Shariah is a prescriptive system based on the values, ethos, and principles communicated from a Lawgiving Deity to humankind. There is no obstacle to an Unbeliever understanding what those values, ethos and principles are. Embracing them as the truth is a different matter. A matter that is not covered in this article. A key concept in Sharia is that mundane activities are treated with almost equal emphasis as sacred activities. This near-equality of treatment is understandable to both the Believer and the Unbeliever because the principle can state a standard and expect compliance. It obliges no sacred activities to participate but it does expect good faith dealings. Good faith forms a core connection within any community arising from a consideration of Shariah. Shariah is explicitly about Law growing out of a culture.
In the Eight Century, along the Silk Route, the system of Hawala evolved. Hawala was, and is, a means for transferring value between trusted people. The community of traders from Cornwall to Beijing that constituted the Silk Route were a complex tapesttry of cultures. Underlying all of these disparate communities was a standard and an expectation of compliance that not only enabled trade but enabled a cultural development which promoted a greater community. That community was, in modern terms, international. Indeed, the traces of the word "hawala" can be found across common and civil laws of Europe: the aval in French law and the avallo in Italian law: words derived from hawala. The infrastructure of any distributed finance system reflects the underlying community and the evolution of ideas such as hawala reflects the cultural melting pot of the Eighth Century.
Any application of Islamic Finance drives an emergence of greater and wider communities. Community is difficult to visualise in, for example, international bonds trading or share exchanges. The key concept for communities is not "value exchange" as in non-Islamic Finance but "trust exchange". Trust Exchange parallels Value Exchange and the system of Hawala has worked, effectively, to ensure that Value and Trust systems work in parallel. Indeed the Hawala system has many features that are outstandingly similar to the features of the Blockchain Ledger and Cryptocurrencies.
Hawala broadly works as follows: customer, A, approaches a Hawala broker, X, in one city and gives a sum of money, W, that is to be transferred to a recipient, B, in another, distant, location. Along with the money, a password that will lead to the money being paid out. X calls another Hawala Broker, M, in the and informs M about the agreed password. B is informed by A about the password. B approaches M and tells him the agreed password. M releases the transferred sum to B. A small commission is usually paid. X now owes M the money that M had paid out to B. M must trust X's promise to settle the debt W. This kind of Value exchange depends on a trust exchange. X must trust M not to collude with B to commit fraud. Similiarly M must trust A and X. X and M must trust A and B not to be dishonest. The entire system, rests on a community that trusts the rest of the community. Failure of Trust is significant. The system resonates with the technological features of the Blockchain Ledger.
Were one of A,B,X and M to break Trust, that failure of Trust would be just as significant as the loss of financial value. This is where Sharia unavoidably refers to the relationship between the Sacred and Mundane. Bilking the Hawala System is not simply a Mundane financial matter, it is an affront to the Sacred values of any Believer. In that respect the failure of Trust has more consequences than the financial loss. It is always possible to recoup money but the Trust is far more difficult to recover. It is this intangible social value that makes Islamic Finance into a system that is about more than money. It is also a system about communities.
It would be a perfectly reasonable Hawala transaction to lend a sum of money to a stranger purely to show they are a trustworthy individual. Which turns traditional Western Finance on its head. The outcome would be to know that two disaparate communities have a connection that is vital and active. It takes Finance beyond the superficial transactionalism of traditional Western Finance.
The Trust System embodied in the Sharia approach to Finance, endows everybody with personal agency. It is not simply a matter of shifting numbers about balance sheets but also of understanding that each transaction is accompanied by obligations that must be within one's personal agency to deliver or to ensure delivery of. If, for example, I know that I cannot cook a meal for some Friend, then it would be improper for me to offer to do so for money. It would not be improper for me to have some Second Friend cook a meal for my Friend. But that would require that I am honest about who will do the cooking. My Friend might not like my Second Friend's cooking - or they might like it far more than my amateur attempts. The core is that my honesty about who does what is a key to that transaction being within the bounds of a Trust System. If I actually explain, honestly, what I want the money for, then that adds to the general sense that the transaction has been undertaken with respect towards the agency of all parties involved. It is not simply selling food.
The outcome of such a transaction is not simply that my Friend gets fed by my Second Friend but that there is some intangible - it may be small it may be large - growth in the Community. My Second Friend might well not know their cooking is appreciated. Having their cooking appreciated is a significant benefit for someone skilled who takes pleasure in cooking. It is not simply that my Second Friend gets to do something they take pleasure in but that they know both Me and my Friend think positively of them for doing so. That might well be a trivial example, but it shows how the system of trust in Hawala-like exchanges can build community and strengthen individual connections. Food, used as an example, demonstrates that the system is not simply restricted Islam but extends to any group who sincerely exist as a community. The Knights Templars, in the Eleventh and Twelfth Centuries used the same kind of system to finance the Frankish, European and English Monarch: distributed finance is not new. The automation of process is but that is not a surprise.
One of the key historical lessons of the Silk Route and hawala is that distributed finance is not a new thing. It has existed in hawala for centuries. Which is not to pretend the innovation of machine based decentralised finance is to be dismissed. It does, however, suggest that there is a lot to be learned, outside of Islamic Finance, that is of value to other communities. The innovation is not only in the technical capacity for distributing finance to the community but also of learning lessons from communities where distributed finance practices are not unknown. It also suggests that the ethical scrutiny of automation systems is an area that will emerge as a powerful consideration - both in Cryptocurrencies and other areas such as Artificial Intelligence. That Islamic Finance can drive that is, in part, because of a grounding is a clear moral system with a community committed to that system.
It would be naive to suppose that the only outcome is a strengthening of friendships and communities. In such a system, there is a tendency to shy away from talking about the failures. Because failures in Trust Systems have a much more profound impact than in Traditional Western Finance systems. Failures of Exchanges, for example the Mount Gox failure, are articulated and described in terms of the finance and transactions. Very little is explained in terms of community impact. Yes, people do describe how they deal with their transactions differently, but that does not communicate the community sentiments or changes in community relationships. That focus on the book keeping is, quite literally, a system with no ethical underpinnings. Communities - for better or worse - have ethical standards. Making those ethical underpinnings clear, seems to be something that is beginning to emerge from Cryptocurrencies.
Ethical standards might well be objectionable or unbelievable outside specific communities; however, the consistent application of standards demonstrates that they are, in fact, ethical standards. Which lends itself to the use of blockchain technologies. A blockchain that commits to consistent application of standards increases both technological stability and User Community confidence in tandem. That coupling of community and technology promotes the exposure of evidence as to the ethical nature of the blockchain. One of the significant lessons of the Mount Gox failure was that the principles of transparency, openness, and clarity had failed to be applied and that the Community was increasingly unaware of where the value - both in financial and social terms - of their assets really was. Other factors most certainly factored into events, but the signal failure was in the fragmentation of Community for the benefit of a small clique. That failure of communication to the Community is something that can be addressed with technical devices such as wallets that only permit the holding and exchange of reputationally acceptable digital assets. A wallet ceases to be a way of obscuring ones wealth and concealing ones riches and becomes a way to vouchsafe that wealth and riches have a particular and clear set of principles underpinning them. Yes, the total amount of Cryptocurrency might well be concealed, but not the ethical underpinnings.
These are all lessons that can be gleaned from Sharia - not in the sense of religious conviction but in the sense of being systematic, open, transparent and clear about ethical stances. A Sharia compliant Platform promotes greater opportunity to develop greater Community cohesion outside of Islamic Communities not only because it demonstrates that technology can be clearly driven by ethical considerations but it can show what is regarded positively and what is regarded negatively. Yes, a wallet that only accepts digital assets that have been determined to be Sharia Compliant is a religious motivation while a Wallet that only accepts low carbon digital assets is, strictly, not. The principles of Sharia - such as what is Wealth - give a guide to how to regard assets that are accepted by the Sharia Wallet and the hypothetical Low Carbon Wallet. Which, intrinsically, gives a framework to ethically trade between communities. Because the Wallet itself can show what different ethical Cryptocurrencies have in common and what they have that separates them.
The Silk Route, historically, skirted the fringe of Asia. It connected an incredible range of cultures and communities through trade and cultural exchange. That is the underlying power of any Cryptocurrency acknowledging its debt to a cultural heritage. The connection was not simply something to do with the Eighth Century. The connection was a very human thing that persists to this day: how trust can be vested into transactions. Which, it turns out, is far harder than it might seem. The hawala system relies on a system of trusted people. Which in turn relies on a system of trusted communities.
Where trust fails in cruptocurrencies because the financial element of the system was simply a pump and dump scam, there is a systematic degradation of the social connections and the community reliant on those connections. Which further undermines all cryptocurrencies. For a community to identify itself and to vest socially in a cryptocoin is a significant risk. Where it has visibly happened in the past - with DOGE and the NASCAR and Jamaican Bob Sled Team - the entire enterprise was carried forwards by a commitment to a specific end point by the DOGE community. It was about having fun - a hedonistic enterprise. Shariah Finance, for good reason, takes itself more seriously. With a distance between itself and the hedonism of DOGE that underlines the more widely experienced needs of communities for Finance to do Socially useful things all the time. DOGE and NASCAR or the Jamaican Bob Sled Team were transient. Islamic Cryptocurrencies, Wallets and Non Fungible Tokens must commit to longer term, less hedonistic social ends. In short, these are Cryptocurrencies that are obliged to do good or fail.
Much as though the Blockchain is seen as new technology, the reality is that many of the needs and the wants of cryptocurrency communities are developing beyond the simplistic idea that these are a way to simply gain the biggest pile of "coins". Beyond the basic technology of the Blockchain Ledger it is becoming obvious that people desire things that have a genuine social outcome - be that NASCAR, Bob Sled, or even Shariah - which show evidence of the technology doing good in the world. Which, in the longer run, will have consequences for such things as the use of Artificial Intelligence in Social Media. As Communities begin to understand that technology and the control of technology is not a nice to have after thought: communities that build their own technological infrastructure are communities that thrive.
