Now as a crypto trader when you enter into crypto world you start to wondering is crypto halal or haram! As if you listen to direct Mosque Molvi simply he would say overall crypto is haram and this is due to lack of knowledge.
We will take crypto on side now and talk about few things which local mosque molvi said haram and now change their thoughts slowly with time. We will start giving by examples and then in end we will go through crypto example
In start when photography is invented they said picture taking is haram and when they did proper research then they know that in ISLAM if a picture is made with hands like mujasma then haram but the picture taken by camera is not haram.
Same with Television they told its haram but actually TV is not haram. It actually depend on the use of TV. If used for songs then haram but if used to serve purpose convey Islamic message then halal.
Same use case of smart phone.
Also when airplane were invented, they said travel in it is haram it fly over mosque and then later they change their thoughts.
Same with crypto it’s a wide topic to be discussed
It have a use case of transferring payment across borders. Now if use case of these payments is for good things then its halal but if used for smuggling purpose, buy weapons etc then haram.
Now after knowing crypto is halal there are further two types Spot and Future
In Spot we simply buy and sell when prices goes up and we did profit. But when we buy/sell we pay small fee to exchange during buying and selling.
In Future there is a different game. It have buy (long) mean you can buy now and sell later simply like Spot and sell (Short) mean you can sell now and buy if price go down to make profits.
Now here it comes Leverage option (now here is the whole key)
Leverage give us money power like if we have 10$ and we set 10× leverage then it mean we can do shopping worth of 100$ in future but it comes with cost which is liquation.
If trade goes against us and reach the liquation point then our account will wash (No Money Left).
So if you use over leverage then its haram we have to use normal leverage and with proper risk management.
Now here there is another thing which they called interest but it’s not actually interest. In future trades we have to pay fee for leverage and that is decided by simple factor.
If buyers are more and seller are less fees are paid by buyers. Same if sellers are more and buyers are less fee are paid by sellers and it’s paid after every 8 hours (on binance exchange) but these fees are very negligible same like in spot.
Now if you do future without knowledge and over leverage then for that person its haram and if you do with proper rules and risk management then its halal.
Here in Real Life Example
Imagine; A wedding function in your house and you have to buy 50 tola gold.
Now in actual real life people cannot afford 50 tola sudden. So we have to go to goldsmith shop and make a deal that he would give us 50 tola gold on current price and we have to pay him back after 3 months. (Now we did a future deal in Real Life).
If after 3 months gold price goes down we will get loss and if after 3 months gold prices goes up we will make a profit.
So, same in Future Trading
We either buy or sell base on our analysis we made profit/loss and when in business both profit and loss include its halal.
- Leverage is loan?
- Leverage is sood?
- Use of leverage is gambling?
- Funding fee after 8 hours is interest?
- Short Selling in Future (already explain in article).
- Long Buying in Future (already explain in article).
- What is Liquidation?
- What is Margin?
Best way of Future Trading
- Use less leverage (2x, 5x, 10x)
- Use zero liquidation coins for trade (according to your margin).
- Use SL & TP on every trade.
Note: Without Learning or having knowledge if you start any business it will called in term of gambling.