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17 Function of Money in Islamic Perspective

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The ancient Arab people used the gold and silver before the currency. In this post, we will know about the sale and purchase transactions at the time of the Prophet (PBUH). How does the money function in an Islamic perspective? Is there a law about the use of money in Islam? Here are the following 17 functions of money in  Islamic perspective.


1. Gold and silver as money

Before the currency appeared, the Arabs of the time of the Prophet used gold and silver as a means of exchange of goods or services. This Quranic verse describes gold and silver as treasures and they can be used as money in the form of Dinar and Dirham. The following is written in one verse of the Quran.

“Beautified for mankind is the love of the joys (that come) from women and offspring; and stored-up heaps of gold and silver, and horses branded (with their mark), and cattle and land. That is the comfort of the life of the world. Allah! With Him is a more excellent abode.” (Verse3:14)

2. Money as a dinar and dirham

At the time of the Messenger of Allah, dinars, and dirhams were designated as currency. The decree of this dinar and dirham is also written in the holy book of Quran. Below is the Quranic verse.

“…. And among them, there is he who, if thou trust him with a piece of gold (dirham), …..” (Verse 3:75)

3. Can be used to buy real objects or buy services

In the Islamic view, the function of money recognized is only as a means of exchange and the unity count. The money can be useful if it is exchanged with a real object or to buy a service. Below here is the following Quranic verse.

“And they sold him for a low price, a number of silver coins (dinar); and they attached no value to him.” (Verse 12:20)

4. As the symbol of wealth

Both of money, dinars, dirhams and even gold and silver are the treasures. The amount of one’s possessions is a symbol of wealth. This verse describes the creation of gold for the enjoyment of life in the world. Read more about How to Increase Wealth in Islam in Halal Way

Here Allah Almighty says in the Quran.

“And were it not that mankind would have become one community, We might well have appointed, for those who disbelieve in the Beneficent, roofs of silver for their houses and stairs (of silver) whereby to mount, And for their houses doors (of silver) and couches of silver whereon to recline, And ornaments of gold. Yet all that would have been but a provision of the life of the world. And the Hereafter with your Lord would have been for those who keep from evil.” (Verse 43: 33-35)

5. Money as an exchanges

The main function of money is as a means of exchange, but at the time of the Prophet (PBUH), many people use the exchange of other goods by using gold and silver. With money, gold or silver we can buy something we need. This is the hadith that tells about this.

“From Abi Sa’id Al-Khudri and Abu Hurayrah may Allah bless both of them that the Prophet (peace be upon him) ordered a man to go to Khaibar, then he came with dates (dating good qualities.) The Messenger of Allah said: what I eat Khaibar date? “He replied: No Ya Rasulullah, by Allah I got it by (exchanging) a sha ‘ with three sha’.Then the Prophet said:”Do not do it, sell all your dates to get money (dirham) then buy dates with money dirhams. “ (Hadith Sahih Muslim)

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6. Money serves as a measure of value

In the time of the Prophet (PBUH) the money of silver and gold used by the Prophet (PBUH) as a measure of the value of something. Arabs use this money are not based on nominal, but on its weight. With this measured weights of money serves as a measure of value, such as goods in nisab zakat (charity). Below is the following hadith.

“The silver coin which is under five auqiyah there is no obligation of zakat upon it”  (Bukhari Muslim).

7. Use the money well and wisely

The function of money would be better if it can be used for the purposes of Allah Almighty’s way. The Prophet Muhammad (PBUH) advised us to use the money well and wisely, such as spending the money on the family and help the friend in need. Below is the following hadith.

From Abu `Abdullah (some call Abu ‘Abdurrahman) Tsauban bin Bujdud servant of Rasulullah Shallallâhu’ Alaihi Wasallam. said, The Messenger of Allah (peace and blessings of Allaah be upon him) said: “The chief dinar is the dinar spent by a person for his family, the spent dinar for the vehicle or the need in the way of Allah, and the spent dinar to help his comrades in the cause of Allah.” (Hadith Muslim).


8. Money as a tool for transactions

In the Islamic perspective, money is also used as a tool for transactions. With money, we can buy something that we want. From that goods, we can also sell it again and can make any profit from it. Below is a hadith narrated by ‘Urwa.

“That Prophet Muhammad gave him a golden dinar to buy a sheep for him.” Urwa bought two sheep for him with the money, then sold a lamb one year old and brought one Dinar along with one of the sheep to the Prophet. On this basis, the Prophet prayed to Allah Almighty to bless the ‘Urwa’ transaction. So Urwa always makes a profit (from every trade) – even if he buys dust. “(In other narrations) ‘Urwa said:” I heard the Prophet Sallallahu’ Alaihi Wa Sallam said, “There is always goodness in the horse until the Day of Resurrection.” (Sufyan said, “The Prophet told Urwa to buy a sheep for him as a sacrificial animal”)
(Hadith Bukhari).

9. Spending the money in the way of Allah Almighty

The money or the possessions that we have should be spent in the way of Allah Almighty. The purpose of this is to use money or property well and useful. Such as giving money to free the slaves, giving the charity to the poor and providing for the family. Below is the following hadith.

From Abu Hurairah Radhiyallahu ‘Anhu. said, The Messenger of Allaah (peace and blessings of Allah be upon him) said:

“The one dinar you spend on the path of Allah, the one dinar that you spend to liberate slaves, one dinar you give to the poor and one dinar you spend to your family then the greatest reward is the dinar you spend on your family “. (Hadith Muslim).

10. The rule of transactions

This Hadith explains the selling rules which is the sale and purchase transactions must be balanced. Like gold with gold, silver with silver and cash. The Prophet (PBUH) recommend that if there is a bit of excess, it should be returned. If not, there must be usury in it and this is prohibited by the Prophet (PBUH).The Prophet Sallallahu ‘alaihi Wa Sallam said in this hadith.

“Gold with gold, silver with silver, … must be the same size and cash. If any excess means usury. As if a different nature then sells according to your origin carrying cash.” (Hadith from Sahih Muslim).

11. Money also required for zakat

Gold, silver even money is also required for zakat. Zakat treasure or zakat maal has a nishab requirement of one of the treasures that the zakat has been running for one year counted from the day of the ownership of goods. If all zakat obligatory conditions have been fulfilled then he is obliged to paying zakat. Below is the following hadith narrated by the Prophet Muhammad SAW. Read more about Ways to Give Charity in Islam

 “There is no obligation of zakat on gold property that has not been up to 20 dinars. When it has been up to 20 dinars, the zakat is a half dinar. Likewise, silver is not taken zakat before up to 200 dirhams which in this case of zakat is 5 dirhams. “(Hadith Bukhari).

12. The rule in selling goods

What is the rule in selling goods in Islam? Prophet Muhammad (PBUH) advised us to sell goods with similar goods and paid in cash. Here is the following hadith.

‘Ubadah bin Shamit, the Prophet Sallallahu’ alaihi Wa Sallam said: “(gold) silver with gold, silver with silver, wheat with wheat, sya’ir with sya’ir, dates with dates, and salt with salt (premises must be the same) and the like and in cash – from hand to hand. If the species are different, sell as you wish if done in cash from hand to hand. “ (Hadith of Muslim, Abu Daud, Tirmidhi, Nasa’i, and Ibn Majah)

13. The prohibition of debt

In Islam Prophet Muhammad (PBUH) has proved that buying and selling something in a debt, it is strictly prohibited. Below is a hadith narrated by Al-Bara` bin ‘Azib and Zaid bin Arqam Radhiyallahu’ anhu.

“Rasulullah Sallallahu ‘Alaihi Wasallam prohibits the sale and purchase of gold with silver in debt.”
(Hadith Muslim).

14. The prohibition of falsifying money or misusing the money

This hadith narrated the words of Prophet Muhammad SAW about the prohibition of falsifying money or misusing the money that is in the community. Here is the following hadith.

“Rasulullah Sallallahu Alaihi Wasallam prohibits the fusion of dinars and dirhams that apply in the community, except for counterfeit money.” (Hadith Imam Ahmad).

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15. The Messenger of Allah (PBUH) recommend transaction by cash

The Messenger of Allah (PBUH) said it would be better if do trading using the money, do not with the barter system. Prophet Muhammad (PBUH) believes that the sale and purchase of transaction with barter system there is an element of usury in it.

“It turns out Rasulullah SAW, does not approve the transactions with the system barter, for it is recommended should use the money. It seems that he forbids such a form of exchange because there is an element of usury in it “. (Hadith narrated by Ata bin Yasar, Abu Said, Abu Hurairah, and Abu Said Al Khudri)

16 Died and still has a debt

If a Muslim dies and he still has a debt, then on the Day of Resurrection it is no longer of dinars and dirhams (money). A Muslim must redeem his debt with his kindness. Here is the one of the following hadith. Read more about Law of Not Paying Debt in Islam

From Ibn ‘Umar, the Messenger of Allah (peace and blessings of Allaah be upon him) said,

“Whoever dies in the state still has a debt of one dinar or a dirham, then the debt will be paid with his kindness (on the Day of Judgment) because there (in the Hereafter) dinars and dirhams. “(Narrated by Ibn Majah)

17. The prohibition of hoard in money

In Islam, storing of gold, silver, and money is forbidden. Storing treasure is an evil act to block the flow of the treasures that Allah Almighty gives to those in need. This is one of the Quranic verses that describe the rewards for those who like to store their wealth.

“O ye who believe! Lo! many of the (Jewish) rabbis and the (Christian) monks devour the wealth of mankind wantonly and debar (men) from the way of Allah. They who hoard up gold and silver and spend it not in the way of Allah, unto them give tidings (O Muhammad) of a painful doom, On the day when it will (all) be heated in the fire of hell, and their foreheads and their flanks and their backs will be branded therewith (and it will be said unto them): Here is that which ye hoarded for yourselves. Now taste of what ye used to hoard.”(Verse 9: 34-35)

Hopefully, with knowledge about the 17 function of money perspectives in Islam, this can add our insight as Muslims. We need to remember to use the money well and wisely so that we get good benefits as well.

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