Can crypto be Halal?

By Nams | cryptohowto | 17 Nov 2021


I am very optimistic that you will learn a lot more about MRHB DeFi ecosystem, and what it can do from the tens of articles that will be written by the many capable authors on this platform. Hence, mine is not an article to educate you on the technical aspects of MRHB DeFi. Mine’s a commentary to allow you to appreciate why a platform like this is necessary, and a very welcome addition to the crypto space. 

First things first, cryptocurrencies have created a non-excludable financial space, in the sense that anyone can participate freely from any corner of the world as long as they have a device with internet connectivity, and provided that the state they are domiciled in does not bar them from participating in crypto. For example, China is one country that recently banned the use of cryptocurrencies. There are a few other states around the globe where it is not allowed to participate in crypto. However, the majority of the countries around the world do not expressly prohibit their citizens from being part of the crypto space. Countries like the United States are calling for more regulation of cryptocurrencies by putting up legislation aimed at controlling the crypto space. In my opinion, it is only a matter of time before other countries around the world begin to take the route of China or the United States.

Now, there are several reasons that have been put forward to justify the restriction of crypto, or its outright ban. Among the reasons topping the list are the accusation that crypto is a haven for criminality. A few examples can be cited where cryptocurrencies have been used to propagate illegal transactions, money laundering, ransomware, pilfering, racketeering, tax evasion, among many others on this endless list.

Other opponents of cryptocurrencies have justified their stance from a religious and moral point of view. A typical example is from Indonesia where its National Religious Council ruled that cryptocurrencies are forbidden for Muslims due to the elements of uncertainty, wagering and harm possessed by cryptocurrencies, which are akin to gambling and extremely risky investments. Gambling and extremely risky investments are prohibited in the Islamic religious faith. It is probably important to note that tenets of gambling, dishonesty (in business), and crookedness are prohibited by the major religions of the world. I have cited some examples below:

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Before we lose sight of the bigger picture, I would like to categorically stress that cryptocurrencies themselves are not inherently bad. Blockchain technology in general, and cryptocurrency in particular, has been used to build more efficient and equitable systems in the real world. The contribution of crypto to, among others, finance, banking, transport, entertainment, governance, and supply chain management cannot be overemphasized. Therefore, to paint the whole industry black is a great injustice to all the users in the space, including the people who stand to benefit when the technology goes mainstream. Crypto is not bad, it’s a few actors who are bad.

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Crypto is not bad, it’s a few actors who are bad

The market of cryptocurrencies has often been referred to as the Wild West. This is in reference to the supposed lawlessness, greed, lack of regulation, and zero ethical standards characterizing cryptocurrencies. It’s basically a jungle, and there are no rules in the jungle. Rug pulls, exploits, as well as pump and dump schemes have become so commonplace in crypto to the the extent that a good number of users are calling for regulation. However, one school of thought argues that regulating cryptocurrencies goes against the very ethos of why crypto was created in the first place. Crypto was created to give freedom to people to do as they please with their money. But we must not forget that with freedom comes great responsibility. Where one man’s freedom ends, another man’s freedom begins.  Therefore, one thing we can all agree on is that we’d appreciate some level of sanity in the crypto space. And this is where MRHB DeFi comes in.

MRHB DeFi ecosystem is a platform firmly founded on religious ethics, specifically the Shariah law. First things first, what is Shariah law?

Shariah law

“A religious law that lays down governing principles for spiritual, mental, and physical behavior that must be followed by Muslims”

Shariah law is essentially Islam’s legal system. Thus, it covers all aspects of life including social relations, economics, religion, ethics, morality, finances, among others. Shariah law is based on 4 primary sources, namely:

  • The Quran – This is the Islamic Holy Book that contains Allah's message as was delivered to Prophet Muhammad.
  • The Hadith – This is a report of the words, actions and deeds of The Prophet.
  • Ijma – This is the consensus of Islamic scholars on matters of Islamic law.
  • Qiyas – This is the process of analogical reasoning by comparing and contrasting the Holy Quran and teachings of the Hadith in order to answer a new question.

Shariah law categorizes all man’s acts into five distinct categories, namely:

  • Acts that you are obliged to do
  • Acts that are recommended for you to do
  • Acts that are permitted for you to do
  • Acts that are discouraged for you to do
  • Acts that are forbidden/prohibited for you to do

Acts that are forbidden are referred to as Haram. Examples of acts that are Haram include prostitution, adultery, murder, theft, to name but a few. In terms of finance, it is considered Haram for anyone to profit from ill-gotten wealth, such as money earned through;

  • Stealing,
  • Cheating,
  • Corruption,
  • Charging interest (riba)
  • Extremely risky investments,
  • Gambling,
  • Any means that involve causing harm to another human being.

Haram actions are considered a sin because they bring harm one way or another. Things that are Halal are those devoid of Haram. Haram is bad, Halal is good.

The belief that business is to be mutually beneficial, conducted honestly, and shared risk form the core of Islamic business. Therefore, a person should not engage in such activities. To be Shariah compliant means that an asset is devoid of all the facets considered as Haram (see some examples above). In my opinion, this is exactly the type of self-regulation that the industry needs. We do not need to be regulated by governments, but we need ways to protect ourselves from unscrupulous actors. MRHB DeFi ecosystem is a platform promising to operate within the confines of Shariah law; abiding by Shariah principles, and screening of all crypto assets to ensure compliance.

There are a good number of projects in the crypto space whose sole purpose for existence is to cause distress to other humans by way of pump & dump schemes, rug pulls, theft, dishonesty, and the like, therefore MRHB DeFi is one way that users can feel safe to invest their funds in crypto assets.

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Nams
Nams

Blogger. Cryptocurrency enthusiast. Economist. Researcher. Cryptocurrency is the future, and the future is now.


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