Crypto is one of the most popular crypto assets or cryptocurrency investments today. Crypto has been trending on various social media because many people are interested in crypto money or cryptocurrencies, which are still very foreign to most people. Simply put, crypto money can be interpreted as digital money
Cryptocurrency, as quoted by Forbes, has three keywords related to its function: digital, encrypted, and decentralized. This means that unlike traditional currencies, US dollars, euros and even rupiah, this digital currency is not controlled by a central authority with respect to the value of money. Therefore, the task of controlling and managing this currency is completely held by cryptocurrency users over the internet.
Crypto is officially defined by Jan Lansky as a system that satisfies six conditions:
Meanwhile, according to Bank Indonesia (BI), crypto money or cryptocurrency is a digital asset designed to function as a medium of exchange. Crypto or cryptocurrencies use strong cryptography to protect financial transactions, control the creation of additional units, and validate asset transfers
Cryptography itself is a method used to use codes to protect information and communication channels. The concept of cryptography has been known since the days of World War II. At that time, the Germans used encryption to send secret codes, so that they could not be read by the Allies.
In 1983, American cryptographer David Chaum used encrypted e-commerce called e-cash. Then, in 1995, he implemented it through Digicash. These were early encrypted electronic payments where the user’s software had to determine a specific encryption key before it could withdraw the note from the bank and send it to the recipient. This prevents issuing banks, governments, or third parties from tracking digital currencies.
In 1998, Wei Dai published a description of “b-money,” which is characterized as a decentralized electronic money system. Shortly thereafter, Nick Szabo described Bitcoin Gold. Like Bitcoin and other cryptocurrencies that follow it, Bitcoin is described as an electronic currency system that requires users to complete proof-of-work functions in a cryptographically integrated and published solution. A reusable Proof of Work currency system was later created by Hal Finney following the work of Die and Sabo.
Bitcoin, the first decentralized cryptocurrency, was created and maintained in 2009 by developer Satoshi Nakamoto. As a proof-of-work schematic, use the SHA-256 cryptographic hash function. Namecoin was founded in April 2011 in an attempt to build decentralized DNS that makes Internet censorship extremely difficult. Shortly after, Litecoin was released in October 2011. It is a successful cryptocurrency
Currently, at least 10,000 types of cryptocurrencies are traded. However, in Indonesia alone, 229 cryptoassets have been registered with the Commodity Futures Trading Regulatory Agency (CoFTRA).
The following types of cryptocurrencies are the most popular or have the largest market capitalization in USD, namely:
Crypto Bitcoin is the cryptocurrency with the largest market cap or value in the world. Currently, the total bitcoin market valuation stands at $671.78 billion, or approximately Rs 9,673.63 trillion (an exchange rate of Rs 14,400). In second place in the cryptocurrency market is Ethereum. In fact, Ethereum is software or software based on a blockchain network that can be accessed for free or open source. Blockchain based network applications have a crypto asset called ether. According to CNN, the Ethereum software is built to empower
Using cryptography makes the use of crypto currency inoperable. This means that cryptocurrency transactions cannot be faked. Cryptocurrencies or lists of cryptocurrencies are usually centralized in a system called blockchain technology
Of course, there are pros and cons in the opinion of many. For professionals with cryptocurrencies, the good points are:
Bank Indonesia (BI) sees that the impact of crypto asset transactions on the stability of the Indonesian financial system is still limited. “Cryptocurrency trading is still in its infancy, and the facilities traders have are limited to spot trading with a small amount of crypto trading compared to stock trading,” the central bank said. Released in the Study of Financial Stability no. 37 which was launched on Wednesday (6/10/2021). However, BI emphasized the need to continue to monitor the development of these impacts. This is because there are still some significant risks and public investment interest in this asset may continue to grow.
The legal status of cryptocurrencies varies widely from country to country and many of them have not been defined or changed. According to the Library of Congress, there are “absolute bans” on trading or using cryptocurrencies in eight countries: Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan, and the United Arab Emirates. And the implicit ban applies to 15 other countries, including Bahrain, Bangladesh, China, Colombia, Dominican Republic, Indonesia, Iran, Kuwait, Lesotho, Lithuania, Macau, Oman, Qatar, Saudi Arabia and Taiwan. In the United States and Canada, state and provincial securities regulators, coordinated by the North American Association of Securities Administrators, are investigating “Bitcoin fraud” and ICOs in 40 jurisdictions.
Different government agencies, departments, and courts classify bitcoin differently. The Central Bank of China banned the use of Bitcoin by financial institutions in China in early 2014
Then how about crypto from an Islamic perspective? As a legal reference for Indonesian Muslims, MUI has held the Ijtima Ulama Forum on Monday (9/11). In the forum, Ijtima Ulama discussed several things, one of which was related to cryptocurrency. The MUI officially prohibits the use of cryptocurrencies as currency. Chairman of the MUI Fatwa Asrorum Niam Soleh also stated that there were several reasons for banning cryptocurrency as a currency. One of the reasons is that cryptocurrencies do not meet the shar’i requirements for using the currency. The shar’i requirements for using currency include physical form and value, besides that, the exact amount of money must be known, ownership must be owned, and it can be handed over to the buyer. Niam also shared several reasons why cryptocurrencies are illegal. This is because cryptocurrencies include gharar and dharar, which also violate Law Number 7 of 2011 and Bank Indonesia Regulation Number 17 of 2015.
What are gharar and dharar? Gharar is the element of uncertainty in transactions and dharar is that it can cause harm to other people or parties.
