Is NFT (Non-Fungible Tokens) Halal? Are NFTs permissible in Islam?

Is NFT is Halal or Haram in Islam? Let's Start from scratch.

What is Halal or Haram in Islam?

Halal was defined by Salehudin as the ability to differentiate halal and haram goods and services based on Shariah (Islamic Law). The Halal Literacy is important because before consumers ready to adopt a products or services, they will go through the process of knowledge, persuasion, decision, and confirmation. This article defined Halal Literacy as an ability of a person by combining a set of knowledge, awareness, and skills to differentiate between Halal and Haram goods and services based on Shari’ah Law. 

Equity, debt, and derivative are several types of financing in Islamic finance with four main components include Islamic banking, Takaful & Retakaful, Islamic capital market and Islamic interbank money market Islamic financing activities usually managed by Islamic banking. Islamic banking or Islamic financial institution is the branch of Islamic finance. It is a banking based on Shari’ah (Islamic law) that called Fiqh Muamalat (Islamic rules on transactions). The rules and regulation of the Fiqh Muamalat came from the Quran and the Sunnah. Besides, it can be also based on other secondary sources of Islamic law such as opinions collectively agreed among Shari’ah scholars (Ijma’), analogy (Qiyas) and personal reasoning (Ijtihad). The fundamental principle of Islamic finance includes the prohibition of Riba’ (Interest), the prohibition of Gharar (Uncertainty) and the prohibition of Maysir (gambling). Besides, using and dealing in certain forbidden commodities, share profits and risks also prohibited in business, zakat, and Takaful. In term of financing in Islam, the main methods include Mudarabah, Musharakah, Murabahah, Istisna, Ijarah and Quard Hassan.

Is NFT (Non-Fungible Tokens) Halal? Are NFTs permissible in Islam? 

NFT Halal or Haram? 

This is the very common question we face after the introduction of Non-Fungible Tokens (NFT) into the Islamic Finance world. Normally, the acceptability or impermissibility of an NFT varies on what the NFT that you are involved in is made of.

If the fundamental on the non-fungible token is Shariah-compliant and you do not get any doubt that against Islamic law, you can consider that NFT is to be Halal. But, if an NFT comprises something non-compliant or there were possible extrinsic concerns that could risk Shariah’s non-compliance, you can consider this NFT is to be haram.

My understanding of NFT Non-Fungible Tokens is that it is more like an asset or commodity than it is a stock. So, I think of it like a car or something. It’ll appreciate/depreciate over time. So, the question becomes the nature of the item the NFT represents, and whether you are comfortable buying and selling things of that nature. Having said that, I don’t think there’s a purification factor to any earnings you can make from selling an NFT (this might go under assets/possessed cash when doing Zakat calculations).

So NFTs are simply digital versions of tangible collector’s items. Rather than receiving an actual oil painting to put on the wall, the buyer receives a digital file. They also obtain exclusive rights to the property. NFTs can only have one owner at a time. Because NFTs include unique data, it’s simple to verify ownership and transfer tokens between owners.

Want to know about What is NFT? Is Non- Fungible (NFT) and Fungible Token (FT) being Same?