For the global Islamic community, there are some questions about interacting with cryptography: is it halal? Do you comply with Shariah law? However, the new Halal DeFi solution provides ethical interaction with crypto and Web3 technologies.
The world of cryptography, blockchain, DeFi, and many other Web3 features is expanding. At this point, the industry has reached almost every other niche sector. From music and sports to fashion and education.
Today, as the world becomes more familiar with common crypto use cases, crossovers in these industries appear as standard. When it comes to faith-based finance, decentralized financial solutions are not always the first connection. However, the religious sector has many industry-related use cases and offers a wider range of recruitment opportunities.
Faith-based finance
The United Nations has a chapter called “Ethical Finance” within the Environment Program (UNEP). Below this chapter is “Faith-based Finance.”According to its own definition of faith-based finance, it “remains a niche within the overall socially responsible investment theme. [it] It involves the idea of using ethics to guide financial decisions. Religious investments may be compliant with beliefs and religious law. “
Most global religions have their own financial rules. Often, especially in the Abrahamic religions, there are similar concepts that distinguish how to carry out practices.
In a book on Catholic finance, Dr. Antoine Kuni de la Verriere explained the seven main principles of finance according to his beliefs. They include “prohibition of short-termism, prohibition of non-noble investment, obligation to prioritize noble savings, prohibition of unfair profits, obligation to share interests, obligation of transparency, and obligation of financial example”. included.
Judaism is often associated with finance, as Jews have been recognized as lenders and merchants, even in historical context.
For those who follow Islam, “Islamic finance” under the Shariah law, which is their overall norm of life, is very important. In fact, Islamic finance is a major industry around the world. Islamic financial rules and obligations are essential to the identity of Islam and could technically apply to 1.9 billion people.
Two main characteristics of these financial rules include the absence of interest claims and the absence of investment in anything that harms others or is expressly prohibited by the Koran. Such include gambling, alcohol and tobacco.
Islamic finance and crypto
Islam is the second largest religion in the world and contains almost a quarter of the world’s population. In such large demographics, of course, there are products that cater to the practitioner. However, in order for these products to actually support the Islamic world, they must meet the technical specifications classified as “Halal”. Halal means that the product complies with the Shariah Act mentioned above.
Halal covers everything from food to clothing, services and lifestyle choices. Not surprisingly, finance also meets Halal standards, so cryptocurrency and DeFi contracts need to be made as well. BeInCrypto talked with Naquib Mohammed, CEO of Marhaba DeFi, about the implications of doing halal in cryptospace.
“Blockchain is the underlying technology for building different use cases. There are many applications and use cases built on a particular blockchain, but then the finance of these applications and protocols. Let’s talk about use cases. These are things that must act in line with Islamic finance, “Nakib said.
Like the currency itself, the dollar, euro, pound, etc. do not have to be halal. “When we talk about Halal crypto, we are talking about the product, not a crypto token that follows the following rules. Islamic finance.”
For example, “Most Islamic scholars around the world always adhere to Shariah for currencies like Bitcoin and Ethereum because of the acceptance of the underlying technology.”
Naquib’s proprietary platform, Merhaba (MRHB) DeFi, is an example of a protocol on the halal-validated blockchain. He said the need for such a platform comes as an answer to many persistent questions and hesitations about cryptography and DeFi from the Islamic community.
DeFi debanking
One of the key features of Islamic finance is the ban on interest.
“When we talk about DeFi, it’s entirely based on interest. Initially, none of them were Shariah compliant. The main idea behind DeFi is to reach the masses financially. But you can’t reach the masses. You can’t have financial inclusiveness until you build something that covers every part of the global market. Those that don’t comply with 24% of the world’s population. Can’t be said to be financial inclusion. “
Naquib states that the Halal-certified DeFi platform will create equipment that allows Muslims to “find their place in the financial revolution.”
Moreover, from his observations, these platforms are open to first-time users. “In the last six months of experience, onboarding users are the first crypto interactors.”
Earlier, BeInCrypto spoke with Saeed Al Darmaki, co-founder and managing director of the UAE’s Alaphabit Digital Currency Fund (ADCF). The fund actively supports and promotes DeFi innovation in the region.
He said DeFi projects that want to be Sharia compliant can repackage their methods to follow the existing Sharia compliant model. An example of such a model is how Muslims borrow a mortgage.
When it comes to MRHB DeFi, it’s more than just avoiding interest. We are creating a fully compliant system.
“The plan is a set of eight products. We started with the anti-NSFW NFT platform Souq NFT. We will scrutinize the products in advance. The Merhaba wallet is the gateway to the entire ecosystem. In the future. , The wallet will be the gateway to additional features. The final product is the Halal Liquid Harvester. “
Decentralized giving and receiving
According to a study by the MRHB team, “80% of the Islamic community has two questions. Which tokens are Shariah compliant and where can I buy them? The other is something in Halal. If there is, and where to buy it. “
Naturally, products like the MRHB wallet solve this problem because they only list tokens or protocols that are scrutinized and compliant within the Sharia framework. But when it comes to giving, another big problem arises.
Charity is a major aspect of faith-based finance. Christians should give 10% of their income as a tithe. In Hinduism, charity is an essential feature of Dharma. Islam has its own version of the gift called Zakat.
In cryptographic spaces, especially faith-based cryptographic spaces, this is sometimes referred to as “distributed philanthropy” or by Naquib as DePhi.
“Decentralized philanthropy uses blockchain to eliminate intermediaries. Funds move from source A to source B with complete transparency,” says Naquib. “One of the five pillars of Islamic belief is charity. There are about $ 300 billion in charities on the market. This is unaccounted for because many people make personal donations. It doesn’t include charities either. Our CTO joined us last year because we couldn’t find a suitable solution because we were looking for a solution that could provide part of our portfolio and meet our obligations. did.”
Comprehensive ecosystem
Of course, for those practicing faith-based finance, there are questions about new areas such as cryptocurrencies. Most practitioners want assurance that they are in morality when accountability to higher powers dominates daily activities, especially those involving money.
“We’re probably facing the most backlash in the community with questions like why are we compliant with Shariah, show us your dissertation, etc.” In these situations, with the Muslim Pro app. Unlike the scandal in, additional preparation is required to ensure user transparency.
However, if done correctly, these new features will open up a new world of ethical and decentralized finance to billions of people around the world.
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