Essays on the Sharia and Economic Aspects of Bitcoin

Abstract

This dissertation offers a multi-disciplinary analysis of Bitcoin’s monetary viability and its standing under Sharia, responding to contemporary fatwas that prohibit the cryptocurrency. Combining empirical research with the principles of Fiqh analysis, the objective of this study is to address an overarching question: Can Bitcoin plausibly function as money in modern markets without contradicting the objectives and Fiqh foundations of Sharia? On the empirical side, a multi method wavelet framework—applied to daily data from August 2015 to June 2024—reveals that Bitcoin’s pronounced volatility is neither wholly erratic nor uniquely disqualifying. A substantial share of its risk co moves with recognised systematic factors, while its price dynamics display only sporadic coherence with the US dollar cycle. These patterns suggest that Bitcoin is progressively integrating into global financial networks in ways consistent with a diversifiable, potentially hedging asset rather than an isolated speculative bubble. Jurisprudentially, the dissertation re examines the main grounds advanced by prohibition fatwas: lack of intrinsic value, absence of state backing, excessive speculation, and facilitation of Sharia violating activities. By mapping these objections onto classical legal maxims—māl criteria, sadd al dharāʾiʿ, and the default presumption of permissibility—it demonstrates that many rulings rest on incomplete analogies and under specified harm assessments. A rigorous usuli approach, anchored in accurate technical, financial, and economic understanding and the objectives of Sharia (Maqāṣid al Sharīʿah), supports a conditional permissibility view: Bitcoin itself is not inherently haram; rather, certain market abuses surrounding it demand targeted regulation akin to classical controls on fraud, gambling, or price manipulation. By fusing data driven evidence with a systematic legal critique, the dissertation advances two central contributions. First, it reframes Bitcoin’s volatility and dollar resilience as features compatible with monetary functionality in diversified portfolios. Second, it offers a methodological blueprint for future Islamic rulings on emerging technologies—one that encourages jurists to collaborate with economists and technologists to balance innovation, ethical integrity, and societal welfare. The findings call for nuanced regulatory frameworks that safeguard against genuine harms without foreclosing the developmental opportunities that decentralized finance may hold for Muslim societies.

Date of Award	2025
Original language	American English
Awarding Institution	HBKU College of Islamic Studies