What is Bitcoin, Crypto assets? Crypto Asset Halal or Haram? Crypto Asset Shariah Compliant

Definition of Crypto Assets:
‘A crypto-asset is a digital representation of value that uses cryptographic encryption techniques.’
Digital means crypto assets do not exist physically, they are a virtual or intangible form of assets. However, being digital does not mean that they are imaginary or non-existent.
Categorization of Crypto Assets:
A crypto asset is represented in the form of units which can be categorized as either “coins” or “tokens”. Tokens can be further divided into: (1) utility tokens; (2) equity tokens; (3) commodity tokens; and (4) hybrid tokens.
A coin derives its value from people’s ‘trust’ and believe in its native blockchain system. It also depends on its acceptability and usage as a transfer of value and medium of exchange.
A token derives its value from an underlying.
Utility Tokens:
Utility token derives its value from the usefulness or benefit attached to it.
Equity Tokens:
It is a stock or share of a company in the form of cryptographic digital token.
Commodity Tokens:
Commodity token digitally represents an underlying commodity.
Hybrid Tokens:
A hybrid token is a mixture of more than one category mentioned above; or it has some new features which make it different from previous types.
Shariah Compliance of Crypto Assets:
it is possible to create a new shariah compliant crypto-asset or to establish criteria for shariah compliance of the existing crypto-assets to distinguish between shariah compliant and non-compliant ones.
In this regard, a comprehensive definition of mal/property based on the collective understanding of Islamic jurists’ views can be provided as:
‘Mal is anything which is (1) naturally desirable or has commercial value, (2) capable of being stored, and (3) capable of being owned.’
Moreover, shariah accepts mal either in tangible form, like real estate, vehicles, commodities, etc. or in intangible form, like usufruct, benefits, etc. Based on this understanding, crypto assets can be recognized as mal, even with their digital or virtual nature. However, to be qualified as a usable asset, the following parameters should be observed:
1. A crypto asset should represent the value of something which is permissible or lawful in sharia, and that thing should have commercial uses and benefits.
2. The native blockchain protocols should be designed in such a manner that they do not fundamentally consist of impermissible element.
3. The main legal contracts forming the contractual and transactional framework for the crypto asset should not violate any shariah principle.
4. The crypto asset by design should not contain any impermissible element. For example, it should not be attached or linked with the underlying project/product/service/goods in such a manner that it raises concerns about gharar, riba, or violates any other shariah principle.
5. The main objective of the crypto asset should not include any impermissible element. For example, the use of the crypto asset should not be exclusively for impermissible purposes or haram activities.