A New Exploration in the Conceptual Scope of the Principle of "Prohibition of Gharar (Risk)" and Its Applicability to the Buying and Selling of "Cryptocurrencies" from the Perspective of Islamic Law

‌ ∴ Introduction ∴ ‌
The legal landscape surrounding transactions necessitates robust regulations to safeguard the interests of the parties involved. Without such regulations, transactions could result in significant losses for one or more parties, potentially leading to disputes. Technological advancements, despite their many benefits, often introduce complexities that, if not thoroughly understood, can cause problems in transactions. A prime example of this is the emergence of cryptocurrencies. In the realm of Islamic jurisprudence, principles like the no- harm principle (risk or uncertainty) are designed to prevent financial harm and protect economic relationships. This principle, rooted in the teachings of Prophet Muhammad, aims to ensure that transactions are free from ambiguity and undue risk, thereby preventing potential losses.
     The principle of "No-harm principle" is particularly relevant in the context of modern financial instruments and transactions, such as those involving cryptocurrencies. Islamic jurists have historically applied this principle to various forms of trade, where any form of uncertainty regarding the goods or their price renders the transaction void. Early Shia jurists and later scholars have invoked this principle to invalidate contracts involving ambiguous or uncontrollable assets. However, with the advent of digital currencies, the application of this principle to contemporary financial transactions has become a matter of significant debate.
‌ ∴ Research Question ∴ ‌
The primary question guiding this research is whether transactions involving cryptocurrencies can be deemed void under Islamic law by invoking the principle of "No-harm principle." This inquiry is crucial as it addresses a contemporary issue faced by the Islamic financial community, particularly in the design and implementation of new financial instruments in the money and capital markets. Given the complexities and the novel nature of cryptocurrencies, this research seeks to explore the applicability of the no-harm principle to determine the legitimacy of such transactions in Islamic law.
‌ ∴ Research Hypothesis ∴ ‌
The authors hypothesize that cryptocurrency transactions are unlikely to be deemed risky and thus void under Islamic law based on the principle of "No-harm principle." This hypothesis is grounded in the understanding that while cryptocurrencies involve certain inherent risks and uncertainties, they do not necessarily fall within the traditional definitions of risk as established by classical Islamic jurisprudence. The hypothesis suggests that the unique nature of cryptocurrencies might require a re-evaluation of traditional legal principles to accommodate new financial realities.
‌ ∴ Methodology & Framework, if Applicable ∴ ‌
This study adopts a doctrinal research methodology, primarily involving the analysis of library data sourced from Islamic jurists and legal scholars. The doctrinal approach is appropriate for this research as it involves a detailed examination of legal principles and their application to contemporary issues. The research framework includes the following steps:
     Literature Review: A comprehensive review of existing literature on the principle of "No-harm principle" and its application in Islamic jurisprudence. This includes classical texts by early Shia jurists like Sheikh Saduq, Sheikh Tusi, and Ibn Idris al-Hilli, as well as later scholars like Allama Hilli and Fakhr al-Muhaqqiqin.
     Analysis of Cryptocurrencies: An in-depth investigation into the nature of cryptocurrencies, including their creation, trading mechanisms, and the risks associated with them. This step involves understanding the technical aspects of cryptocurrencies to determine whether they inherently possess the characteristics of risk.
     Legal Analysis: Applying the principle of "No-harm principle" to the findings from the literature review and the analysis of cryptocurrencies. This involves comparing the risks associated with cryptocurrencies to the types of risks traditionally considered as risk in Islamic jurisprudence.
     By following this methodology, the research aims to provide a detailed and nuanced understanding of whether cryptocurrency transactions can be considered void under the principle of "No-harm principle" in Islamic law. The findings from this research are expected to contribute to the ongoing debate among Islamic jurists and provide practical guidance for those involved in the Islamic financial industry.
‌ ∴ Results & Discussion ∴ ‌
The investigation into the application of the principle of "No-harm principle" to crypto-currency transactions yielded significant insights that refine our understanding of both traditional Islamic jurisprudence and its applicability to contemporary financial instruments.
     Conceptual Understanding of Risk: Linguistic and terminological analyses confirm that "Risk" pertains to risk or danger primarily arising from ambiguity or uncertainty in a transaction. This aligns closely with the terminological definition that involves the risk of potential harm due to ambiguity in the subject matter or price during the transaction. The study elucidated that Risk applies only when ambiguity is substantial enough to be of concern to the general public. Minor ambiguities or uncertainties regarding future economic statuses, such as price fluctuations, do not constitute Risk.
     Scope of Risk: The scope of Risk is not confined to ambiguity concerning the subject of the transaction alone but also extends to the price. Several scenarios illustrate this broader application:
     Ambiguity Regarding Existence: This includes trading items whose existence is uncertain, such as a stolen car.
     Ambiguity Regarding Acquisition: This involves trading items whose possession is uncertain, like a bird in flight.
     Ambiguity Regarding Type: This pertains to the uncertainty about the kind of item, such as a ring of unknown material.
     Ambiguity Regarding Quality: This covers transactions where the qualitative characteristics of the item, like the quality of rice, are uncertain.
     Ambiguity Regarding Quantity: This includes situations where the quantity of the item, such as the weight of gold, is unknown.
     Contrary to some jurists who consider Risk a characteristic inherent in the transaction itself, the research found that it pertains more to the subject of the transaction—trading something inherently risky due to these ambiguities.
     Evidence from Islamic Jurisprudence: The principle of "No-harm principle" is heavily supported by narrations, particularly the well-known hadith, "The Prophet (peace be upon him) prohibited Risk sales." Although exact wording is absent in Shia sources, the acceptance of this narration among both Shia and Sunni scholars lends it significant jurisprudential weight. Some scholars extend the no-harm principle beyond sales to various aspects of life, though such extensions are not substantiated by hadith collections. The reliability of the narrations varies, with most lacking strong chains of transmission, yet their widespread acceptance validates the principle. Additionally, scholars invoke other sources such as the Quran, consensus of jurists, Muslim conduct, and rational conduct to substantiate the principle.
     Application to Cryptocurrencies: In assessing the principle of Risk's applicability to cryptocurrencies, the study considered several factors unique to digital currencies: The complexity of the mining process
     The non-physical nature of cryptocurrencies and their exchange, Market volatility, Unknown originators, Lack of physical backing.
     Despite these factors potentially increasing perceived risks, the study concluded that cryptocurrency transactions do not inherently involve the type of ambiguity that constitutes Risk. Cryptocurrencies are defined entities with known mechanisms of acquisition and transfer. The risks associated with their future economic status or market volatility do not fulfill the criteria for Risk, as they do not involve ambiguity about the existence, acquisition, or inherent characteristics of the items being exchanged at the time of the transaction.
‌ ∴ Conclusion ∴ ‌
The study on the principle of "No-harm principle" in relation to cryptocurrency transactions led to several critical conclusions:
     Definition and Scope of Risk: Risk pertains to significant ambiguity or uncertainty concerning the subject or price in a transaction. Minor ambiguities or uncertainties about future economic statuses do not fall under Risk.
     Application Beyond Subject of Transaction: Risk includes ambiguities in the price and various aspects like existence, acquisition, type, quality, and quantity of the items exchanged.
     Evidence from Islamic Jurisprudence: The principle is robustly supported by narrations, though with varying reliability. Its acceptance among scholars underscores its importance.
     Cryptocurrency Transactions: The complexities and risks associated with cryptocurrencies do not constitute Risk. There is no inherent ambiguity regarding the existence, acquisition, or characteristics of cryptocurrencies at the time of the transaction. Hence, cryptocurrency transactions cannot be voided based on the principle of Risk.
     These findings clarify that while cryptocurrency transactions are not void due to Risk, this does not inherently legitimize them under Islamic law. Other factors, such as their rationality and compliance with broader Islamic principles, require separate examination. This study provides a foundational understanding for Islamic legal researchers to further explore and address contemporary issues in financial jurisprudence.