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Crypto Guides & FAQs

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Investing in crypto - halal or haram?

Many people do not look at crypto as currencies. Instead, they are interested in investing for the long term in certain crypto projects for the technology and use case of that particular project.
 
Our view is that investing in crypto is halal as long as the project itself is halal.
 
There is some nuance when it comes to analysing which cryptos are halal and the different opinions that are held. You can check out a more detailed article here on the permissibility of crypto. We also have an article covering the differing views of the permissibility of crypto.
 
We have also compiled a table of the major coins, including altcoins, and whether or not they are halal which you can find at the bottom of the page.
 

How much should you invest in crypto?

Whenever you invest, you should ask yourself about the risk levels associated with that investment. Crypto sits in the high risk column of investments. 
 
As with anything which is high risk, you need to be comfortable with the fact that your investment may significantly underperform and you could be sat on losses of 70% or more. On the flip side, if your investment pays off, crypto has shown that you can make lucrative returns of 10x or more.
 
The key thing when decided how much to invest in crypto is to only put an amount that you would be comfortable losing. That way, even if you come up against a turbulent time in crypto, you can ride it out over time or simply sell and accept your reduced capital.
 

Where to get started investing in crypto

If you've decided that you want to invest in crypto, you will need to open an account with a crypto exchange. These work in a similar way to online stocks and shares platforms but instead of buying and selling shares, you buy and sell crypto. 
 
There are platforms such as Revolut or Paypal which will allow you to transact certain crypto coins. There are also other specialists brokers, such as Coinbase and Binance, that will allow you to trade a wider variety of coins.
 
 

Is crypto trading halal?

Unlike investing, trading involves the short-term buying and selling of crypto. As long as you are taking ownership of the digital asset itself, short-term trading is perfectly halal.
 
 

Crypto Staking - Halal or Haram?

What is staking?

In short, staking is a way of generating a return on your crypto. In a nutshell, you offer up your crypto to be locked up in a smart contract and in return for you doing so, you get rewarded. Your coins get put to work by the system and they're needed to help the system to achieve consensus. The reward is typically additional coins of that coins you have staked which you can then sell for cash if you so wish.
 
There are different ways of earning yield on your crypto and we've gone into the whole thing in some detail in this guide.
 

Is staking halal or haram?

It can be, yes. There are different terms such as yield farming, liquidity mining, lending, staking, yield farming and they all have different technical meanings.
 
We highly recommend a good thorough read of this guide if you are serious about earning on your crypto.
 
 

Detailed Guides

Cryptocurrency, Bitcoin, Ethereum and Ripple are now established investment products. But as these assets are so new, Muslims have a whole series of questions around them both from an Islamic perspective but also a commercial perspective.
 
In this detailed guide (which we will add to live) we will cover off all the big question on this topic. Each of the links below refers to a detailed article that we have done to address that question.
 
Zakat on Crypto is a topical question. You can calculate your zakat on crypto here plus you get a free portfolio health check too.
 

Introduction to Cryptocurrency & Key Definitions

 


Islamic Issues with Bitcoin and Cryptocurrency

 
 
 

Commercial & Investing Issues with Bitcoin and Cryptocurrency

 
We will be doing detailed articles on each of these topics, but for now we share our high level thoughts below under each heading.
 

How can I invest in blockchain?

 
- Cryptocurrencies (obviously)
- Stocks of companies that are investing properly in blockchain
 How to Invest in Cryptocurrencies in an Islamic Way
 How to get Exposure to Crypto through the Stock Market
 How to earn yield/stake on crypto

How can I invest in cryptocurrencies?

Coinbase and Binance are the two most reputable brokers out there. And you want to use a reputable broker for this stuff. We have created a halal crypto list of the top 50 coins here . See also How to Invest in Cryptocurrencies in an Islamic Way
 
 

What is the halal way to invest in bitcoin and other cryptocurrencies?

Make sure that the cryptocurrency or token you are investing in is halal. You can do that by consulting with our muftis on the IFG Forum, or by consulting our halal crypto list of the top 50 coins here.See also How to Invest in Cryptocurrencies in an Islamic Way
 

Is bitcoin a bubble?

We think that is incredibly hard to say right now as two competing trends are colliding: (1) there is insane bubbly ordinary-investor-piling in shenanigans going on which suggest a bubble; and (2) Bitcoin and crypto is going mainstream and it is very clear it is hear to stay and will likely form an integral part of the technological future that lies before us.(2) suggests that (1) is rational, but, well, (1) is pretty crazy right now. Long term we are bullish on bitcoin, but we do not think it should form a massive part of your overall portfolio for three reasons:
  • It is high risk and high reward
  • It is fundamentally not a very “impactful” or “useful” asset. It is not like a company or a property that actually does something productive for the world.
  • You should have a diversified portfolio. Not financial advice, but perhaps a 5-15% allocation of your overall portfolio is sensible.
 

Is it a good idea to invest in cryptocurrencies?

A small amount in crypto is not going to hurt anyone. We think its a nice additional diversification to a portfolio and hedge against the future too. If you do invest, we’d suggest investing in a basket of cryptocurrencies as right now it is unclear which the clearly dominant currency is.
 

Alternatives to bitcoin and crypto

Bitcoin/crypto is a high-risk high-reward investment. See this guide to these kind of investments and what other options are available out there.In particular, we do recommend you check out venture capital investing in early-stage technology startups. You can learn about this investment class for free on our Ultimate Startup Course and you can hear about cool investment opportunities in this space when you join our angel investor syndicate: IFG.VC .

Resources

 
Halal Crypto List