Reconciling Islamic Finance, Microcredit, and Bitcoin

  • charging interest
  • risky, speculative transactions (e.g., paying for an unbuilt house)
  • participating in businesses against Islamic law (gambling, alcohol, pork)


A few years ago I read Startup Rising: The Entrepreneurial Revolution Remaking the Middle East, and entrepreneurs typically pointed to two cultural blocks: wasta (‘connections’) mattering more than good ideas, and cash-on-delivery.

Alternative Investment

Islamic banks may be designed around religious laws, but they also need to be profitable, value-generating businesses. Entrepreneurs want funding. How do they do it?

Can Muslims use digital currency?

This is an interesting question. As best I can tell (tl;dr) most people believe that Bitcoin is compliant with Islamic finance, but existing analysis is published by Bitcoin proponents and entrepreneurs with vested interest.

Is Bitcoin actually accepted in Islamic countries?

The main projects which I think of in this space are:

Isn’t Bitcoin speculative and involved in un-Islamic businesses?

I wouldn’t call Bitcoin stable, but that only relates to its performance over time / investment potential. It is not the vaguely unbuilt house used in my Islamic Finance book. And there are stock exchanges for Islamic companies. So Bitcoin’s Muslim proponents are comfortable with it.

2018 Update: Gold-Backed Cryptocurrencies

OneGram and HelloGold are two halal cryptocurrency startups which back their coins with gold, to assure users that it is not a speculative currency.

Smart Contracts and Islamic Finance

There is an interesting project on GitHub describing how one might set up an Islamic bank in countries with only small Muslim minorities, by using an Ethereum smart contract as the bank. The bank would have minimal fees and no need for interest payments, because it is run autonomously. The repo’s creator is in Japan, and says that Japanese banking laws restrict practices required by traditional Islamic finance.

What about Bitcoin and ISIL ?

You may have seen stories in 2015 about how ISIL funded itself, including the possibility of cryptocurrency (mostly Bitcoin).


I want to dig deeper into Islamic finance… it appears that a digital option here (based on gold or paper currency, or on cryptocurrencies) could attract interest from wealthy Muslims, and provide essentials to the poor. If you ignore this system, a business may have trouble expanding globally, or a charity could shut out many of the people that it wishes to protect.

2020 Update! I made an eBook:

Defining these applications in open source code and smart contracts would make it easier for Islamic institutions which understand their business and requirements to evaluate their options. I wonder if a less risky smart contract could be developed as an accounting and financing tool for a ‘serverless’ bank. This would be a small team using their standard national currency, but with record-keeping and overhead occurring automatically in the blockchain. This bank and entrepreneur would report transactions and get their financial records from the contract. If they found a breach in the contract, they would be able to show all of their agreements and transactions in court.

 by the author.



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Nick Doiron

Nick Doiron

Web->ML developer and mapmaker.