Tech and Financial Transactions 02 – Crypto and NFT
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AI Generated Summary ©
The speakers discuss the potential of cryptocurrencies, including their use in transportation, retail, and entertainment, and the need for strong legal frameworks for cryptocurrency mining. They emphasize the importance of protecting cryptocurrencies and warning of the danger of using them as a means of payment. The recording and listen-only session concludes with the operator asking participants to answer a question, and all participants are in a listen-only mode.AI Generated Transcript ©
do it justice.
So I come back until David Akata have an estimate I'm gonna say probably not very long at all but I mean when I was not about me when I talked about to almost every single data cut before the secret Muhammad Sallallahu it was Southern Water. I'd
love to Anna we are blessed to be back in session with our beloved Chef. Chef tomato goes on Charlotte's Anna will be presenting on the subject of E currency cryptocurrency, crypto mining and NF T's insha Allah specifically in sha Allah shift tomorrow we'll be speaking about the fifth perspective on cryptocurrencies and Shawn let's identify the problem.
Salam aleikum wa rahmatullah.
hamdulillah Al Hamdulillah. Wa salatu, salam ala Nabina. Muhammad, what should I learn a lot? Why should or should one number hung didn't have to worry about.
So inshallah today's session is shallow, or decision shallow, we'll be covering, as you see on the screen, by the way, I never use in all my classes, I never use PowerPoint, but I refuse to use PowerPoint. But unfortunately, the power is stronger than me. So
I apologize if I'm not looking very comfortable with using the PowerPoint. But we saw the topic of E currency or cryptocurrency and crypto mining and NF T's. As you can see, they are covered actually in three of the papers in your in your packet. Unfortunately, don't have the page numbers, like the earlier shift said. But we had one paper by Mustafa Ahmed and Marcia most of our hamartia or Mahan, in which part of their paper they discuss cryptocurrency as well as NF Ts, and then also the paper by the body. Michelle also covers cryptocurrency and NF T's as well. And then my paper the last paper there you see on the screen. My paper is just about cryptocurrency but insha Allah this
presentation also cover the NF T's as well. And inshallah the next session is actually an open session where Chef Alma Han, and also chef, Dr. Berry Michelle will be here to answer also any questions that you might that you might have as well inshallah so
so there's a lot of there's a lot of controversy about cryptocurrency and in particular whether or not cryptocurrency is halal, or it's not allowed. I mean, that's obviously the biggest question that people want to want to ask about about cryptocurrency. Early on, because I happen to come from an area in California close to Silicon Valley, where we have a lot of high tech people, I happen to know a few brothers who made 1000s and 1000s of dollars on Bitcoin before ever even asking the question whether or not this might be halal or not. Which unfortunately, sometimes happens.
So finally, and of course, by the way, it's almost always the case that technology and real life is always ahead of law. And and basically like legal analysis, so the thing appears, and then you have the laws coming later. And then you have people analyzing it as to what needs to be done. What's the proper perspective with respect to these these items? That's true. That's true with respect to law as a whole any legal system. I mean, even the the government of the United States they Bitcoin was around and they had no idea you know, how to deal with it, is it a currency is it acid and so forth. So the fact that from a fifth perspective, sometimes we're also lagging a little bit. Again, this is
natural, I mean, things appear first before in general things appear first before the questions are asked about how we should deal with it from a legal perspective. So the question of cryptocurrency, which basically cryptocurrency you can think of it as a type of money. It is it is a type of money. So the so the analysis of it from the perspective of from the Sharia perspective, basically all goes back to questions related to
real questions related to money, what is money from machinery perspective and so forth? So forth for someone
To start by speaking a little bit about money from what you could call an economics or a secular perspective. And usually when people speak about, when people speak about money, they usually talk about something that serves
basic purposes, such as what they call a medium of exchange, medium of exchange, basically, what that means is that, if I want to buy something from you, you're willing to take this thing that we call money, in exchange for what you have. So before money before money became common, you know, for example, if you had a car that I wanted, well, I'd have to look at my stuff, let's say like, I have an older car, and maybe I have a computer, maybe I have one almost eliminates books, or whatever. So I put them all together as a package. And I say, Hey, are you willing to give me your car for this is what they call barter. So the whole idea of money basically made this made the idea of
transactions and business and basically economy made it much easier, you know, we don't have to have what they call a double coincidence of wants that basically, do you want my car and my stuff in exchange for your car, we have something common between us that we're all willing to accept. That's, that's the main purpose. And the main goal behind money to facilitate Business Exchange, exchange of goods, and basically going to get something from you whether it is a good, you know, like a book, or whether it is a computer or even renting a property. And there's something that you're willing to accept as payment. So that's one of the that's one of the main purposes,
and benefits also of money. Also, it's what they call a store value, I mean, you can keep it other things, for example, may not be that easy to keep, if you if all your wealth, for example, is in fish, let's say, if you keep fish for too long, it's going to get rotten, it's not going to be very effective. But you can keep money or you can store money someplace. So it's a store of value for and so forth. And so historically speaking, actually, historically, speaking, in different cultures, lots of different things played the role of money. You know, nowadays, for example, we usually look at the bills that we have, but probably you can imagine,
in the time of the example, in the time of the process, and we have we had Dean dinos and did hums.
We had money, which was based on gold and money, which was based on silver, and gold and silver, these are two of the common
common basically,
foundations of money, you can see what money is, oftentimes gold and silver plays the role of money. Or even if you have paper money, many times, it's backed by the gold or silver, what they call the gold standard, or the or the silver,
or the silver standard. But again, as I said, over time, a lot of times different things like certain types of seashells, were used as money in many different cultures.
If you happen to be in prison, Michela, none of you right now are in prison. But in prison, things like cigarettes, for example, cigarettes play the role of money in prison, because it's things that people want. And they're willing to accept it, because they know that other people are also willing to accept it in exchange for goods. So if you have something that you know that other people are willing to accept,
in exchange for their goods, basically that thing is going to be playing the wall of money.
And that's what basically that's what money is from, from a secular perspective, that thing which basically people are willing to accept, in exchange for goods or services people are willing to accept.
And it doesn't matter.
It doesn't matter if that thing is based on nothing.
In other words, for example,
the American the United States dollar, for example, the United States dollar right now is backed by absolutely nothing.
You cannot go for example, to the United States government say look,
I think the dollar is going to go down, I want to exchange my dollar for gold.
Now, if you go to the United States government want to exchange $100 Bill, they'll give you $100 BILL In exchange,
because there's not It's not based on anything. The only reason it is out there
is again people have confidence in it, people are accepting it.
Actually the bulk of the money
there's something called the money supply, which is basically the entire amount of money. If you if you count up for example, all the dollar bills in your pocket, and all the coins that are out there, and then if you count out Oh
All the money that people have in their in their bank accounts, then you get this thing called the money supply.
And the bulk of the money supply nowadays, it's it is created by the banks. It's graded by the banks and not created by the federal government.
Basically, somebody goes to a bank, when somebody goes to the bank and says, look, for example, I want to borrow a million dollars.
The bank doesn't say, Okay, let me go to my vault and see if I have a million dollars. They don't do that. They say, What's your name? What's your account number? Okay? All right, in $1 million, there, you have a million dollars. That's it.
And now there's a million dollars in the money supply.
That's all that's how money is created.
That's how the so the American dollar has nothing behind it.
The bulk of it, as I said, if you if you look at the percentage of the money supply, what is created by the banks, the bulk of it is what has been created by the banks just by just by an accounting entry.
Interestingly, by the way, obviously, those loans that they make
those loans that they make, I mean, obviously they're going to charge interest.
So that means the American dollar, you know, the bulk of it is actually a debt riba we based system
it's actually a debt riba we bases.
And yet, of course,
most everybody uses the dollar, including our older man show, they all use the dollar, our governments all use the dollar, even though that's where the dollar comes from.
So, so that's money from a, that's money from a secular perspective, that's the money that we are dealing now with the in the in the secular economies that we are dealing with.
So an important an important question, obviously, is whether or not
what should be money? And what can we can accept as being money?
Does the Sharia have something else to say about?
In other words, for example,
these dollars for example, again, the process in which the bulk of them are created, obviously is problematic. But even the idea of $1 or a currency that has nothing, nothing to back it up, for example, Is this acceptable? Or there's some conditions, for example, that the Sharia puts, in order for money to be considered
sound money, correct money from, from a Sharia perspective,
and much of the debate, much of the debate surrounding cryptocurrency and those, those Shadowclan orlimar, who came out with with fat was saying that, that cryptocurrency is not halal.
They are basing their fatwas, at least in the majority of the cases when they have
some evidence behind it. They are basing those fatwas on the idea that
that cryptocurrency does not meet the *ty a definition of money. And it's not acceptable as money.
So in their mind, so basically, in their minds, they're saying that the Sharia has certain criteria in order for money to be considered money. And if those criteria are not met, then basically the whatever it is you're talking about, whether you're talking about cryptocurrency or something else, then that cannot be considered as money and should not be treated as money and so forth. So you do get as I said, you actually in my paper I discuss or I mentioned and I refer to those scores who have come to the conclusion that cryptocurrency is not
is not halal.
And as I said, the basis of their of their opinions as to why cryptocurrency is not allowed is going to go is going to come back to this question of what is acceptable money and what isn't acceptable money.
So I don't know how long I've spoken already, but I haven't even defined what cryptocurrency is, but I guess it's okay
so cryptocurrency what is cryptocurrency are actually better maybe what are cryptocurrencies?
So So I got a definition from Wikipedia. I mean, what
where else to go right then Wikipedia and it's there on the screen, a digital currency.
A digital concert. The currency is designed to work as a medium of exchange through a computer what met a network that is not reliant on any central authority, such as a government or bank to uphold or maintain
So basically, what does that what does that mean in the financial crisis in 2008?
A lot of people, a lot of economists, they put the blame on that financial crisis of the financial crisis on the banks, and also the government and their interaction with these banks and the laws related to these banks. And so somebody came up with this idea of why don't we design a system? Why don't we design a system where basically people can
essentially define their own currency, and be able to pay each other directly, they call peer to peer, pay each other directly without ever have having to worry about a central bank, a central basically authority or governmental authority. So as I said, before, you know, anything could be anything could be used as money. If we agree, for example, here that these pens that we got from from MJ, we'll use that as money. So some of you mashallah might have taken three of them instead of just one. So you might have more money than somebody else. So now, if you want to buy something, you could use that.
Basically, we could create our own within this room, like what I said, in prisons, they do this all the time, we could create our own monetary system.
As long as we, as long as we are willing to accept whatever it is, we have determined as a method of payment, we can do it.
And that's essentially, that's essentially what they did.
Coming up with Bitcoin, they came up with this idea that basically, we're going to create this new currency, this new currency that they call Bitcoin, and we're going to be able to use this, you know, we have a platform and so forth network, we're going to be able to use this
to pay one another for different different items. And if anybody wants to join us, anyone wants to accept these Bitcoins, you know, all they do is have to basically go online, create a wallet, and say, I'm willing to accept, I'm willing to accept these Bitcoins.
And that and that's basically the birth of
the birth of cryptocurrency. So they they, a white paper came out, a white paper came out basically,
that explains exactly how the system is going to work.
And explains exactly how new coins are going to be, quote, unquote, minted. Of course, they're not actually minted. I used to own bitcoins first came out, I used to make a joke of pulling out Aquinas said, Have you ever seen a Bitcoin before? Of course, there's no such thing as a physical Bitcoin. If somebody is selling some of your physical Bitcoin, you're being scammed, I hope you I hope you realize that. Otherwise, I have some in my room,
that you still I forgot to bring them with me. There, they happen to be chocolate.
Okay, so, so so so they, again, they set up the system, where they could, they could buy whatever they want from from each other using this form of money. And this white paper will describe, for example, how our new coin is going to be how our new coin is going to be entered into the system, because that's a problem, right? You can't have money and the money is like free or everywhere. And anyone can just create their own money that the obvious of this problem. So they came up with a rather complicated system. And said, basically, this is what we're going to do in order to create new coins and basically give people new coins. And they call it mining. They call that mining, they
wanted to, they wanted to use a word
they want, they wanted to use a word that sounds like you know, when they used to get gold mining for gold, and so forth. And
it's kind of clever with them. But anyway, so that's so all of this is spelled out actually, this is as as open and as transparent and monetary system you can imagine.
I mean, the banking system of the United States and how they create money, all the details and all the laws of it takes up books and books. There's a small like 15 page paper that describes this entire system of how we're going to create this currency.
And then other people came along and said, That's a great idea. We have our own platform. We have our own platform. In other words, we like our own network. We're going to create our own we're going to create our own currency as well.
All you need is basically people to buy into it. And so if there are some people, especially if these people are like famous in the IT area, and they come out with a white paper, they say look, we're going to produce also a currency a cryptocurrency. This is how it's going to work.
And so people see that and they get interested in it. And if they trust the source, they might give them money even before the coin comes out, this is the initial coin offering, they know that the coins are going to go to come out so they give them money now to start another cryptocurrency a lot of times by the way, these are scams.
People say they're going to produce a cryptocurrency, they get money from people and nothing ever gets produced. That has happened quite a bit. And recently, there was an article just a couple of days ago, where somebody who was able to it was doing it as a test. And in just a couple hours, he was able to get $100,000 from people to create a new currency. And now there are actually literally literally 1000s and 1000s of cryptocurrencies out there.
Somebody something in the area of about 20,000 If I remember correctly, or something, some ridiculously high number like that.
There's different market cap and other websites that you can go and see all of these listed. So, so we're talking about literally 1000s and 1000s of different types of cryptocurrency
most famous one is Bitcoin, then probably the second most famous one is something called Aetherium. And Aetherium has been in the news a lot lately for reasons that I will comment on later, inshallah.
So basically, the different papers that you have, they discuss the 50 arguments against,
against
the permissibility, or the hollowness, sometimes they make up words, words in English, but hopefully they're clearly the halal pneus of cryptocurrency. There's actually a lot of if you if you especially if you go like on YouTube and stuff like that, and see all the different videos that are out there, and the different people who are speaking against cryptocurrency, they present actually a large number of arguments, I tried to cover as many of them as I could in the paper. And in my paper, and also, Declan Marshall also discusses a number of them. And Chef, Chef Omar and Han, not to be confused with Chef or Moranbah him. So they also discussed a number of those of those
arguments as well. So basically, what they're trying to say is that from a fifth perspective,
from a faith perspective,
cryptocurrency is not acceptable as a type of money.
So in other words, money and the Sharia has certain requirements that must be met. If you look at if you look at Bitcoin, I'm just going to use Bitcoin as an example. And in some ways it could stretch to other than some other than Bitcoin. But basically, the argument is that if you look at Bitcoin, and if you think about what is the Sharia requirements for money? They're going to make the argument that that bitcoin does not meet the Sharia requirements from it.
Which sounds you know, it sounds plausible, but the problem is, we have to look at all of these conditions that they put, and actually ask the question, is this true? Does the Sharia actually like lay down?
Does the Sharia actually lay down such requirements for money?
So for example, one of the common arguments that you hear against Bitcoin, by different fuqaha
is it doesn't have a governmental source.
It does not have a government to source right, it is a private, it is private, as we described, right? It's actually the the whole purpose of it. The whole purpose of it is to be outside of the system.
That's the whole purpose of it. So obviously doesn't have a government to source. And but the question is, is this is this necessary? Is this necessary in order for something to be accepted by money from a Sharia perspective?
Is this necessary in order for something to be considered money from Sharia?
Now, if you go to the time of policy,
if you go to the time, the power system in the time of the postal system in Medina, and Mecca, but in Medina in particular,
they are using Durham's and dinars.
So they're Hamsun dinars, the dinars. And Durham's that they were using.
They were produced by a government,
the Byzantine and the Persian governments. This is the this is the coins that they
herbs were actually usable, foreign, original case of foreign exchange, I guess they were using these coins, which actually came from came from a foreign land.
The province I sent him himself during the lifetime of the province says
we have no evidence, we have no sign
that he considered it necessary that him the prophesy said him and his companions as a state, for example, take over the minting of coins, and produce their own coins. They did not do that.
Not only did they not do that, but also all of the whole of our Russia din. They also did not do that as well.
During this entire time, none of them
none of them produced coins. It wasn't until the time of the Amaze, that we basically have the first Islamic coin and the first Islamic mint.
Now what does that mean, with respect to with respect to what we're saying here? So if the argument is that it must come from a government source, so the province I sell him in his time, yes, we had Persian, we had Byzantine.
Obviously, these are not Islamic sources, these not Islamic sources, but they are the government as such.
But the prophesy centum himself did not insist on producing,
producing or minting coins or being basically the source of money, and basically accepted the money that was and as I said, the whole of Russia didn't also did this.
So
basically, we don't have any proof from the power system. We don't have any proof from the process and that money must have a government of source,
that money must have a governmental source. It is true that Yeah, it did have at that time.
It did have at that time. But this is not evidence in itself, that it must be coming from a governmental source. And there's some narrations also, that people use from Homer that are not necessarily authentic, from his time of using something even other than gold and silver during his time. But, but this is, as I said, this is one of the arguments that is that is presented the counter argument to that basically, I mean, obviously the Persian government, the Byzantine commit, these are not Islamic governments, these are you know,
they are involved in Kufa and so forth. And, and so to argue that any government has to come from a government or any government, this sounds also kind of like a strange argument as well. But the point is that there is definitely no direct evidence, no clear evidence that for something to be considered money and to be dealt with as money that it has to come from, from a government to source.
Secondly, they also argue, I'm going to try to go through these pretty quickly that cryptocurrency and I mentioned, who of the different authors also mentioned this, cryptocurrency doesn't have any intrinsic value. So like gold and silver, gold and silver, you know, gold and silver are basically like desired in and of themselves.
And now, if you look at cryptocurrency, cryptocurrency actually has nothing, nothing intrinsic to it that has any kind any kind of value to the dollar. For example, as I said, it's not backed by anything, you could maybe argue that it doesn't have any intrinsic value, although maybe people will say
the confidence that people have in it is its value.
But if they're going to make an argument like that, then with respect to this platform and this network, then the confidence that people have in cryptocurrency within this network, a Bitcoin, for example. That is its that is then it's an intrinsic value.
Another common argument, as I said, Probably I'm not going to go through all this is that basically, so it has it doesn't have a governmental source, and also it's not legal tender. In other words, no government or the government's have not declared it as legally to be used as money. There's actually a couple of countries by the way in the world that have actually adopted Bitcoin as legal tender.
Unfortunately, for one of them, El Salvador hasn't turned out
hasn't turned out very well. For them the past for almost one year they've used Bitcoin as, as as legal tender.
But again, the evidence that a government has to proclaim it legal tender
there's also no there's no evidence for that from the from the Sharia perspective, I think from the ones that are more commonly heard are things like the fact that the price of Bitcoin is very volatile. And there's a lot of speculation going on with respect to Bitcoin. And this is
This is absolutely true. If you look
for actually, if you look at Bitcoin form for a long time where the price was actually very stable, and other factors led to people getting interested in it, and, and the price of it has been has been very volatile. And a lot of people are speculating in it, and many people, actually percentage wise,
probably more people are using it.
percentage wise people are more using it as a speculative measure than, than anything else. The problem with these two, the problem with these two arguments is that that has nothing to do. The fact that the price is is has been volatile, the fact that people have been using it for speculative purposes, that has actually nothing to do with the nature of the cryptocurrency itself. So as I said Bitcoin for a long time, the price was stable,
how people all of a sudden now turn to a currency and then make it unstable. That doesn't affect the fact that it is that it is money, it was money before and it's still money.
I mean, if you look at the Turkish Lira recently, for example, it has been very unstable, and it has lost lots of value. Many currencies sometimes lose lots of value, or they go up and down.
This doesn't, this doesn't negate the fact that these are currencies, they are still money, no one's going to doubt, for example, that the Turkish Lira is money.
So, so again, the volatility doesn't disprove it as money, it may not be very good money.
I mean, if you want money, you want to if you're going to hold any kind of money, you want that money to be stable.
So it may not work very well as money under some circumstances, but at the same time it is it is still money. Some of the early stocks, by the way, in it, some of the early stocks had the same kind of history,
that that Bitcoin has had with respect to the price of the stock, and so forth, maybe things will will stable out over time, or maybe the whole thing will crash one or the other, either one of those is
is very possible. And the same is true, also, if people are using it for speculative reasons. I mean, people buy euros, for example, people buy dollars, for all the time for speculative reasons. But usually, you know, what they can buy and how much they can buy is not going to affect the price of the dollar euro very much. Not too long ago, a couple of brothers tried to try to
not not Muslim brothers and a couple of siblings tried to corner the silver market.
You know, these things, you know, these these kinds of things can happen. But it doesn't it again, these things people are are speculating in Bitcoin and other cryptocurrencies. That doesn't negate the fact that doesn't negate the fact that that these things are still currency.
Similarly, some people point out the fact that there's a lot of criminal activity that has been taken place with respect to Bitcoin, especially it has been used a lot in the in the, in the, in the dark web, and so forth. That was probably true. Earlier on, though now there's much more many more regulations in which that's much more difficult to do to do nowadays. But again, again, using something for criminal activity doesn't mean that the thing itself must be haram.
Because again, keep in mind that you your local drug dealer, hopefully you don't have a local job with them. But keep in mind that your local drug dealer, right, the number one thing that your local drug dealer wants is cash, they deal in cash, right?
Now we're going to take your credit card
and run your credit card. Of course, if it was, um, Joe probably wouldn't work, right. So
he's not paying attention, either intentionally or whatever, he's not paying attention. So So again, these people are dealing in cash and criminals deal in cash, pretty much a lot. So that criminal activity doesn't make doesn't make cash haram. So similarly, you know, people are using Bitcoin other things illegally, that in itself doesn't again make the currency itself, so forbidden.
And and also, especially with respect to Bitcoin. So essentially, what we're going to see is one of the common arguments, or what are the common responses and actually all three of the papers, they pretty much have the same common response. And that is that basically,
basically the default ruling concerning anything, is that a permissibility. So the default ruling basically, the default ruling of Bitcoin should be permissible, permissible or halal, unless you can prove
unless you can prove otherwise.
But that condition of or that idea of the default ruling of anything is permissibility. Actually, that is conditional is that it is the default ruling of anything that might be beneficial, is permissible, the default ruling of anything, which is harmful, is not going to be permissible.
And so especially with respect to Bitcoin, we haven't spoken about the mining very much, and how that works. Inshallah we'll speak about that shortly. But mining takes up a lot of energy, a lot of energy. And so the Biden administration just
just two days ago, it's it's leaked out that the Biden administration is basically
thinking about putting a ban on what they call proof of work, which is how Bitcoin is mined, because all of the energy that it takes.
So from the point of view of of climate change, from the point of view of the of the health of the of the world as a whole, and even the health of local communities, the effect the effect of Bitcoin, and especially the fact of the mining that is done,
it could have a very, very negative effect.
So just like for example, they were talking about cultured meats earlier, you know, if some days this is if someday
is discovered, the culture of
cultured meats are very bad for your health.
So basically, that fact that is bad for health, and for your health, let's say like very bad for your health.
Not like not like processed meats, which apparently people don't have an issue with. But culture, culture, meats, cultured meats, if there if it turns out that those are like really bad for your health, like, for example, and chef gave this example or like smoking, how the fatwa changed for smoking.
You know, so even if something, let's say starts off, and we think that it is permissible, if we actually find that it is very harmful, then the ruling has to change to that, to that prohibition. And that is, that is a big problem. And an issue that needs to be looked into with respect to Bitcoin. But of course, Bitcoin is just a specific type of
cryptocurrency and the model, that crypto that Bitcoin uses is not the same that is used by by every by everyone else. The second most important or the second with respect to market capitalization. The second largest, cryptocurrency is Aetherium.
And Aetherium, has been going through this big thing that they called the merge. Just Just today, they finished the one of the more one of their last tests
to go from what they call proof of work to proof of stake. So they are they're basically changing the entire system for Aetherium of how you create how you create new money. And as a process as a as a result of that, they expect that their energy consumption is going to drop by 99%.
So So Bitcoin, as I said, as an example, it is there's no question that Bitcoin could be very harmful to environment, especially in the long run. By the way, there's some articles that say no, the opposite of case they are like using energy that most people don't use anyway, and so we're but it looks like it looks like as a whole, it might be very harmful in the long run, and that is something I mean of all the arguments against Bitcoin in particular. Again, not cryptocurrency, but of all the arguments against Bitcoin. That's probably one of the strongest
arguments.
Okay, but we have never seen this part of this PowerPoint presentation, they did add something to do with martial.
So, so those who say the permissibility of the basically
cryptocurrency
is is permissible. So again, cryptocurrency the idea the idea and what what what I mean by that
the idea behind that
is basically developing all kinds of currency, the developing a network or platform where we're going to identify some kind of currency or some kind of form of money that we are going to accept among ourselves as a kind of money.
So basically, the essence of that and the idea of that there doesn't seem to be anything in the Sharia that would prevent that kind of thing.
All
The arguments that were presented as I mentioned before,
either they don't have any basis or maybe you could even present counter arguments against those proofs against using cryptocurrency cryptocurrency as, as any kind of money. So basically all three of the speakers went back to this all three of the articles went back to this idea that the default ruling is that of permissibility. And of course that has to do that is dependent upon
it's not
okay. Oh, you mean Oh, I see which is okay.
I won't worry about
so so from there.
Basically, if you look at cryptocurrency and the different kinds of cryptocurrency, there's still some important points, though that need to be mentioned, number one is the type of activity that you're going to be
that you're going to be involved in, you know, simply like making a payment. So like you want to make a payment to someone overseas, it might be easier for you to switch your dollars into cryptocurrency to Bitcoin, for example, and send it so what is what is known as using it as a payment rail. Probably there's nothing, there's nothing wrong with that, as Dr. Michelle mentions, also, each each cryptocurrency is going to have a white paper. And basically that white paper is going to describe the actual workings of the cryptocurrency. And that's where you can analyze the maybe, you know, maybe something is questionable there, maybe there's some giveaway aspect and so
forth within that, within that model. And it's very important to point out, it's very important to point out that when we say, when those riders say that it is permissible, This in no way should be considered
any kind of idea that it's okay to or encouraged you to invest in Bitcoin or anything like that.
All the papers pretty much agree that you're not supposed to speculate on money, money has a very distinct purpose in the Sharia. If you misuse it, if you abuse it, it can cause great harm to people, people rely on money. So one start, once people start speculating on money, you know, you actually are then affecting essentially their purchasing power, you know, what the, you know, maybe what their whole life savings are worth anymore. So it is not permissible as a whole in the idea of speculating and using money to make money. This is something that the Sharia scholars as a whole have stated is impermissible.
Besides the idea of buying Bitcoin support, then there's also the idea of mining Bitcoin, or in the case of others, what they call sticky. And so basically, mining is essentially what so what they do is they the, they're trying to figure out some way to make it difficult,
but at the same time, make it possible to create new coins. So essentially, they, they they create puzzles, and different and basically different computers are going to try to solve this puzzle.
It's basically going to be a unique number, which, you know, very long, unique number. And so essentially, who is going to be able to solve it, the more computer power you have, and have a picture in my paper of a computer mining place where you know, we have a stack, you know, the whole large building is this computers, basically mining coins. So the first one is able to the first computers that are able to solve, able to solve that puzzle. They are the ones who are basically going to have the right to validate that exchange and so forth.
I don't want to go into the details of blockchain. But basically, they're going to be then the reward for that is they're going to get a Bitcoin in exchange. So basically, the more computer power you have, the better your odds are at solving the puzzle, but it's not going to be the case. There's some randomness that is not going to be the case that you know, whoever has the biggest computer power is always going to be solving the puzzle. It's it's structured in such a way that that's not going to be the case. So there is some randomness, there is some risk involved. So some people might say like, this is like gambling.
This is like gambling, you know, you're putting up all this computer power and you may win you may not win basically. But actually, Dr. Michelle, just this also I just this is more like the concept in the Sharia of Jhala which basically like if
If I lost my car and I say I'll pay $500, to whoever can, can, whoever finds my car, for example,
then whoever ends up finding it, I'm going to I'm going to pay them, this is an acceptable contract in the Sharia. And this is more like that than it is than it is gambling. And this is mining. So mining is via proof of work. And as I said, this is what Bitcoin uses, this uses up a lot of energy. Another approach is what they call proof of stake or staking.
Security wise mining is much stronger. I mean, the whole point of the mining, the whole point of Bitcoin, is essentially to prove you're able to protect the blockchain from basically being manipulated in any way. Staking is not as safe, but is much, it's much less energy consuming. So basically, in staking you actually, like, you basically put money in you buy coins, and those coins are basically held at stake.
And usually, you're very restricted as to what you can do with those coins. So So essentially, you put money in, and the more money that you put in, then basically, the greater the odds are that you're going to be chosen to validate the next node. So the more money you put in, the more likely you're going to be chosen. And if you are chosen
to validate the next blockchain, you all you're going to receive the coins as payment.
So this, this is a perhaps problematic because you're actually putting money in, in order to get money in exchange for
the thing that you're working for. See, in the case of mining, you're actually putting your your computer power in, and then trying to make money as a result here, you're actually putting money in, essentially to make money off the money that you have put in. And also sometimes in some cases, that money which you are staked because the you know, the platform as a whole needs people to put,
you know, to get engaged in it so many times their money which is at stake also sometimes they pay interest on it. Obviously, interest is going to be it's going to be haram. So staking. Also staking is could be problematic on a couple of levels, even though
even though it's much more energy
efficient. And finally, the NF T's are the non fungible tokens.
This is not actually just in my paper, this is addressed in the Dr. Michelle is Dr. Schiff Omicron. And most of them are so and by the way, the next session inshallah Dr. Michelle, and
they will be here to answer your
your questions, Shola. So NF T's NF T's are a unique cryptographic tokens that exist on a blockchain and cannot be replicated. So fungible basically means it's not like anything else. And this is, so this NF T's, there's a lot of useful. There's a lot of useful ways in which NF T's can be used.
For example, the useful and also profit making like Pearson, for example, which publishes a lot of textbooks.
They're thinking of putting their next textbooks out as NF T's. That way they can control the you know, if you buy a textbook, and then you resell it,
that way, they can control that and basically get a cut out of that, as well.
And so basically, it is, in some cases, though, it is not much more than
basically a one of a kind digital item, one of a kind digital item, many times which is just representing something else. It's not the thing itself, it is representing something else, like sometimes this representing a piece of art, it's not the art itself, but you actually have the this, basically this code that this is your, this belongs to you.
In many cases, in many cases, this doesn't mean that you have the copyright.
You know, it doesn't necessarily give you any rights over the thing. You have to look very closely at the smart contract to see what are your actual rights. Because sometimes you're just buying basically, basically for that information on that blockchain, that this belongs to you. And a lot of times it's nothing but nothing much more than just like bragging rights. That actually belongs to me. I don't have any copyrights over it. Anybody can use it. It's still being distributed, and you can find on the internet, but in reality, that node there that that blockchain shows that it belongs to me, I can do anything with it.
And people are willing to pay millions of dollars sometimes to be able to say that
this belongs to me
The most, the most expensive NFT that was sold was for like $89 million.
And there's a board a, there's a board a collection they sell for millions, you know that these are just pictures of board apes. I can imagine in most mosques if someone went up to the mom and said, I'm thinking of investing in bored apes, what do you think? I just can't imagine what the responses you're gonna get from most Imams. First of all, how do you know the ape is bored?
Anyway, so as both of the as both of the papers
speak about
depending on what the underlying asset is, so it's so it is either representing an asset or something Unitas so depending on what the underlying asset is, if that underlying asset is halal, is halal and is useful then inshallah the NFT is halal. If the underlying acid is for example, something haram, whatever you can imagine that is haram, then the NFT is also going to be is also going to be haram. As Dr. Michel points out, you have to make sure that you're not just wasting money. I mean, again, just having bragging rights that says that, you know, I paid for this, and you're actually not getting any benefit from it. This could be obviously a kind of a Seraph. And
then finally, as I said, it's very important as
Mr. Ballmer and Omar Khan
mentioned, it's very important that you you read the smart contract,
to be able to determine like what kind of rights you're going to be getting to see if it is actually something of benefit of benefit or not. Unfortunately, I don't think anyone covered the idea and the concept of smart contract. That is also another thing that we need to look into smart contracts and fourth and so forth. And other things like this are already used being used in what they call Islamic FinTech or Islamic financial technology. And those need also looking into as well. About Aklavik when was cinematic
ocular collage Epidermolysis Dakka Dakka Kola and if anyone wants to buy set a DeMars coins from his room can speak to him after
his nfts as well or trade your car for my books I'm also available, but we're going to inshallah take a break before the q&a We're going to play a quick video on sha Allah Tada from AMC, Indian American Muslim Council inshallah short video presentation. And then we will continue with the q&a inshallah a lot of good luck
if anyone's at the mic so far?
Yeah, we'll start with Jeff.
May Allah preserve your share?
I don't know if you addressed it. But there was the issue of creating a cryptocurrency making your own.
I know, as you as you mentioned, there's 1000s of cryptocurrencies out there. And
new ones are coming out every day. And I get questions about people who want to make some new ones, including my own brother.
All of the investors when they
address this issue, you have to prove to them that it's not a Ponzi scheme, right. It's not a pyramid scheme. So how do you address that?
Or what's the I mean, if majority of them that are out there are Ponzi schemes, how do we get around that aspect?
So there are a number of cryptocurrencies that turned out to be Ponzi schemes, as I said, when it comes to of course, the idea also initial coin offerings.
This has some concerns with it as well. I mentioned it in the paper, and also
Masha
mentioned a related idea and that is that one of the issues with respect to cryptocurrency as a whole is that if I'm going to use dollars to buy cryptocurrency, and cryptocurrency is money, because I didn't get into the whole debate about whether cryptocurrency is money or assets it's over.
I don't know if my speech board you but I definitely think that would work.
But it is money, it should be considered money. And so we have very strict rules about when you're exchanging money for money. That basically has to be a spot transaction. I cannot give you I cannot give you $100 Now and then after one week, you'll give me an example.
The Exchange in euros or something like that. And so this is a this is also this can be a problem with Bitcoin and some of the other
cryptocurrencies that there could be a time delay in, in getting your currency.
Sometimes that time time delay might be very short and maybe you overlook, they also actually have ATMs that you can get your cryptocurrency from in different parts of the
United States, as long as you have a wallet, and it will go directly into that wallet. I mean, not all by the way, all transactions I forget. And on Bitcoin, they're going to be fine. They're actually going to be finalized. Like every, I think it's every 12 minutes. That's how they've designed the algorithm that is going to take to solve the to solve the puzzle. So So my understanding was correct. Maybe some brothers, I don't know whether.
So are you saying that some brothers want to establish their own cryptocurrency? Yeah, they already made. I mean, they already made it.
It was my brother. I had we talked for months, this was his COVID project, you know, like, people were making bread, he, they made a cryptocurrency. And they got right. So people who stick money, they stick almost half a million dollars into it eventually. But the hope every single investor, the hope was that we're going to hype right to use that term, we're going to hype this up, so that the value of the coin grows so much so that those people can eventually cash out. So it's not they're not investing in something intrinsic, it's they're investing in the hope that other people will buy it to evaluate in order to raise the value of it so that they can actually just cash out, they want
dollars, at the end of the day, they don't want the cryptocurrency. Does that make sense. So there's a difference between a Ponzi scheme as Ponzi scheme and what they call pump and dump, rare, you know, you put you put the currency out there, and you you, you give it a lot of hype like this is going to be really something big. And as a result, as a result of that you get people to buy into it. And basically you're so obviously, ethically, ethically Islamically, ethically, and even here in the United States, ethically,
this is considered improper, you are basically trying to deceive people trying to deceive people to get them to invest. Your only purpose in doing that is to get the price to go up. And then you will sell
if all of a sudden a number of people sell that means the price is going to drop again. Right. And that's the result of the action that you've done. Right. So clearly, that's how I'm from Michelle. So though, so some cryptocurrencies will add caps, you can't sell over a certain percentage of what you own in a certain amount of period, in order for the price not to drop, like you mentioned, but ultimately, the vast majority of the currencies that are available are of this nature, outside of the major ones that you covered in your paper like Bitcoin, Aetherium and others. So again, every so with respect to Ponzi scheme, obviously, you know, one of the clear signs of a Ponzi scheme is that
you are kind of like promised a reward and so forth. And Bitcoin in particular, definitely doesn't
meet the criteria of what you would call a Ponzi scheme. Bitcoin in particular. Yeah, I mean, the original owners, they seem to be still in there. And I mean, it's not like he hasn't sold any of his but if someone were to, I mean, if some brothers were to set it up, they could set up a Ponzi scheme that would be haram and they could be they could deceive people as to the value of something all of that is obviously haram that
said I wanted a love or character
as you just mentioned, like those who are creating these, you're saying they want to avoid the system. In reality, they also created another system because when you need to apply it so he goes on the someone who is leading this, but what I want to ask you here is what they are creating a decentralized system. In other words, they are what they're claiming is this system is fulfilled with gone we're going to create a system which doesn't have them. So theoretically, nothing wrong with it.
Okay, sure. Theoretically, theoretically. You can theoretically right.
Is there another system? Sure. Okay. You mentioned the time of the Prophet sallallahu alayhi wasallam and all the time to complain Oh, the Power Rush said that. The Prophet sallallahu Sallam did not create it like you know, he used the Durham andina so you don't think that also is a proof that is not is not a need to create like some these cryptocurrency because as Jeff and are you saying everybody trying to get his own and then it's not gonna be any security in the society I'm just say this halal and
And this is gonna be too much. Now we just say, Okay, this is valid and this way is haram, why don't I just, you know, have what role to these because it's not only secure.
And this last point
when you come down because you say, Now, you're like Bitcoin is halal. So how are you going to measure yours the cat, and if it's permissible to add the beach going to the gobo, the money that you have to give this again?
Unfortunately, it's a little bit of a echo here. So
it's hard for us to So he's saying, you know, if other
you know, the proof that the prophets lie, Selim did not create a new system of currency, with all the insecurity that exists with creating new currencies and new systems.
Isn't there enough room for, you know, for that in and of itself to to err on the side of caution? And the second thing was, how would we, if we do take these things as permissible, what does that mean, in terms of his account calculations?
So So with respect to the first question, I mean, this, this, this international, monetary system that we have, right now,
you don't have to study economics very deep to see that there's lots there's lots of problems. And not in problems in particular, with respect to concepts like Doom. It favors the powerful over the over the poor in many, in many ways. And as I described, with respect to how they create money now, I mean, it's all it's, it's debt based, it's riba we based. So I think there's many, many ways in which you can analyze what is going on right now and point out a number of things which are not only maybe just haram, but almost borderline kind of shocking as to what the system really is right now. So to see if someone were if someone were to argue that this this, this system doesn't look right,
and as Muslims, we should be opposing this kind of boom, and we should maybe develop our own system. Again, theoretically, that's, that's No, I don't think anyone can can argue against the idea that there's a lot of questionable
aspects with with respect to the current system. There's lots of room with respect to the current system. Obviously, it's a completely Riverway based system as well in many aspects.
So we should be actually we should be maybe it's even incumbent upon us to be looking for some kind of solution. And actually, I know a number of Muslim economists who like have high hopes and things like cryptocurrency, maybe maybe something in the long run might, might turn up Inshallah, with respect to of course with respect to the cut. So if cryptocurrency whatever currency you have is considered money,
then you deal with it as money. So just like you just like how you pay us a cut on other monies, let's say like, if you have dollars, if you have euros, and then you have Bitcoin, basically all of that is going to be added together. So basically, they're like one kind of acid, all that value of all that is added together, and you pay the appropriate amount 2.5% on it if you're above.
So we'll go to the sisters if any of the sisters have a question.
That's fine. You want to just ask the question
you got to make there
can someone invest in crypto knowing that the company deal with interest or
anything that's prohibited? And it's them?
Like they might have they might the company itself might not deal with just that. But it might also deal with that. Does that make sense? So the question is, can someone invest it's hard to hear from the state. So can someone invest in a form of currency or accompany with crypto that deals with interest in mixed forms of investment? Yeah, like that's not the only thing. But it also deals with that.
So I think it's more of a question about investments than so. Can a person invest their crypto into a company that has some form of haram transactions, even if that's not solely their form of transaction
Yeah.
Okay, so crypto again, it's just like any other kind of money. So just like dollars, if you have dollars and you want to invest them,
then whatever company that you're going to invest in, you have to make sure that the satisfied the Sharia parameters.
Let's say like the stock market, the Dow Jones, Islamic index have come up with certain parameters. Personally, I'm not real pleased with some of those parameters that they came up with. But But essentially, I mean, if the question is investing your Bitcoin into a company or something, again, it's his money. So whatever, whatever the principles are, with respect to if you're going to invest dollars in something, it's going to be the same with respect to cryptocurrency, if I understood
like America
what's the ruling on using cryptocurrency as a form of investment similar stock, so you aim buying low and then when the price goes up, you're selling the you're not really into using crypto for its purpose was let's use it to make money by buying and selling. And obviously, sometimes you end up buying something that never, you know, is anything and you end up losing money. So you're not using the microphone
was the first one I could hear.
So there's a big difference between investing in stocks and investing in cryptocurrency or euros or whatever. So in one case, you are actually doing something which is engaged in what they call the real economy. Really kind of in other words, like producing goods and so forth. There is some outcome and basically the you know, the entire
maybe it's not the entire idea of riba but one of the key aspects of river is essentially you are trying to make money off of money, completely divorced from the real economy. So whether you're charging, so
obviously riba if you're charging riba clearly, it's obviously not halal. But even if you are investing in money, whether it is dollars or cryptocurrency and your whole idea is just trying to make money off of the money,
completely divorced from the from the from the real economy. So this is not Riba. Exactly. I mean, no one could argue that it's specifically riba but it is it is very much akin to rebirth. So you should avoid that. So just
I'm sure you understand, like in cryptocurrency, pretty much all of them have a certain purpose. The you right for that specific cryptocurrency? Would that be considered to say, Well, I'm not really investing in money, or I'm not buying and selling money, I'm buying a service. Right? So the one of the Kryptos
you know, is to be used between you know, for example, you know, banks or financial Institute's or, or car companies as a form of transaction.
With that, again, if you're talking about the currency not like tokens or something that then currency is money's money.
Don't try to make money off of just money.
Divorce from the from the real economy.
We have exactly one minute so please make the question very short inshallah. And you might want to not use the mic, if you could just speak up, we can hear your better probably without the mic.
Alaikum
My name is Mohammed the heavy. And this is my second year attending. I'm just talking a little head on I benefited a lot. So thank you, Chef. And Chef, almost I met my question is is staking allowed to or are not allowed to a certain degree, because there are platforms like a trading platforms like Coinbase that offer a reward system like, you know, 3% Apu API in return an annual percentage yield, which I think is linked with to interest. So I just want some clarification on that.
So so any fixed return on what you have staked is basically
just okay.
So my secretary might finish right at 515 Allah Khalid Sheikh Mohammed was pants I bless you and elevate you and protect you and reward you and all of the Messiah who prepared these papers May Allah subhanaw taala keep us sufficed with halal and protect us from haram Allah Ameen. Markelov Eagle Michelle
What's on it we'll take a break Sutherland was about to kind of be no Mohammed