From my blog:
The second potential solution to the issue of riba fiat currencies is Bitcoin. Bitcoin advocates among Muslims propose that the Muslim Ummah should embrace a Bitcoin standard, arguing that Bitcoin’s creation aimed to bypass and, ideally, supplant the debt-based fiat system of central banks. They acknowledge gold’s historical role as the supreme form of currency in the analog world, but assert that in today’s digital age, characterized by the internet, Bitcoin stands as the preferable solution rather than gold.
When Muslim Bitcoin enthusiasts hear Muslim gold enthusiasts proclaim that gold is the solution to the current riba-based fiat system because the Prophet Muhammad PBUH used it, the Bitcoin proponents respond by stating that the Prophet PBUH utilized gold due to its superiority as the monetary technology of his time. However, they emphasize that Sharia does not mandate gold as the exclusive legitimate form of currency.
“The idea that we are devotionally bound to using gold and silver is one that does not hold up with Islamic law. I know it’s a very nostalgic view among some Muslims, but there is literally no evidence that we HAVE to use gold and silver. Those arguments are always utilitarian arguments about the independence of Muslim peoples and their ability to escape the global capitalist monetary system. As far as religious evidence, there is nothing that says, “Oh you who believe, use gold and silver”. Gold and silver were used at the time of the Prophet Muhammad PBUH simply because they were the predominant currencies. Interestingly enough, the very first dirhams and dinars, with dirhams being silver and dinars being gold… ‘dinar’ comes from the Roman Latin ‘Dinarious’, which is a coin of gold, and ‘dirham’ Greek comes from ‘drakhmē’. Many times the coins that were used by Muslims will be Sassanid or Byzantine coins. Even in 70 AH when Abdul Malik ibn Marwan had a mint built in Syria and struck their own coins and standardized the weights, you will find the Shahadah (declaration of faith in Islam, proclaiming that there is no god worthy of worship except Allah and that Muhammad PBUH is His messenger) on one side and then on the other side a picture of the Sassanid or Byzantine king.”
~ Shaykh Joe Bradford
Mufti Faraz Adam has also written an article presenting the case that Islamic jurisprudence does not mandate the use of gold, but rather that gold was used as money in the time of the Prophet Muhammad PBUH due to its characteristics.
“The Dinar is typically referred to as the ‘currency of Islam’. The idea stems from the fact that the initial currency minted by an Islamic government was that of the gold Dinar and silver Dirham. It was the Caliph Abdul Malik ibn Marwan who ordered the minting of these currencies in the year 76 AH. However, does that mean that Islam has a specific currency it encourages or advocates? Far from it. Matters of economics and finance in Shariah are generally left to the people to do what is most optimal, fair, and useful for themselves within a divine framework featured in the Qur’an and Sunnah. Those elements which are relatively more likely to cause harm to individuals and society have been banned by Shariah. Such practices do not fall within the remit of human discretion in transactions. In regard to an Islamic currency, Ibn Taymiyyah states that Shariah has not defined any specific condition nor definition for currency and has instead left it to the customary practice and governance of the people. Other scholars have enumerated various forms of money such as commodity money, customary money and more. This has always been the understanding and therefore during the Mamluk dynasty (872-922 A.H/1468-1517 CE), they introduced Fulus (copper coins) as a currency to use in small commercial transactions. The Ottomans introduced a currency named Qaimah in the form of paper money. In 1914, the Ottomans officially declared that paper currency was the only legal tender for the medium of exchange. What makes gold so special then? It is the characteristics of gold that make it naturally appealing to humans to use as a currency. In earlier times, humans only had the elements in their natural environment. The most obvious thing to do was to use one such element which can represent the transfer of value. Something from their environment had to be used as a technology to represent value and facilitate exchange. Gold proved to have all the innate characteristics of a medium of exchange based on:
Gold has no time limit or shelf-life; it is durable.
• Gold is portable
• Gold is divisible and malleable
• Gold is rare
• Gold is finite and has scarcity
There are 118 elements in the Periodic Table of Elements. Humans eliminated all of the elements that represent gas for obvious reasons such as the inability for it to be ascertained. Another 38 other elements could not be used in everyday exchanges as they posed a threat to human life and endangered the very people currency should serve. These elements were either too reactive, corrode over time and/or ignite when exposed to air. The medium of exchange had to be rare but not too rare to ensure it has maintained value and is not impacted by hyperinflation. That left only 5 possible precious metals: rhodium, palladium, silver, platinum, and gold. Platinum and palladium were proven to be too rare to create enough coins to circulate; people needed a metal that was somewhat rare so that not everyone produced their own coins, but available enough so a reasonable number of coins could be created to allow commerce. Silver wasn’t a good choice because it tarnishes over time and rhodium was also too rare to be used. This left gold as the strongest choice when making/choosing an element as a currency.
Thus, gold was not established as the currency because of it being gold, rather it was the characteristics and features of gold which made gold the dominant form of currency. A monetary system needs particular characteristics which create a conducive environment for monetary stability. Anything which harnesses these characteristics has the potential to serve as a currency; whether it is naturally found or digitally constructed. The purpose is to have a monetary language by which people can interact, exchange value, price items, and have economic stability, permitting the acquisition of everyday needs and a mechanism for remuneration.”
~ Mufti Faraz Adam
Bitcoin enthusiasts argue that Bitcoin possesses all the attributes of gold, such as divisibility, durability, recognizability, portability, and scarcity – attributes that make gold valuable. They also argue that Bitcoin enhances these characteristics even further and offers more, for example:
• Divisibility: Bitcoin is highly divisible, with each unit, known as a satoshi, representing a fraction of a Bitcoin.There are 100,000,000 satoshis in one Bitcoin. This divisibility allows for precision in transactions, making it practical for both large , small & micro payments. Gold, on the other hand, lacks this level of divisibility, as it is typically traded in larger units, such as ounces or grams.
• Durability: Gold is a physical metal, and while it doesn’t corrode or tarnish much, it can be damaged. Bitcoin, being a digital asset, is not subject to physical wear and tear. It exists as data on a decentralized ledger, making it inherently more durable in the long term.
• Recognizability: Bitcoins are easily recognizable and verifiable through the decentralised blockchain. Gold can be authenticated through various methods, but it’s an expensive and burdensome (melting gold) thing to do in contrast to the ease of verification that exists within the decentralised Bitcoin network.
• Portability: Bitcoin is exceptionally portable since it exists as digital information. You can carry significant wealth on a small hardware wallet or even memorize a seed phrase for recovery. Gold, on the other hand, is bulky and heavy, making it less practical for large-scale wealth storage and transportation.
• Scarcity: Bitcoin’s scarcity is programmatically defined. There will only ever be 21 million Bitcoins in existence, making it highly predictable and resistant to inflation. In contrast, gold mining continues, and new deposits are discovered, which can impact its scarcity over time. Additionally, Bitcoin’s scarcity is easily verifiable on the blockchain, while determining the exact amount of gold available can be challenging due to hidden reserves and ongoing mining activities.
Another contention that some Muslims, who advocate for a return to the gold standard, put forward against Bitcoin is that it’s not physical/tangible. They make the argument that according to Islamic jurisprudence, money should be physical. Muslim bitcoiners respond by stating that money does not need to be physical for it to be considered Mal refers to wealth or property. It encompasses all types of possessions that hold value and can be owned, such as money, goods, real estate, livestock, and other assets)
“Although some Hanafi jurists have stated that Māl must be a physical entity, Mufti Taqi Uthmani dispels this argument and states that the Quran and Sunnah have not explicitly defined Māl, rather, Shariah has left it to the understanding of people He thereafter quotes the Fatāwā of late Hanafi jurists which consider electricity and gas as Māl despite being intangible. Thus, intangibles can also be Māl on condition they are desirable and retrievable.”
~ Mufti Faraz Adam Shaykh
Yasir Qadhi on why money does not need to be physical / tangible:
Islamic jurisprudence states that social concurrence is key in determining something to be a currency:
Another important thing to note is that akin to gold, Bitcoin does not originate through interest-bearing loans, as fiat currencies do. Gold and Bitcoin are both mined, but their mining processes are quite different. Let’s explore how they are mined and the proof of work and energy exerted in each case.
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Moro Blanco 
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