Alhamdulillah, and Peace and Blessings be upon our prophet Muhammad ﷺ.

The Islamic Shariah does not appoint any particular item as a currency, rather it refers to what people have widely recognised as a form of currency. Imam Malek (may Allah have mercy on him):

"ولو أن الناس أجازوا بينهم الجلود حتى تكون لها سكة وعين لكرهتها أن تباع بالذهب والورق نظرة"

المدونة 3/5

"And if people recognised leathers as a form of currency, I would call it Makrooh (مكروه - meaning: non-recommended) to sell it for gold and silver"

Al-Modawwanah 3/5

Imam Malek said that if leathers are widely recognised and accepted by the people as a form of currency, then all rulings of Reba (الربا - meaning: usury) apply to it, just like gold and silver.

Imam Ibn Taheyyah (may Allah have mercy on him) said:

"وأما الدرهم والدينار فما يعرف له حد طبعي ولا شرعي بل مرجعه إلى العادة والاصطلاح؛ وذلك لأنه في الأصل لا يتعلق المقصود به؛ بل الغرض أن يكون معياراً لما يتعاملون به والدراهم والدنانير لا تقصد لنفسها بل هي وسيلة إلى التعامل بها ولهذا كانت أثماناً؛ بخلاف سائر الأموال فإن المقصود الانتفاع بها نفسها؛ فلهذا كانت مقدرة بالأمور الطبعية أو الشرعية والوسيلة المحضة التي لا يتعلق بها غرض لا بمادتها ولا بصورتها يحصل بها المقصود كيفما كانت"

مجموع الفتاوى 9/251

"The Derham (silver coin) and Dinar (gold coin) have no exact value except what people are accustomed to and have widely accepted. This is because the coins are not valued for its use, rather for its value, unlike other forms of wealth which has an intrinsic use for its value (e.g., livestock)". The value of Derhams and Dinars is eventually determined by how much people are willing to trade it for when purchasing other items.

Majmou Al-Fatawa 9/251

Some scholars stated that currencies must be issued or permitted by the state. Imam Ahmad (may Allah have mercy on him) said:

"لا يصلح ضرب الدراهم إلا في دار الضرب وبإذن السلطان، لأن الناس إن رخص لهم ركبوا العظائم"

الأحكام السلطانية 299

"Derhams (silver coins; but meant currencies in general) must be issued only by the state's official regulatory body and/or by the permission of the state's leader only. This is because if people are to issue currencies at will, they would commit the greatest of sins (referring to the unjust distribution of wealth and its cascade effects)"

Al-Ahkam Al-Sultaneyyah 299

Dealing with Bitcoin, or any other cryptocurrency, is not yet a widely accepted form or exchange of value (as defined above as it is merely a medium of money transaction, not a currency that has a core value). Also, there is no official regulation body to guarantee a value for it, rather its value solely depends on trading activities. Therefore, it cannot be considered a currency with all Reba (الربا - meaning: usury) and Zakat (الزكاة - meaning: the annual 2.5% of wealth paid to charity/alms) rulings apply to it.

As for buying and selling Bitcoin, and any other cryptocurrency, the main condition for it to be permissible in Islam is that it should be free of Gharar (الغرر - meaning: is a form of deception). Trading Bitcoin is a form of gambling (the profit made by someone is the exact loss of another) which is achieved through its volatility (price fluctuations). And with the absence of a core value, there is no official regulatory body that guarantees its value for the people to rely on when dealing with it.

Therefore, it is not permissible to deal with Bitcoin, or any other cryptocurrency, as a currency as long as the conditions discussed above are still valid.

And Allah knows best, and peace and blessings be upon Prophet Muhammad and his progeny.