How to get started with Crypto – Speculator vs Visionary
Before you start, Ask the right questions
فَاعْلَمْ أَنَّهُ لَا إِلَٰهَ إِلَّا اللَّهُ وَاسْتَغْفِرْ لِذَنبِكَ وَلِلْمُؤْمِنِينَ وَالْمُؤْمِنَاتِ ۗ
The scholars have taken from this that ‘knowing’ comes before ‘speaking and action’. If that is the case with Islam, then why not with our daily financial dealings? Anyone who thinks that by acquiring this ‘magic crypto coin’ they will become millionaire and has no real reason to make such a decision besides hope, then they cannot be surprised if it doesn’t go their way, nor complain to anyone else that they didn’t do their due research.
So if one approaches this from this aspect, they need to find out:
- What are the skills required to be an investor
- What are the islamic considerations they need to learn to not fall into haram
- How to manage risk and what does one need to know to manage their money correctly
- What is this ‘crypto thing’ they want to invest in
- Why do they think it will increase in value
- What time frame are we looking at for this value increase
- Finally, what signs are they to look for to signal its time to leave this investment
These are the kinds of questions a speculator needs to ask themselves. As you can see, these are not the same kinds of questions one would ask when buying a car or a game. These are the kinds of questions you ask for something you wish to buy but not ultimately keep. Its purchase is for the purpose of selling later on for a profit.
Visionaries & early adopters
Then there are those who see something fundamentally wrong with this world, with our monetary system, our government, our institutions and they want to know if there is a way to exit that system and #Choose2SayNo. Or those who see how the world currently functions and wishes to find better ways of doing it. For them there are a completely different set of questions. For these types of people, they want to explore possibilities, opportunities, they want to know what more they could do with this ‘tech’, how could they improve their lives and the lives of others with it, or at the very least, how they could protect themselves from harm they perceive to be incoming. For this type of person they would ask:
- What are the problems we currently have
- How severe are these problems and do they pose a threat to everyone or just me
- How deeply rooted are these problems in society, culture, our institutions and even our governments?
- How exactly does this new tech seek to solve these problems
- At what cost is this problem solved or relieved
- Who pays for this problem to be relieved
- What do I have to do to do my part in the future
There are very different questions to ask. These are not the type of questions you would ask if you wanted to set up an online shopping platform selling light bulbs, or whether you should invest into Tesla stocks. These are questions related to users and adopters, not speculators and profit seekers.
These types of people can tolerate negative price action because they still have what they wanted from it, ie its use case and what it offers them. Much like a person who purchases a car, knowing that as they drive it it loses value, but that’s not why they purchased it, so they are still happy.
What would need to happen for the islamic community as a whole to agree on whether trading Bitcoin is halal or not. Is it a case of bitcoin needs to be adopted more and be used globally as means of exchange to buy goods and services. Then they will agree it is considered Halal? Or is it the volatility decreasing?