Risks and Investment of Cryptocurrency : an Islamic Approach

Abstract

Purpose – The purpose of this paper is to explore the risks that arise from cryptocurrency investment from an Islamic perspective.

Design/methodology/approach – This study applied a collection method of interview techniques and documentation obtained both offline and online. The study looks at two main issues, namely how experts view cryptocurrency and how the government responds to cryptocurrency investment activities. To answer this problem, the study uses support from previous researchers, including studies and triangulation models.

Findings – This study has found several points, including: the risk of cryptocurrency investment has quite extreme price changes, making it a target for cybercrime and there is no strong regulatory support. In an Islamic perspective, cryptocurrencies are still being debated and the majority are forbidden because they contain elements of gharar, dharar, and maysir (high enough speculation). Furthermore, with more harm than maslahah according to some scholars.

Implications – The analysis in this paper will fill the gap in the literature by investigating the relationship between the high returns that investors get and the risk. This will be seen from an Islamic point of view. because this research serves as a guide for academics, researchers and decision makers who wish to invest in sharia. However, this research can be expanded to investigate the potential and opportunities of crypto as a viable investment instrument in the world of Islamic finance.

Originality/value – This paper is the first paper to discuss and explore risk and investment in cryptocurrency instruments from an Islamic perspective, to provide strong information on this issue based on several views such as religious experts, academics and practitioners in the Yogyakarta region