Introduction: Why Bitcoin and Gharar?

Bitcoin is the world’s most recognized and dominant cryptocurrency. Yet despite its widespread adoption, some fatwas have declared Bitcoin haram, often citing the Shariah concept of Gharar — usually translated as excessive uncertainty or high risk — as a key reason.
Among these are fatwas from:

• Dar al-Ifta’ (Egypt): Citing Gharar and volatility as reasons for prohibition (Egyptian Fatwa Link).
• Majelis Ulama Indonesia (MUI): Also referring to Gharar as a central Shariah concern MUI Fatwa link.
• Syrian Islamic Council: referring Gharar as the main Sharah issue (Syrian Fatwa Link).

This blog addresses the misunderstanding of Gharar as it applies to cryptocurrencies — especially Bitcoin — and explains why such objections are not consistent with classical Islamic jurisprudence.

What Is Gharar in Shariah?

In Islamic jurisprudence, Gharar refers to excessive uncertainty or ambiguity in a transaction or contract, not in the asset itself. Of course, one may argue that Gharar can be an attribute of the asset outside the context of a transaction or contract, if the existence of the asset is questionable. Meaning that, if the asset does not exist or its existence is uncertain, then Gharar will be an attribute of the asset. However, this argument is flawed, because being digital or virtual does not mean that an asset does not exist. Bitcoin and crypto assets are digital or virtual assets that can be digitally stored, owned, and transferred from one party to another. The ownership and constructive possession of these assets can be established by any party.

Actually, digital and virtual assets fall under the category of Intangible assets; and they are recognized in Shariah as asset.¹ So, it is incorrect to say that digital or virtual asset do not exist at all, or Shariah does not recognize such assets.

Now, we come back to the topic of Gharar in Bitcoin or crypto assets. As defined in classical sources:

«الموسوعة الفقهية الكويتية» (31/ 149):

«هي الجهل المتعلق بخارج عن الإنسان كمبيع ومشترى، وإجارة، وإعارة، وغيرها.»

“Gharar is the ignorance related to something external to the person, such as a sale, purchase, lease, loan, and similar matters.” (Al-Mawsu‘ah Al-Fiqhiyyah Al-Kuwaitiyyah (31/149)

Interestingly, many Shariah scholars consider that Gharar exists in Bitcoin or crypto assets, because they do not understand it. However, the above definition tells us Gharar is a type of ignorance or uncertainty related to external transactional matters, not to the individual’s personal state.

Ibn Rushd mentions that Gharar can be divided into effective and non-effective. There are conditions when Gharar is actually effective in transactions, and if those conditions are not met then Gharar will be ignored, considered as non-effective.²

Other classical sources, like Al-Mudawwanah, Ibn Juzayy, Al-Qarafi, etc. mention that:

• Gharar relates to unclear outcomes, such as selling something unknown in identity, quality, or quantity, or impossible to deliver, like a lost camel or a bird in the sky.
• It invalidates contracts when it affects the principal subject matter, and when the uncertainty is excessive and avoidable.

If a party clearly mentions the type of crypto asset, its quantity, its name, ticker, wallet address, and the delivery time (spot), network, then there is no room for Gharar in the asset. However, some Shariah scholars argue about Gharar in crypto assets due to their price fluctuation. Market price fluctuation of an asset alone does not constitute Gharar. A transaction is considered completed fulfilling all the Shariah requirements and conditions, including the exact price specification. In Fiqh, the price fluctuation of an asset is an external factor, it does not affect the transaction.

For example, if a party owns 1 Bitcoin (BTC) and sells it to another party on the spot for USDT 100,000 with immediate transfer of the countervalues, then there is no Gharar in this transaction. Even immediately after completion of this transaction, let’s say the price of BTC goes up to USDT 110,000 or goes down to USDT 90,000, such fluctuation does not affect the transaction at all. The trading parties accept this price fluctuation as part of the investment or market risk.

❝ We should clearly differentiate between Gharar (transactional uncertainty) and investment or market risk. The former can invalidate a contract; the latter is part of everyday business or trading. ❞

Can Gharar Exist in Crypto Transactions?

Yes — Gharar can exist in crypto under certain conditions. But it does not exist in Bitcoin or cryptos as an attribute of the asset class. Let’s differentiate:

✅ No Gharar in Bitcoin as an Asset

• Bitcoin is a well-defined, known, and transferable digital asset.
• Buying Bitcoin through an exchange involves known price, known quantity, and instant delivery — all fulfilling Shariah transparency requirements.
• Therefore, Bitcoin does not inherently carry Gharar.

 

❌ Potential Gharar in Certain Crypto Activities

Some examples of Gharar-prone activities in the crypto world include:

• Short-selling: selling BTC or cryptos without genuinely owning them.
• Dealing in Contracts-for Differences (CFDs): trading CFDs without ownership of the underlying crypto asset.
• Derivatives: Futures and options trading.
• Presales with unknown returns (e.g., sending tokens without knowing what or how much you’ll receive).
• Mystery NFTs or Loot Boxes.

 

It is important to emphasize here that these are contractual issues, not a problem with the asset (e.g., Bitcoin) itself.

The Mistake in Some Fatwas

Considering Gharar in Bitcoin and other cryptos solely on the basis of price volatility reflects a misunderstanding. Bitcoin’s price fluctuation is:

• Market behavior, not an intrinsic ambiguity.
• Like other assets, i.e., stocks, commodities, or foreign currencies, which also fluctuate but are not deemed haram on that basis.

❝Gharar is not an attribute for an asset — it is a judgment on the structure of a transaction.❞

Classical scholars judge contracts, not items, as gharar-laden. A proof of this claim is that whenever they talked about Gharar, it is always in the context of transaction and contract. In fact, one of the conditions for Gharar to be effective is that Gharar relates directly to the subject matter of the contract, that too should be an exchange contract (Al-Aqd Al Mu’awadhah).³ Bitcoin cannot be said to “contain Gharar” any more than gold or silver can be — unless the transaction itself is unclear or deceptive.

Conclusion: Bitcoin Is Not Inherently Gharar

• Bitcoin is not a “Gharar-based” asset.
• It can be bought and sold permissibly under clear Shariah conditions, spot transactions.
• The claim that “cryptos contain Gharar” is a categorical mistake — the correct question is whether a particular crypto transaction contains Gharar or not.

Muslim investors should focus on ensuring their transactions are free of Gharar but should not get confused with generalized misconceptions about price volatility being Gharar.

---

1. See: Islamic Fiqh Academy, 2000, Resolution No. 43, 5/5; AAOIFI, 2012, Article no. 3/3/3/1 ↩︎
2. Bidayat al-Mujtahid, 2/171; Al-Majmu‘, 9/258 ↩︎
3. See: Al-Ashbāh wa al-Naẓāʾir by Ibn Nujaym, p. 121, Dar al-Hilal edition; Al-Ashbāh wa al-Naẓāʾir by Al-Suyūṭī, p. 120, Dar al-Kutub al-‘Ilmiyyah, 1983 edition; Al-Furūq by Al-Qarāfī, vol. 1, p. 151; Bada’i al-Sana’I, vol. 5, p. 156; Al-Qawānīn al-Fiqhiyyah, p. 272; Mughni al-Muhtāj, vol. 2, p. 16; Kashshāf al-Qinā‘, vol. 3, p. 163. ↩︎