The Fiat Dilemma of the Muslim

Muslim Bitcoiner
8 min readJan 28, 2022


When a Muslim wants to make a significant or life-changing investment, whether it’s for a business, an education, or a house, they have a choice to make: either take out a loan, or save up the required capital. Either choice puts the Muslim in a dilemma as they strive to keep their wealth ‘halal’.

In the current fiat standard banking model, taking out a loan is not an option for the God fearing Muslim since it directly involves usury, or Riba as it’s called in Arabic, which is prohibited in Islam. Taking out a loan from an Islamic bank is touted as a viable alternative, but this option has its own problems. Islamic banks still need to operate and make profit in the fiat standard banking model, where they are still incentivized to issue as much debt as possible in order to make more profit. Indeed, an Islamic bank could declare that they don’t deal or associate with Riba, but they must mimic the profit making mechanism used by regular banks. Islamic banks will typically charge a fixed fee instead, name it something in Arabic, and make money off the loan, without taking on any of the risk. An unfortunate but predictable outcome of this Islamic banking model is that a Muslim ends up paying even more to take out a loan through an Islamic bank than just taking out an interest bearing loan through a regular bank.

This brings us to the other option, which requires the Muslim to save up the cash required for the investment. But there are two main problems with this option.

The first problem is that cash depreciates year after year due to increasing rates of inflation. When dollars are introduced into the money supply, every saver who is holding cash gets their wealth rapidly devalued, as they witness the prices of goods and services rise.


Consider if someone living in the year 1950 puts $10,000 under their mattress. Several decades pass, and in 2021, their grandson wants to use the $10,000 to help with an investment for a certain business venture. Well now that $10,000 only has about the purchasing power of about $870 relative to 1950! In 70 year time period, $10,000 has lost about 91.3% of its purchasing power. This is essentially theft, and it occurs over long periods of time without the saver even realizing it. G. Edward Griffin, author of “The Creature From Jekyll Island”, aptly describes inflation as a hidden tax:

  • "Inflation, therefore, is a hidden tax. This tax is the most unfair of all because it falls most heavily on those who are least able to pay: the small wage earner and those on fixed incomes"

With this problem, the saver needs to acquire more and more cash as inflation eats away their hard earned wealth. If a Muslim has aspirations to go to medical school, and, instead of taking out a loan, they work hard for 5 to 10 years to save up the required cash, say $300,000. Well by the time they have saved up the required $300,000, now the medical school they want to apply to has increased tuition to $450,000. So now, the Muslim has to work a few more years to try to save up the required cash before it gets eaten up by inflation.

The second problem is that saving cash still involves Riba, albeit indirectly. Consider when the saver wants to deposit their cash in a bank. Due to the nature of fractional reserve banking, banks hold little to no cash reserves. Instead, they loan out the same amount of deposited money, and they make a profit through interest. Even if a Muslim decides to save up cash and not take out a loan for their investment, they are still associating and even enabling Riba.

When the Muslim is armed with the knowledge of the haram nature of the Riba based banking system and how their cash is stolen via inflation, they will try to look elsewhere to protect their wealth. They will look to the stock market, and then they will try to figure out which stocks are halal to invest in. This investment avenue has its own problems. Nearly every publicly traded company has debt on their balance sheets, and of course these debts involve Riba. The Muslim must spend hours researching which companies are halal to invest in, in addition to spending hours research which companies will have the best performance. The Muslim must also discern which companies have other haram aspects or dealings, like dealing with pork or alcohol, or if the company is performing ethically from an Islamic perspective. Having to spend hundreds of hours of research to properly navigate and invest in the stock market is just not a viable option for the average Muslim with a full time job and a family. Sure, he or she may be able to find a handful of “halal” companies in the stock market to invest in, but not being able to invest in the top performing companies jeopardizes the Muslim as their stock market investments does not keep up with the rate of inflation.

The Muslim could choose to invest in real estate, but this asset class requires a large investment to get started as the Muslim simply cannot buy a small percentage of a specific building or a plot of land. And where does the Muslim acquire the funds for such an investment? Through a loan from a bank? Now we’re back to the problem of trying to avoid Riba.

A safe and popular halal asset class that a Muslim could invest in is good old fashioned gold. Gold is good, but lately it simply doesn’t keep up with rampant inflation, especially considering the last 10 years. If you bought gold 10 years ago, the price in US dollars hasn’t changed much. This means that if a Muslim puts their wealth in gold, it would be no different than just holding on to the cash, in terms of trying to preserve that wealth and trying to beat inflation.


Fiat forces Muslims to go to the casino and gamble their wealth. Muslims need to actively manage their portfolio in order to beat inflation, just so they can preserve their hard earned wealth. Saifedean Ammous, in his most recent book, The Fiat Standard, succinctly explains this problem of the struggle to preserve one’s wealth in fiat:

  • “The problem with fiat is that simply maintaining the wealth you already own requires significant active management and expert decision-making. You need to develop expertise in portfolio allocation, risk management, stock and bond valuation, real estate markets, credit markets, global macro trends, national and international monetary policy, commodity markets, geopolitics, and many other arcane and highly specialized fields in order to make informed investment decisions that allow you to maintain the wealth you already earned. You effectively need to earn your money twice with fiat, once when you work for it, and once when you invest it to beat inflation

In addition to the struggle of preserving the value of savings, a Muslim must also struggle to avoid Riba in their handling of money. But, as discussed earlier, Riba is present in virtually every financial investment. Muslims have deluded themselves into thinking they can make their wealth halal in the fiat monetary system.

If you’re a Muslim, there’s one thing to take home from this article: You can not escape Riba by saving up cash for your investment. You cannot escape Riba by operating within the fractional reserve banking system, and working with an Islamic bank or passing your rent money to a landlord to pay a riba-based mortgage does not make your money “halal”. When you choose to work for and put your wealth in the fiat monetary system, you enable others to deal with and make money from Riba.

The presence of Riba is one of the most serious problems facing Muslims right now, and Prophet Muhammad (pbuh) cursed those in engage and associate with Riba:

  • Jabir said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: They are all equal. (Sahih Muslim 1598)

Fiat incentivizes Muslims to compromise on their principles and remain in poverty, as their wealth is stealthily stolen via inflation. Fiat makes the Muslim become a slave of debt rather than a slave of Allah. The fiat monetary system is a slow rug pull as the value of the dollar eventually approaches zero. And when the rug pull happens, there will be no government, bank, or institution to bail Muslims out.

The Ummah’s only realistic option is to transfer their wealth into Bitcoin as a way to protect themselves from their wealth getting stolen. Bitcoin also protects the Muslim from Riba, as now you have the option to store your wealth in the most secure and decentralized network, without Riba being involved in the source code. Bitcoin mining requires energy and proof-of-work, as opposed to fiat mining, which requires riba and proof-of-debt. With Bitcoin, there is no bank or financial institution that a Muslim needs to go through to store or move your bitcoin. Instead of dealing with the fractional reserve banking system, bitcoin gives the Muslim the option to be their own bank.

While Bitcoin gives the Muslim the potential to transact, bank, or take out a loan without requiring Riba, adopting a Bitcoin standard has the potential to lead to a world where interest-based lending wouldn’t be as common, if it were to exist at all. Given that Bitcoin has a fixed supply of 21 million, we could expect it to appreciate year after year in a “hyperbitcoinized” world. In that scenario, bitcoin would be expected to appreciate slightly every year to match world’s production and output. This means that lending bitcoin at a 0% interest rate would actually be a positive return since the bitcoin that was lent out will be worth more when the lender receives his bitcoin back at the end of the loan period. With an appreciating asset like Bitcoin serving as the base layer of money, there is less incentive to keep your bitcoin at a bank to earn interest because banks cannot simply “print” more bitcoin to protect the depositor in the event of capital loss. Why deposit your bitcoin in a bank for the small upside of earning a fixed rate of interest but have the huge downside of completely losing your bitcoin? Individuals are more likely to use there bitcoin to invest in businesses that yield a profit rather then lending to earn a fixed interest rate. The potential for Bitcoin to discourage or even eliminate earning income through interest is a really good reason, among other reasons, for Muslims to adopt a Bitcoin standard.

To conclude, the only way to opt out of the fiat system is to simply buy and hold bitcoin for a long period of time. When you exchange your dollars for bitcoin, through this action, you’re effectively telling the conglomerate of credit issuers of the federal reserve and private central banks that you’re no longer participating in their debt-based ponzi scheme. To the author’s knowledge, there is no better way to fight against fiat other than fleeing to Bitcoin. Bitcoin could give the Muslim Ummah a second chance for a better future, where Muslims can securely store and grow their wealth, as well as making sure that wealth is not involved with Riba.