Bitcoin and blockchain technology is the hotbed of new innovations in the fintech world. No surprise that blockchain technology is finding multiple use-cases in the field of online business, banking, lending, insurance and changing it forever. Surely, there are still a lot of hurdles and challenges to overcome however the direction is right.
Is Bitcoin Halal?
Almost all central governments and banks have called it a highly speculative asset full of high risks and warned investors to stay away from it. Just few days ago Reserve Bank of India (RBI) has barred banks from dealing in any cryptocurrencies. During December, 2017 Bitcoin price was on a roller coaster ride, touching around $20,000 a coin and currently hovering around $7,000 losing almost 60% of its value. Frequent and large price changes in cryptocurrencies further adds to investment risks. However, with all recent negative news, central govt. and banks warnings, Bitcoin seems to have found a strong resistance point near $7000 price.
Google trend results for Bitcoin and other cryptocurrencies searches have been consistently falling globally, also painting a bleak picture. Is Bitcoin and Blockchain story just a bubble or a fad about to go into oblivion. Interestingly, this is not a new phenomenon though, throughout human history this has repeated again and again with any new technology. No one was interested in computer or internet when they were tested in the universities labs. Fast forward, they have become the most essential part of our daily life to the point we can’t live without them.
No one knows for sure, as its too early to predict but Bitcoin and other cryptocurrencies might repeat history as more and more people understand and get familiar with these technologies. At present, Islamic world has been making great strides in exploring cryptocurrencies and blockchain technology. Recently, a number of Islamic countries have launched various new ventures and startups in the field of blockchain technology. UAE, Qatar, Saudi Arabia, Indonesia and others have shown keen interest and have been actively participating in global conferences related to Bitcoin, Blockchain and other cryptocurrencies.
So far there are highly mixed reactions from Islamic scholars and religious leaders about cryptocurrencies acceptance as a medium of exchange. Islamic scholars and jurists from a number of countries like USA, UAE, South Africa have ruled in favor of cryptocurrencies. However, some scholars in Turkey, India and Britain have labelled them impermissible and against Islamic law. Egypt’s top Muslim cleric has called for a complete ban on bitcoin, calling it “forbidden” by Islam. Comparing Bitcoin trading to gambling, which is banned in Islam, Muslim cleric issued a fatwa banning bitcoin “due to its direct responsibility in financial ruin for individuals,” according to Egypt’s Al-Ahram daily.
Silver lining is that in spite of fatwa and confusing signals from Islamic scholars, there are number of new startups in the Islamic world launching their own cryptocurrency. Few of the famous ones are detailed below:
1. OneGram (OGC)
OneGram, set up in Dubai and launched in 2017 is the brain-child of Briton Ibrahim Mohammad. According to the company website, OneGram Coin (OGC) is the first physically gold-backed and Shariah compliant cryptocurrency. Its based on blockchain technology and is specifically adapted for the Islamic Financial Markets. On top of that gold backing definitely provides stability to OneGram against any speculative risks.
As the name suggests each coin is backed by one gram of physical gold stored in company’s vaults. OneGram has a fixed 12,400,786 coins supply, approximately half of Bitcoin supply and is regulated by Dubai-based Al Maali consulting. It employs proof-of-stake algorithm with a block size of 1 MB. OneGram recently concluded a successful Initial Coin Offering (ICO) and currently boasts of almost 100,000 members in 17 different countries. According to Reuters, 40% of the cryptocurrency has already been sold generating millions of dollars in company’s reserves.
2. HelloGold (GOLDX)
Malaysia is not far behind in the race to try blockchain and cryptocurrencies. HelloGold, is another Gold backed cryptocurrency startup from Malaysia. Their cryptocurrency GOLDX is a fully operational, 100% gold backed stablecoin. GOLDX has been Sharia-certified by Islamic scholars at Kuala Lumpur-based Amanie Advisors and has plans to launch its online gold platform in Thailand later this year. According to HelloGold website:
“HelloGold is developing an application using blockchain for the mass market, where end users benefit from the application of the technology without needing in-depth knowledge of the underlying technology. In the long term, customers will be provided the option of converting their vaulted gold to a digital gold token (GOLDX). This will enable customers to use the stored gold as value beyond the HelloGold System. Once the digital gold tokens (GOLDX) are successfully traded on exchanges, the tokens will be available for purchase. This will create a stable cryptocurrency fully backed by physical investment grade gold.”
Whether Bitcoin and other cryptocurrencies are Halal or not Halal is a million dollar question which still needs to be answered by Islamic world. However, if Muslim world can adopt and embrace cryptocurrencies at an early stage, it can herald a new era of transparency, financial freedom and innovation that will have domino effect on Islamic world prosperity.
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