Will bitcoin be a primary currency of Islamic State as it seeks to establish an actual nation?
Islamic State (IS) has used bitcoin to raise funds, according to Deutsch Welle, a German-based satellite TV station. An IS bitcoin account received around $23 million in the past month, according to the report.
As the militant group seeks to establish an actual nation, IS is building state-like institutions and services, including schools, hospitals and now a treasury.
Bitcoin And The ‘Gold Dinar’
In addition to using bitcoin, IS has also minted and released its own currency called the “gold dinar.” The group’s use of the two currencies, however, will likely serve different purposes. Bitcoin serves fund raising and money management while the gold dinar serves more as an ultimate measure of goods nad services.
“Sadaqa (private donations) constitute one of ISIL’s main sources of revenue, and its supporters around the world have allegedly used digital currencies such as Bitcoin to transfer money quickly to accounts held by ISIL militants while minimizing the risk of detection,” according to a June report from the EU Institute for Security Studies (EUISS).
The Deutsch Welle report notes that Ali Amin, the 17-year-old Virginia teen arrested in June for providing material support to IS, taught militants how to use bitcoin and encrypted platforms to remain anonymous. Amin also wrote an essay titled, “Bitcoin and the Charity of Violent Physical Struggle” that noted bitcoin is consistent with Islamic jurisprudence.
“New developments in Bitcoin have allowed marketplaces that run on whatever law system the individuals choose,” Amin wrote.
“This instantly allows for Shariah only compliant markets that cross all borders, nation state regulations, send money instantly and are untrackable (sic) by kafir governments.”
“This system has the potential to revive the lost sunnah of donating to the mujahideen, it is simple, easy, and we ask Allah to hasten it’s usage for us,” Amin wrote.
Reasons For The Gold Dinar
A video in early September entitled “Rise of the Khilafah: Return of the Gold Dinar” gives a financial history of currencies, ending with a release of the IS’s currency.
According to the video, IS has restored “the gold dinar and silver durham as the ultimate measure of goods and services.”
“A map of the world is featured on the coin’s reverse, denoting the tidings of the prophet…concerning the territory that his ummah’s reign would reach, including Constantinople, Rome and America,” the narrator states.
The video also shows the militants distributing the currency to people in what appears to be Raqqa, Syria, IS’s de facto capital.