Analysis of cryptocurrency’s characteristics in four perspectives

Abstract

Purpose: The innovation of cryptography technique and blockchain has made cryptocurrency an alternative medium of exchange due to its safety, transparency and cost effectiveness. But its main feature cannot be separated from the users who use cryptocurrency for their illegal transactions. There are several arguments related to the legality of cryptocurrency. The purpose of this paper is to analyze the nature of cryptocurrency based on characteristics of money, legal perspective, economic perspective and Sharia perspective. Design/methodology/approach: In this study, the methodology used is descriptive with a qualitative approach. The object of this research is cryptocurrency. The data are secondary data obtained from peer-reviewed journal articles, conference papers review, working paper and Sharia consultant reports addressing the legality of cryptocurrency. The literature review analysis includes the following steps: material collection, descriptive analysis, discussion with people in Sharia competency and intuitive-subjective material evaluation. Findings: Regarding the characteristic of money, cryptocurrency is acceptable. But in terms of the legal perspectives, cryptocurrency does not meet the criteria as currency. From the economic perspective, cryptocurrency does not fully meet the characteristic currency due to high price volatility, and from the Sharia perspective, cryptocurrency can be considered property (mal) but not as a monetary value (thamanniyah). Research limitations/implications: The research findings are based on the journal articles, working paper and Sharia consultant report, and it may lack Sharia’s opinion. Any further discussion related to Sharia perspectives will be a great input to enrich the study. Practical implications: This study also includes the implications related to the opportunities and the risks of cryptocurrency that can be discussed for the development of the cryptocurrency in the future. Social implications: This study includes the implication cryptocurrency is using as nature of money and not as speculative instrument. Originality/value: This study argued the legality of cryptocurrency in four perspectives such as the nature of money, legal, economy and Sharia perspective.