Bitcoin’s status in the Islamic community has been widely debated, with some saying it’s haram as others argue that it depends on how it’s used.
However, not much thought goes into how blockchain can enable a Shariah-compliant financial system. On Day 3 of the BSV Global Blockchain Convention, four experts share their insights on the intersection of Islam and blockchain.
Islamic finance puts emphasis on whether any element of the ecosystem adheres to Islamic teachings, Muhammad Mughal told the audience. For instance, it prohibits interest on loans, Mughal, who is the CEO of the AlHuda Centre of Islamic Banking and Economics, added. Other practices such as gambling are outlawed as well.
And while many non-Muslims may not be well-versed with what Islamic finance is, Mughal revealed that it has been growing rapidly and today, it’s practiced in at least 120 countries and is valued at over $3 trillion.
Digital asset entrepreneurs are well aware that Islamic finance is a vast and profitable market to tap into. This has seen many claiming to be Shariah-compliant to target Islamic investors, but as Zahid Mir told the audience, most of these are not halal projects but are just using marketing tactics to make quick bucks. Mir is the CEO of Halalverse, an initiative that promotes halal blockchain projects to the Muslim community.
Any project that’s truly Shariah-compliant has a leg-up on its rivals-that much is clear. However, “just because you’re a halal project doesn’t mean that suddenly you’re going to be successful,” Khalid Howladar warned. He said that being halal comes behind the conventional strategies such as great product and good marketing.
Howladar is the chairman of MRHB DeFi and a partner at boutique startup advisory Acreditus. Before dabbling in blockchain, he was the head of Middle Eastern banks at Moody’s.
Having worked with over five dozen banks while at Moody’s, Howladar believes that the Islamic banking and financial system as a whole could greatly benefit from blockchain. One of the biggest applications will be in DeFi through which one average Muslim will be able to trustlessly interact with another and exchange value.
“With blockchain, you can have peer-to-peer economic activity with settlement from start to finish, mobilizing micro-economies.” There has always been the ‘yes to blockchain, but no to crypto,’ argument, and more so in the Islamic community. The panelists dismissed this argument, with Howladar saying that if that’s your outlook, “you’re missing 50% of the value of blockchain. Otherwise, it’s just a glorified database.
