner was
alone in the shop at the time, but the sound of her voice drew Nelly and Walter from the
parlour, where they had both been engaged in their work. "You have just come from our
poor neighbour's," said Viner. "How is Mrs. Goldie this morning?"
"Oh! Poor soul, I have scarcely left her since that terrible day! She's breaking, she's
breaking fast—she will never hold up her head again!"
"Oh! Hers has been indeed a heavy trial!" murmured Nelly.
"Most heavy," said her neighbour, "and she's quite sinking under it. I've known mothers in
sorrow for their children before now, but never in sorrow like hers! There are many who
receive deep wounds in the heart, but its sin that puts poison on the edge! This poor
creature is always reproaching herself, always weeping over the wrong that she did to her
child, though I am sure that she was but too fond a mother."
"'Oh! Had I known that his days were to be so few,' she cries; and then bursts into an
agony of grief, and refuses to receive any comfort."
"Oh! Do you not speak to her of the Saviour?" cried Nelly.
"I have spoken, and our worthy clergyman has spoken; for, strange enough, Goldie sent
for him. But it seems as if religion rather added to her pain; for when she hears of the
mercy and goodness of God, she sobs out, 'Why did my poor boy never know Him!'"
"And Goldie," said Viner, "how does he bear up?"
"He looks much as usual, perhaps a little thinner; but he does not give way like his wife. I
think that his heart is hardened by selfishness; and yet it has its warm corner too. He
certainly has done a great deal for his children, has given them all that he could, except
the best thing of all!"
"I am sure that he must feel this blow," said Nelly.
"He neither speaks about Ned, nor will hear others speak; he cannot bear his wife's grief,
so keeps out of her way; he scarcely sees her from morning till night—she'll not trouble
him long, poor thing!"
"I had trusted that affliction would have drawn him near to God," said Viner.
Mrs. Winter shook her head. "People may talk about great changes," she said, "but depend
upon it, when a man has gone on for sixty years thinking of nothing but getting on in the
world, it's as easy to raise the dead as to make him turn to religion! We know that there
have been miracles, but we do not dare to expect them; and it would have been a miracle
indeed had that man's heart been raised from the world! I fancy that Goldie has more
trouble in his family before him, at least if it is true what is said about Mat. After the way
in which he has brought up his sons, he must expect to reap as he has sowed."
Viner never encouraged gossip, therefore asked his neighbour no question that might lead
her to continue the subject. She turned suddenly towards Walter and said, "I'm forgetting
the thing that I came for—I bring you a message from Goldie. I think that he feels grateful
—at least as grateful as such a man can feel—for your attempt to save his poor boy. He
wishes you to stop over and see him; I hope that he is going to do something good for
you, Walter."
The shutters of Goldie's shop, which had been put up before the funeral, had been again
taken down, and except that one bright young face was seen there no more, the place
looked much as usual. Walter found Goldie in the back parlour—his poor wife had never
left her bed. Of how much comfort and ease that parlour told, with its nice furniture,
carpet, little mirror above the mantelpiece, and framed portraits of the three sons hung on
the wall! Yet to Walter's eye there was something deeply sad in the place, where comfort
might be, but happiness was not.
Goldie received the youth kindly. Whatever remembrances the sight of Walter must have
brought to the mind of the bereaved father, he showed little emotion on meeting, his voice
might be somewhat tremulous, that was all—there were no tears nor signs of deep sorrow.
"I owe you something, Binning," he said, holding out his hand, "and I am not the man to
forget it. You must be making a poor thing of it at Viner's, I should say—perhaps you are
beginning to look at for something better?"
He stopped, as if for an answer; Walter made no reply, but listened eagerly to what was to
follow.
"Mine is a large business," said Goldie, a little proudly, "and besides that, I have a house
and lodgings to let, as you know, at the other end of the town. I shall want assistance in
the shop, especially now that Mrs. Goldie is ill, and—" he paused, for he would not allude
to the son whom he had lost—"and I should be happy, Binning, to take you in, with a
handsome salary now, and a prospect of future partnership if we find that we suit one
another."
The heart of Walter leaped with delight! The prospect of comfort, independence, without
separation from his friends, seemed so much more than he had ever dared to hope, that
his first feeling was one of unmixed joy! The second, however, was of difficulty and doubt,
and Goldie read it in the changing expression of his face.
"Well, what do you say to it?" cried the fruiterer rather impatiently. "Is not my offer a fair
one?"
"Most kind, most generous, and I shall accept it with gratitude, if I may only be assured
that in serving the shop I shall never be required to do anything against my conscience."
"Your conscience! Oh! That is some of Viner's cant—that won't do with me," cried Goldie.
"If you live with me, you must do as I do, and have none of your nonsense about Sunday.
You had better understand that clearly from the first, and put your conscience in your
pocket, like a sensible man."
"Then I'm afraid—"
"Don't make a foolish decision in a hurry, that you will be sorry for all your life. There's a
customer just come in, I see, I must go to the shop to attend to him. Remain here, and
think over the offer that I have made; you'll never have such another chance of getting on
well in the world."
Walter sat alone in Goldie's back parlour, buried in deep anxious thought, drawn in
opposite directions by two strong powers—duty on one side, inclination on the other. There
were so many reasons for accepting Goldie's kindness: he would be independent, he could
help his friends, he would see them every day—perhaps he might even do some spiritual
good in the house of this irreligious man. But to all this conscience had but one answer. If
he who asks the Almighty to lead him not into temptation, wilfully, with his eyes open,
throws himself into it, how dare he hope for the protection of Heaven?
Should he deliberately agree to disregard God's commandment, how could he ask or

expect that a blessing should attend him? Nelly's favourite text seemed to ring in his ears
—"The blessing of the Lord, it maketh rich, and He addeth no sorrow thereto."
When Goldie returned from his customer, he found Walter with his mind quite made up.
Gratefully, but firmly, the youth declined his offer, and Viner's adopted son returned to his
humble home, not, perhaps, without some feeling of regret, but with a comfortable
consciousness in his mind that, however foolish man might think his decision, he had acted
wisely in the sight of Heaven.
And let me pause one moment to entreat my reader, before he takes any important step in
life, thus to make conscience his first counsellor and friend. Providence may place us in
situations of temptation, and then we have every encouragement to struggle on bravely,
putting our trust in the promised aid of Him who is able to make us more than conquerors.
But let us beware how we place ourselves in such, confiding in our own power to resist
evil.
"Let him that thinketh he standeth take heed lest he fall;" let him avoid the place and the
society that may draw him into sin; and never forget that the prayer put into the mouths
of all by One who knew our weakness and our proneness to err, was:
"LEAD US NOT INTO TEMPTATION."
CHAPTER VIII.
"Deliver us from evil."
"THE very sight of his handwriting makes me feel uneasy," thought Goldie, as the postman
placed in his hand a letter, bearing the London post-mark. He walked into his parlour, and
broke open the seal, and with many an expression of annoyance, and even anger, read the
contents of the letter.
"Why, this is worse than I even feared! Evil tidings indeed! That boy seems to have been
born to be the torment of my life! What a world this is—full of vexations and troubles! Here
am I, who have been labouring all my life for my children, doing all, sparing nothing,
making every effort; and just when I hoped that I should have some comfort at last, one
of them is taken away, and the other—worse! Well," continued he, violently ringing the
bell, "something must be done, and at once. Aleck is prosperous and rich, that is one good
thing, he will do something; I must see him directly. There is no use in showing this letter
to my wife, she is fretting herself to death already."
The servant-girl hurriedly answered the bell.

"Bring my boots and great-coat," said Goldie, "and tell your mistress that I'm called away
on business, and may not be back till to-night or to-morrow morning. I think I'll sleep at
Aleck's," he continued, speaking to himself. "The nights are so bitterly cold at this season,
and I've no mind to get an attack of rheumatism."
With a heavy heart the fruiterer took his place in the railway train that was about to start
for Brighton. It was a bleak November day, and the dull prospect and the chill biting wind
seemed quite in harmony with his feelings. When the Christian suffers, he can look to
Heaven, and comfort himself with the thought that his portion is not here; but when the
worldly man loses earthly joy, he is losing his all, his only treasure, he has nothing to hope
for beyond! The only comfort to Goldie's mind in his distress was the prosperity of Aleck,
his favourite son; and even in the midst of his sorrow for the two others, it was a proud
feeling to the father that he was going for the first time to see him settled in a home of his
own, a wealthy man, a distinguished man, one who could help to raise the whole family.
Goldie took a conveyance from the station, he had never yet been to his son's house in
Brighton, and, indeed, was a stranger to the whole place, as he had rarely quitted his shop
in E—. As he stopped at the door of a comfortable-looking dwelling, a carriage containing a
lady drove off; he had but a glimpse of her face in a fine bonnet, whose crape flowers and
shining bugles seemed expressly designed to make mourning look as lively as possible; he
knew her to be the wife of his son, and not a little proud the fruiterer felt to be able to call
such a fine lady his daughter.
Goldie's loud knock at the door was answered by a servant in livery. Even the painful
errand upon which the father had come could not prevent his exulting in the idea of
grandeur so new to him! He would have passed in at once, as into his own shop, but the
footman stood in the doorway, eyeing him saucily from head to foot.
"Is your master at home?" said Goldie, trying to push forwards into the hall.
"Not at home," replied the man, half-closing the door.
"Then I'll wait till he comes in. I must see him. Where has he gone?"
"You can't see him; he sees no one, he's expecting his hairdresser."
"His hairdresser!" exclaimed Goldie. "But I am his father!" And pushing the astonished
footman aside, he entered the house, and was at once guided by the sound of a well-
known whistled air to the room in which Aleck was seated.
"Is that you, de la Rue? Why—how—can it be!" exclaimed the young man, rising in
surprise on the sudden entrance of his father. He had not been him since the death of poor
Ned, and scarcely knew in what manner to meet him.
"You did not think to see me here," said Goldie, grasping his hand; "but I have come upon
business, urgent business, Aleck. Sit down, my dear boy, I will let you know all. I could not
rest till I had consulted with you."
Aleck throw himself down again on his luxurious arm-chair, with an uncomfortable
persuasion that something disagreeable was coming, us his father drew from the pocket of
his coat a letter, which he knew to be in the handwriting of his brother.
"That will tell its own tale," said Goldie, handing it with a sigh to his son.
Frowning and biting his lip, Aleck read the letter to himself "This is bad indeed—very bad,"
he said, as he handed it back to his father. "What an unreasonable sum he requires—he

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Fintech, Digital Currency and the Future

of Islamic Finance: Strategic,

ISBN 978-3-030-49247-2 ISBN 978-3-030-49248-9 (eBook)

© Gulf Research Centre Cambridge 2021

FinTech has garnered an increasing amount of interest in recent years.

Doha, Qatar Yousuf Al-Jaida

1 Introduction: FinTech and Islamic Finance in the Gulf

2 A Critical Analysis of Bitcoin from an Islamic Legal

3 Combining Islamic Equity Portfolios and Digital

4 The Potential of Smart Contracts for Murabahah Home

5 The Application of Fintech in Microtakaful as a Means of

6 Gharar-Free ReBittance: Powered by Blockchain107

7 Regulatory Issues in Cryptocurrency Usage127

8 Beyond the Jurisprudential Quagmire: Perspectives

9 Does FinTech Revolution Lead to the Disintermediation

10 Utilizing Blockchain Technology for Post-Trade

11 Any Luck with Bitcoin in Saudi Arabia?209

12 Strategic Assessment of Islamic Fintech in

Zaheer Ahmad is an assistant professor of Finance at the Department of

with 13 years’ experience in both the private and government sectors.

a PhD from the University of Tübingen, Germany and an MBA in Financial

PhD in Islamic banking and finance is from the International Islamic

Mohd Saifulizwan Mohd Lateff is a senior executive in the Channel

Umar A. Oseni is Chief Executive Officer of the International Islamic

Fig. 2.1 Types of crypto-assets. (Source: Author’s own) 10

Fig. 5.3 Potential use of Fintech in microtakaful: enhancing consumer

Introduction: FinTech and Islamic Finance

Nafis Alam and Syed Nazim Ali

© Gulf Research Centre Cambridge 2021 1

FinTech is a relatively recent term, and there is no specific definition for

Fintech in the GCC

1. Central Bank of Bahrain (CBB) introduced the Fintech regulatory

service financial institutions, or any other type of applicant working

Fintech and Islamic Finance in the GCC

development for an innovation hub and establish a set of criteria to guide

A Critical Analysis of Bitcoin from an Islamic

© Gulf Research Centre Cambridge 2021 9

Examples: Bitcoin, Litecoin,

Crypto-Assets Utility Tokens Example: FileCoin, HLC

Equity Tokens Example: DAO

Commodity Tokens Example: OneGram

Hybrid Tokens Examples: Ether, Petro, etc.

Fig. 2.1 Types of crypto-assets. (Source: Author’s own)

among different classes of crypto-assets. However, the proposed classifica-

Historical and Recent Developments

Another definition is given as:

Bitcoin is a decentralized digital currency. (Franco, 2015, p. 3)

The meaning of decentralized is that Bitcoin is neither controlled by

Bitcoin and other

Digital Currency loyalty points, etc.

Fiat money stored in a

Fiat money, i.e. USD,

Fig. 2.2 Taxonomy of Bitcoin as a currency. (Source: Authors’ own)

deposited USD 10,000 in a bank account, the same amount is represented

Current Resolutions and Fatwas on Bitcoin:

Scholars Who Are against Bitcoin

1. Turkey’s Directorate of Religious Affairs (Diyanet), which is the top

Bitcoin is only used in illegal activities, or it is used by money launderers.

1 Introduction: FinTech and Islamic Finance in the Gulf

2 A Critical Analysis of Bitcoin from an Islamic Legal

3 Combining Islamic Equity Portfolios and Digital

4 The Potential of Smart Contracts for Murabahah Home

5 The Application of Fintech in Microtakaful as a Means of

6 Gharar-Free ReBittance: Powered by Blockchain107

7 Regulatory Issues in Cryptocurrency Usage127

8 Beyond the Jurisprudential Quagmire: Perspectives

9 Does FinTech Revolution Lead to the Disintermediation

10 Utilizing Blockchain Technology for Post-Trade

11 Any Luck with Bitcoin in Saudi Arabia?209

12 Strategic Assessment of Islamic Fintech in

Fig. 2.1 Types of crypto-assets. (Source: Author’s own) 10