Just a couple of days after we published an article about the gold-backed cryptocurrencies that serve the principles of the Muslim community, an Islamic scholar declared that Bitcoin is permissible under Sharia Law, which could open up the cryptocurrency market to investment from 1.6 billion Muslims worldwide.
Last week we explained that in the Islamic faith, it's believed that economic activity should be based on real and physical assets, not on speculation, and therefore those who profess that religion don't like to invest in any cryptocurrency of a speculative nature, because that goes against the Islamic law.
The study, by Muhammad Abu-Bakar of Blossom Finance in Indonesia, explored the functionality of Bitcoin and other cryptocurrencies to determine whether they fit with Islam's strict definitions of money.
“Several recent fatawah issued by prominent Muslim scholars offered incomplete or contradictory opinions on the topic,” said Matthew Martin, CEO of Blossom Finance. “With all the confusion out there, we wanted to offer clear guidance supported by solid research that benefits both laypeople and practitioners of Islamic finance.”
The study’s author underlined that Bitcoin is recognised as a legal currency in Germany and therefore qualifies as Islamic money in that country.
Bitcoin also received an unexpected boost from Christine Lagarde, when the head of the International Monetary Fund (IMF) detailed the potential global benefits of cryptocurrencies.
Lagarde wrote in a blog post that cryptocurrencies like Bitcoin could enable fast and inexpensive transactions, while the underlying Blockchain technology could make financial markets safer.
“Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest and pay our bills,” Lagarde wrote in the blog post.
The publication of Abu-Bakar's study, combined with Lagarde's opinion regarding digital assets, coincided --or influenced, some might say-- with the fact that on Thursday, April 12, in the span of an hour, more than a billion dollars worth of Bitcoin trades were registered on multiple Exchanges, the largest one-hour trade volume in history.
The price of the world's most valuable digital coin surpassed the $8.000 USD mark for the first time in weeks and it has remained within that range since then.
But not only Bitcoin benefited from this series of news. Most digital currencies saw an increase in their value, maybe bacause another factor could have drove the sudden surge in the price of cryptocurrencies: The approach of tax day in the United States.
The deadline to file taxes was Tuesday, April 17. According to CNN, Ryan Taylor, CEO of Dash Core, said that "The selling pressure associated with tax day has subsided right now… As people get their tax returns, there may be new money entering the market."
By Alejandro Cortés
Sources: Independent and CNN