Understanding NFTs and Crypto Currency From an Islamic Perspective
Channel: Nouman Ali Khan
File Size: 48.51MB
Bismillah R Rahman Rahim Al hamdu lillah wa salatu salam ala Rasulillah. While early he was his reign, so I'm ready to come to all of our audiences. This is being broadcast on my Facebook page on Vienna and also on being alive on YouTube.
As is typical of me, I announced that in a couple of hours from now, I'm going to be going on live and here I am 15 minutes later. So what you'll all have to bear with me is like, well, I'm heading for scrambling and making this work. I just landed not too long ago, back in Texas and had to run over and get this all sorted out. So I'm going to blame this all on jet lag, even though I was flying within the country. In any case, I'd like to introduce the guests that I have with me today for this discussion. First of all, Ibrahim Han, who holds a BA in philosophy, politics and economics from the University of Oxford and Alinea degree from the salaam Institute and an MA in Islamic
finance. He was previously a private equity venture funds lawyer, and he is the co founder of Islamic finance Guru smartycam Ibrahim wireless Salaam. Next up I have Mohsen Patel, who is the co founder of Islamic finance guru, Oxford graduate and a member of Forbes 30 under 30. He's a former corporate lawyer at one of the world's largest US firms whilst running ifwg My son is also actively interested and invested in the web three crypto space Somali commercial quality comes down. And last but not least, I've got with us, Mufti Philos. Adam, who is the director of the Global Sharia advisory firm, Amman advisors, and he has a passion for Islamic FinTech and advises various fintechs
globally. Thank you for being with us, mostly for us also.
Some really, excellent. Okay, so I'm going to get right to it. I'm going to try to just kind of orient all of our viewers for the kind of discussion I'm trying to have with you guys. I've been hearing from friends, people that I have that colleagues, others that are involved in tech, finance in these kinds of industries that you know, the words crypto blockchain, and FTS, these things are being thrown around quite a bit. I'll be the first to admit I understand little to nothing of these things. And whatever little discussions I've been able to have, I've only come up with more questions than answers. At the same time, lots of people on social media have thrown that question
my way and trying to understand an Islamic perspective on this stuff. And my first thought was an Islamic perspective on anything with first demand that we understand what the thing itself is. Right? So we're jumping to the halal haram good evil discussion before actually having a grasp of what it is that we're dealing with. And that was the motivation behind inviting all of you to this discussion. Hopefully, we'll have a structured discussion, I've got some questions outlined here that I'd like to throw your way. I will also want to caveat this by saying that this is meant to be a concise and comprehensive kind of bird's eye view of the subject matter. And I wanted to take this
opportunity for the Muslim audiences, others who want to know more about this stuff to be able to connect with the guests that I have beyond this, because this is their space. So you can take those discussions further for those of you that are looking for more details. Anyway. So let's start this off. I'll start with you, Ibrahim. And that is helped me understand what is blockchain technology?
It's a great question. So I think for a Muslim audience, the best way to understand it is, you know, a vault. And you know, you've got this concept where if all the neurons in the world were destroyed, you could take the different farm with all of their different memories. And you could reconstruct the Quran very, very quickly, that is a storage of information that is decentralized. And so the really powerful thing about that is that no one person is in charge of what the authoritative Quran is. Contrast that to, let's say, you know, the Pope or, you know, the letter, certain traditions, it really depends, like the authoritative Bible is the Bible that is owned by x person, or the oldest
Bible in existence, right person who owns that has all of the power over that data ultimately. So that this it's ultimately about storage of information, transmission of information, and power, and that being decentralized. I see. Okay, so what does that have to do with the world of money and assets and finance? Yeah, so with, you know, with your typical bank, HSBC, or Barclays, or, you know, whoever you're using, you know, across the world, what usually is happening is that all of that information around payments, and all of that information around what money you own, is sat within the central databases that are owned by these large financial institutions. And so what
happens is, they are then the intermediaries necessarily for every single financial transaction that happens, and that means that they can always take their margin
They always have a huge position of influence. And also because the system is set up by a government, the government has a lot of control over this as well, because they can control interest rates, they can print money, they can do things like that. Now, in contrast on the on the blockchain in the blockchain world, if you are storing the payment there, if you are if you have a wallet that is very, you know, clearly yours in this decentralized world, then you cut out that middleman and you cut out the people who set the rules. So the rules are now not set by, let's say laws that are set by the contract or the other code that governs, however that money or that wallet is going to
work. So in a nutshell, in the payment space, the key thing is that you're getting rid of that intermediary, and you're trusting automation and contracts.
With developers building from that a big part of that discussion is defining cryptocurrency. And I'd like you to take a stab at helping our audiences understand that a little bit. Yeah, sure. So I guess everybody knows what Bitcoin is. Right? That's the most famous potentially crypto out there are? We've all heard of it. We're not sure what it is. But yeah, I don't like using the word cryptocurrency. Because what that does is it makes everybody think that crypto is just about currencies, right. Therefore, there's a better term to potentially use which is used by practitioners in the market, which is crypto assets, or even digital assets, right? Make people
aware and understand that there's more to crypto than just a currency or means of exchange. Okay. And so, as Brian was mentioning, all this takes place in the digital world, right? We have a real economy, right? Your land, your real estate, the things that we see around us, we have a financial economy, that's your shares, your bonds, and all these things has been happening over the last 5060 years. But now we move to like a digital world where you can trade digital assets, you can interact digitally with people, or you can get access to digital services. So in a digital setup, how do you transfer value? How do you exchange things, right? What's the like medium of exchange, what's like
way to speak to another, right? And that's your crypto, your crypto asset, or this token, is what you use to pay people potentially. That's so there's there's many types of Kryptos. So one is a means of payment, which is your cryptocurrency, if you want to call it like Bitcoin, but then you have governance tokens as well, for certain Kryptos, you can use that to vote on a decentralized system, like a blockchain, which your brain was speaking about earlier, right? That's a different type of crypto. So it's not used for making payments. And therefore, it's not a currency in any way, shape, or form. But it's just a token, right? Or a vote that you can you can have, alternatively,
there's other crypto assets out there, which are
used as asset backed tokens. So you can tokenize gold, right? So whoever owns this token, it has a certificate, a digital certificate for gold locked in a particular vault. And you can redeem that gold by presenting this token, right? Are we similar certificates that governments issued sometimes for exactly possession of gold? Yeah, it's just never on the digital. It's working in a different infrastructure, right. And then you have utility tokens, which which are quite famous, like, on the Ethereum platform, where you can access certain services by utilizing this utility token, or you have security tokens. And that's very similar to the concept of purchasing shares, or stocks, where
when you have a security token, you have an interest in equity in a company, right? So there's many types of Kryptos out there. Not all of them are the same, they play a different function, but they are working within a digital world, which has its own kind of like, rules and setup. So to understand that with the same principles of the way the world works, the physical world will not do justice, we have to understand from that particular lens, so he could let me throw something at you here.
We all live in a fairly digitized world, even before the emergence of this technology, and wire transfers, you know, you're going to the grocery store and paying things with your credit or debit card.
I mean, so much of your purchasing something online. Much of the world's commerce today is digital to begin with. Right? So it's this is a new kind of digital exchange, but it's not in a sense, I don't find it as revolutionary as one might think that oh my god. Now we're going to have the digital marketplace. Well, the digital marketplace has already existed. And we are not in the age of you know paper Ledger's for transactions, and we haven't been there.
For a long time, so what I want you to help me understand is what is the big besides decentralization? Is there really such a drastic shift from what is essentially a kind of digital economy are my, the money I have in the bank is essentially zeros and ones from what I can understand. It's just data. And this simply seems to be assets that are associated with digital. It's just data at the end. So what's the significant shift here?
The word decentralized, potentially the key there, right? Because the entire current system that we work in, that's known as traditional finance or trade fi. Yeah, in relation to defy decentralized finance. My next question, yeah, okay. Right. And I think that's where the key we feel in the sun that well, we understand the kind of barriers and the roadblocks are there when it comes to working the current system? And what d phi does and what this crypto space does in this digital space? does is it removes many of those barriers potentially, right? It's not always the best, it's, you know, sometimes it's better not to use d phi. Personally, I would say right, many times the traditional
system, maybe a scenario where it's not good to use d phi, we'll get to maybe we should define d phi will do better what helped me with that?
Yeah, sure. Decent, decentralized finances pretty much extending on this concept that, you know, multi service is talking about here. So it's this idea that everything was alluding to so or you're alluding to as well, we'll start where you've got money in the bank, which is zeros and ones. And when we've got that were trusting, you know, HSBC, or whoever it is, that, you know, these are the zeros and ones. And, yes, they've built up a certain amount of clout and trust in society.
But what decentralized finance is all about is about taking those players out of the equation. And where you've got blockchain, which is an immutable meaning, you cannot change this, this is, you know, a mathematically solved thing that just, it cannot, this transaction cannot happen. Unless it is correct, unless it is true, and it cannot then be changed. And there is a record of it forever.
So in this world of defy, were taking, you know, the, the HSBC or whichever bank might be out of the equation. And we're replacing that with something that you can trust a record that this thing exists. So let me understand that better. So hypothetically, just just to dumb this down, because I really like dumbing things down. So I have a bank transaction, I pulled out some money from the ATM or whatever the record of that transaction sits with the bank. And they can provide me a receipt or but at the end of the day, I'm trusting their servers, or their, you know, their agency to withhold that information. And I know there are banks here in the US at least that after a certain number of
years, erase your record. So you can you can only go go back so many years, I'd like to print my bank statements from you know, 10 years ago, I'm sorry, we only keep five years because we have to make room for but you're saying by, by contrast, instead of going to a bank or to the institution with which you had the transaction, the transaction is now in a common universal space, is that what you're seeing the record of that transaction is, you know, exactly, exactly. So and the key thing as well to bear in mind that is that all of this the real in my opinion, kind of magic here is that all of this relies on people an open source information. So you know, the code for example, that governs
a smart contract will be open source, you can look at that you can verify that you can you can know who contributed to that. This is a world where people are the actors, not big central organizations. So does that mean that it doesn't allow for privacy in transactions? Like all records Republic? To a certain extent? Yes, you're right so wallets. Can wallets, wallet transactions are public. So in theory, if you know that a certain, you know, wallet number is associated with X person. That is a public thing you would know that. So you know, if I knew what Elon Musk's wallet was, I could very quickly look at his transactions. That is certainly true, was not the problem that you were
referring to? It sounds like there are times where defy is not the best thing. Yeah, I mean, if I own a business, right, a small business, right?
I would I need to use a blockchain to record my data and send money. I can just use the traditional finance right to store my data. Like I can use Google Cloud Servers. I will have to pay people experts who know how to run the blockchain and store data. So there's a lot of cost savings in that model. So it just depends on what you're trying to do, how many people are involved, if I'm a small business or just
have a group of us, I don't have so many parties that need my information. And there's no need to have a blockchain kind of like database. So it just depends how many people are involved and what you're really doing. And so for a small setup or business, you wouldn't need blockchain. As a ledger, my mind even immediately goes to like, the contrast between let's say, nonprofit organizations versus, you know, business ventures. And a business has a vested interest in perhaps keeping some of its investments transactions, private, because competitors want to know, where these people are investing and maybe get the, you know, get inside information. And in, in the world of
competitive businesses, you don't want everybody to know what transactions, what investments, what moves you're making. But on the flip side, in, in nonprofit organizations, I think this represents an amazing opportunity for transparency, because, you know, cuz, you know, corruption in the nonprofit or government sectors, right, because people are donating money to a cause, understanding that it's for a certain cause. And yet, you know, you know, lavish bonuses are being passed out, or whatever is happening behind the scenes.
And so long as the legal benchmark for tax reporting is okay. You know, yes, there is a disclosure in nonprofits have to disclose their, their transactions, but I also believe in the power of accountants being able to cook books, right? So in that sense, I do you see a really amazing advantage of some kinds of transactions in the world being absolutely transparent. But I also see the problem of other kinds of transactions being transparent at all. So that's the are their
fail safes here yet. There's a thing here about Sudan like pseudonymity. So you know, there's, there's complete transparency and who the person is. But then the fact is that we don't even know who created Bitcoin, we know, he's called Satoshi Nakamoto. But, you know, we don't actually know who he is. So there's this kind of weird, interim level of disclosure that you can actually adopt here as well. So you know, that there's that to think about. And there are actually ways where, you know, some of the big players in this space, they actually start, they actually trade a lot of this crypto stuff offline, it's called, you know, and they're called wallets. So they don't even put it
onto the public wallet themselves, because of these precise reasons. And then they kind of aggregate it, and then it'll go through, you know, a crypto exchange or something, which then just sorts it all out in the backend. So it never really appears. So there's, there's a lot of really fast moving technology that's happening in the backend. But these are the exact kind of questions that, you know, right now everyone in the crypto space is exploring. I just want to add to that, right, because when it comes to crypto exchanges, and everything, you have a public address, write a public key and a private key, the public key is a string of numbers, so you wouldn't necessarily know who
it is. Right? It's just a string of numbers. Okay. So that's something to bear in mind. When you're working with a blockchain, that's where potential is more transparency.
Got it. So it is in a sense, encrypted, because it's just an obscure number, ID and unless you, yourself, inform somebody of what that is, they wouldn't be able to identify you directly. Yeah, instead of me sharing an eyeball number. Now, you know, you wouldn't necessarily know who that belongs to. Right? What governments No
no, cuz, you know, governments like to trace transactions for whatever reasons. So, with I guess, this is another kind of area of defy when it relates to transactions, which are
untraceable, somewhat, there is a bounty actually on a company called Monero.
Which bounty like from the from the US government, for capturing
data triggers, how it works, yes, not necessarily the people behind it, but they are, you know, cracks and you can kind of research this paths offline. But they have, you know, there are there are different projects that are going after different things. So, you know, d phi is not just about you know, all this stuff that we're talking about, there are different uses of the technology. So, you know, you could say that, you know, d phi is great for faster settlement, no hassle international transfers, for example, like, you know, for example, in my business, I pay a lot of people abroad, and I don't know about the US but certainly from the UK, there are certain jurisdictions where it's
very, very difficult to pay to pay to even if
complementing movies that are involved. Yeah, yeah, exactly. So, you know, defi kind of cuts through cuts through that, then there are a whole bunch of streams is basically what I'm saying. So, you know, privacy is like one one area of that as well. Okay.
Let's, I think I've got a decent grasp of these things most, and you help me with this one, too. What in the world is web 3.0? Web 3.0 is the way I like to describe it is a borrowed analogy from someone much smarter than me. So I'll just use that instead. Because why reinvent the wheel? So the way the way that has been described is that we have lived through several kind of turns of the web. So web one was the initial kind of, you know,
advent of the Internet in many ways. And that's where we saw people putting things like, you know, catalogs online, and they call that, you know, read or read only. This was where you were, basically.
Yeah, so it was static information. Exactly, exactly. And then as the web advanced, as people got more used to technology, and they started wanting to live a bit more in the internet, we had the advent of, you know, platforms like this, you know, Facebook, and YouTube and Instagram. And there were forums that are coming online, etc. And they call that year a web two, which is read and write. So we went from read to read and write. And the Advent that is now coming is web three, which is read, write and own. And the own bit is coming from this concept of decentralization. So, you know, we talked earlier about how these large companies are often the gatekeepers to information,
knowledge, a lot of data. And of course, they make a lot of money from it. But in this new world of web three, where we have things like Dows, decentralized autonomous organizations, which I can talk briefly on as well. But this idea is that in web three,
as I said, Before, people are the actors, people are contributing to things that they are good at knowledgeable on, and we've got these, in this day and age, you can quickly amass an army of people all across the world, who are very passionate about, you know, a particular thing. And instead of that, being a central company that, you know, creams, the profits off, that then is its own little thing. And the people participating in it, and contributing to it, get rewarded for it. And they can get rewarded for it. As mostly for us were saying earlier, through perhaps a governance token that is associated with this thing. So let's give it a you know, really simple it sounds like a gaming
thing to me right now. Yeah. gaming environment, tokens, and, you know, participation and earning earning tokens and you know, that making you more influential or assets, like, sounds like Age of Empires or something, I don't know.
100% I think that's a good analogy. And a lot of the infrastructure that you actually see in the early days of web three, which, which is where we are now from the gaming world. So a lot of the discussion, for example happens on Discord. I don't know if you've heard of discord, but it started off as a gaming platform as a gaming kind of chatting. Yeah. So just to give a really simple example for, you know, for your viewers, let's say, you know, you, for example, decided to start a doubt tomorrow, and there were no decentralized, autonomous organization, autonomous, okay, so that is a virtual organization. Exactly. And it typically is people that come together around a common cause.
So, you know, examples in the real world are, you know, there was a Dow that was formed for buying the US Constitution. So literally, people were putting money into this doubt. And the idea was that, you know, we together we'll buy or we will bid for the US Constitution, it didn't work out. But it showed the early kind of promise. How, when did this happen? Pretty recently, I think it was a few months back, they failed, because they did something silly, which is they publicly disclosed what their bid was going to be, and they got outbid.
But that aside by the US Constitution, I'm still stuck on that part. It was up it was it was up for auction a few months ago.
So look it up maybe afterwards, it's called constitution doubt. It's still going and it's the reason it's interesting is because it showed the kind of early promise of of doubters, but you know, the point with Dow is is that you can form groups around anything. So you know, if you formed a Dow, for example, or perhaps they wouldn't even
For you that formed, it might even be your fans, for example, that formed it. And, you know, you've got people that are really willing and happy to contribute to things, they get rewarded through a token, those tokens, for example, could be the entry ticket or the VIP ticket to, you know, a future event that you do. And that's how the reward for participant participation can work. So, look, there are a lot of possibilities here. The what we're doing here is we're hypothesizing about a world that is kind of there, but then is coming, but isn't here exactly yet. And the thing that, you know, we I think, especially as Muslims who are trying to, you know, advance as, as an OMA and get ahead of the
curve of the future wave, the challenge that we've got, is we need to shift the mindset entirely. So you can't come to web three, with like, you know, a web two kind of mentality, like, it's, it just doesn't work. So, you know, the analogy I would give here is, you know, back when the internet was was coming out, so you know, the kind of 90s there were people then that said, you know, email is never gonna work. People are never gonna buy things on the internet, this is just not going to happen. And things change quicker than than you think. Right.
Yeah, I can imagine having a conversation down the road, and you're so web 2.0.
I say to Abraham all the time.
So now the scary two questions that the scary one to me is because I saw that Facebook ad. The metaphor, Metaverse
seems like an immersive digital experience that will disconnect people from the real world and they'll never come out of their basement. And the only time they'll take the goggles off is to go to the bathroom. So that helped me understand what the relationship with this conversation we've had so far is with the metaverse and what this thing is, and why why is the tech space. So excited about it? Yeah, so the metaverse is, as you know, as we've been discussing, the best analogy to it is that you know, the World of Warcraft, online kind of live where you log in or Call of Duty online, kind of you can roam around and do stuff. It's similar to those things in the sense that it's always
live. And you can drop in and out you can interact with people who are also live at the time. And and I think but the interesting thing with the metaverse is its strong ties with virtual reality. So you know, you've got these Oculus headsets that Facebook is working on and others are working on. And I think apples in the running with this as well Microsoft in the running with this, right and, and what's going to start happening now that you've got this the digital infrastructure and the payment rails, plus you've got this virtual reality, and you've got this web 3.0 thing going on, is that you're setting up for more and more time of a person to be spent in the space. And actually, I
think you know, you and I might think Hang on a second, I thought this a few weeks back, I was like, why would someone actually do that? It just sounds bonkers. But actually, the key
us means crazy. Okay.
So why would you do that. And I think the key thing is the business angle here, because a lot of technology gets adopted via the Business Route. Because it's very possible, it's very probable, in fact that, you know, you could see a large tech company saying, you know, actually the this kind of sense of presence that we get with all of our remotely distributed workers, but all of us get a virtual reality headset on. And we're actually in the same room, there's a real sense of presence to that. So let's buy everyone a virtual reality headset. And that way, now you have these virtual reality headsets kicking around, you know, in bedrooms, across all of America in the world. And then
people start thinking about, okay, what are the consumer angles that we can bring to this. And then people start using that native technology, they're already in this space. They know how it works, to do lots of interesting things. So I guess, building on really the point that Mohsen was making, which is that the really fascinating stuff with this technology is yet to come. You know, we're seeing glimpses of it. But the really fascinating stuff is that which uses the new technology or the new rails, and achieves things that weren't ever possible before. So for example, web 2.0 came along and Facebook was possible for the first time you know, social, an online social media platform was
just not possible in web 1.0 Before the internet, but for the first time you have a new experience entirely, or Instagram or Tiktok. So what we're going to see coming is one of those things, so I think that's why it's interesting.
For Muslims to really think about this new technology and this new space and just like spend time in it, to understand it. Yeah, I mean, I see it, taking a step back, I see it as
an incredible new world of commerce, and of maybe even social change. But at the same time, I could see the dark side, even now, like, there's a, you know, just like social medias as powerful a connector for humanity it has become,
it also has a very dark side. And just and if this is going to be such an immersive experience,
there are real considerations to have here about everything ranging from mental health to, you know, its implications on even I would think physical health, education, spirituality. I mean, there are other implication, they're very human implications of far reaching technologies like these, so that there's a lot to process as this stuff emerges. I think also, for Muslims, we're going to have to, we have we have a tradition of like, a HELOC. And other kind of, you know, principles apply it to like how to deal with family, how to, we have, you know, the Sundays filled with things like how to eat with your right hand, or what foot to enter into the home wave, etc. So we have this we're a
culture of mannerism, or religion, of mannerisms. And I think it's going to be a necessity for Muslims to develop ethics and principles of engaging in this new world. You know, not necessarily from a fatwa point of view, but just simply ethics of, you know, we have the universal like ethics of communication. Right? And we have we have an entire body of literature in our deen that deals with the ethics of communication things like Riba and Jemima and, you know, if then we have these things, right. And I think it's important that we re educate the OMA or educate the new on how to apply those principles in the digital space. So somebody can literally give a HIPAA, about, you
know, a principle and then violate it in the comment section later on, for the
sake. So we kind of disconnected the real world teachings from the digital world. And I think that's going to be from the least from the sonic point of view, I think that's going to be an absolute necessity. Because outside of that the addictive potential of this stuff is it's terrifying. Frankly.
Absolutely. Let's, there's a famous thought experiment by a guy called Robert Nozick. He wrote a book called anarchy, state and utopia. And it's this kind of the idea that, you know, what, if you could create this kind of, it's the, you know, the pleasure machine, you probably heard of it. Where if, let's say, someone could just live the perfect life, where, you know, it's, you know, you just getting pleasure, it's, you know, he's running the perfect life. And he only ever really comes out. He doesn't even come out. It's just he all of all of his like, fluids and things are just handling the matrix. That's it. Yeah, exactly. And the question is, you know, is that better? Is there
something more real than that? And obviously, you know, we as Muslims would say, yes. But I think we might be headed in that direction.
Yeah, terrifying. Anyway, one last question for all of you. And I'm going to start with Moxon yourself.
helped me understand NF Ts. Sure. So NF TS stands for non fungible token. Okay. And the idea is that, you know, this is it's a it's a digital token, it lives on the blockchain. And there are alternatives to the blockchain as well, but we won't go down that route.
the idea is that this this thing, I mean, it's non fungible, right, it's that there's only one of these things. And the way that I would describe them is, they're a really interesting mechanism to, to wrap up an asset in many ways. So what I mean by that is, let's, I mean, there are broadly two types of asset here that we're talking about. We've got real world physical assets. So you know, multi sub alluded earlier to something like gold, or I would add into that bracket, things like, you know, a vintage car, or a physical tangible essence. Yeah, exactly. And then you've got digital assets are things that are, you know, natively digital, and we've probably heard in the past year or
so, you know, the hype around NF T's. They've become particularly popular because of digital art. There's a lot of celebrities that are getting in on buying certain types of NF T. What I wanted to stress though,
Is that NF T's is not equal to just, you know, digital art. That is one use case for them. But in the round, they're a really, really useful asset for doing. Basically what I said earlier, wrapping up an asset, making it live on the blockchain so that it definitely belongs to you. There's a record all their digital copies of it, because it's an image at the end of the day, right? Or an animation or whatever. It's some kind of video. Right? So I that's what I had a hard time understanding. Okay, so somebody owns it. But somebody else has a screenshot of it. Yeah, the classic right click save as camp. Yeah. So I mean, what I would say here is let's just understand the world that we live in to
try and help understand this world. So you know, we've we've talked over the course of this session about this new world, right? So we've talked about the metaverse, we've talked about all of these different things. In the real world, you know, people don't like really going out with, you know, like a fake Gucci top, or, you know, a knockoff, Bentley or, you know, something like that.
It is human instinct, to have, you know, nice things and be able to, you know, show those nice things. And in this world where we have a Metaverse, and you know, you've got your house, your your plot of land, you've got nice things there,
you will literally display if I mean, as I said, NFT is is not just digital art, but if you've got digital art, you will literally display it. And it will be instantly recognizable, if this is a if this is a fake or something real. And these things are gaining more and more
value ascribed to them. So there are certain NF T's that are, you know, very highly sought after. And these things bring with them, you know, rightly or wrongly, I'm not talking about the ethics of kind of materialism here. But these things, bring with them a certain value. And I want to ask you this.
So I, you know, my background was in, in digital design, and I was a design director at a company before and I used to freelance also. And this is all of course, this is why point over time, 1.0 times, right. And even since then, the idea Well, the first place My mind went is Well, are we already in a world where we purchase digital assets that are purely digital and not anything but data. And we certainly do we licensed software, we're in fact, using operating systems that we've purchased, we've, we buy apps on our phones,
and then digital art in the world of graphic design. When I'm supposed to make an ad, or I'm supposed to design a poster or whatever, you go to these image, you know, databases warehouses, and you purchase and license
you know, a graphic,
and you have limited use of it. And though it's a digital asset, you but you had to pay for it. It's nothing tangible that you have in your hands, right. So everything from templates to, you know, graphic design. And of course, software is actually an exchange of digital assets already in the real world. That's not something that any of us are unfamiliar with. What seems to be new to me here in the NFT space is it's, I mean, correct me if I'm wrong, it's specifically art. It's specifically a visual image or an animation of some kind, that's now being considered a unique digital asset that cannot be replicated or not replicated authentically, and is licensed in a sense to one person. So
it's a digital Mona Lisa kind of thing. Yeah. So I would probably say that NF T's are not just art. So NF T's are,
you know, they're a tool to kind of wrap that art up and then for you to then transpose it into the metaverse and do all kinds of other things with it.
But what NF T's can also be used for is to digitize real world assets. So in that example, that I gave earlier, I could buy for example, you know, vintage Ferrari, and for me to kind of tokenize that, or, you know, split that up and sell that off for people to then invest in is a lot easier in this, you know, World of NF T's it's certainly possible right? Now I could make a company I could create, you know, certificates, I could then go out and say hey, do you want to you know, buy a part, you know, one 1% of this Ferrari because it's going to appreciate in value and I'll give you this you know, sharing my company, etc. certainly possible. But in this new world, where you can
instantly verify. Oh, actually, my son did buy this
Vintage Ferrari was real it was from a real dealer. He has got ownership of it. Here is this smart contract that tells me that I will get, you know, 1% of it when I send over however many ether or whatever token I'm sending. So it's, it's, it's, it's the same but different, if that makes sense. Yeah, just trying to understand how like, a use case, like, you know, somebody suggested to me, for example, that for
4 billion people are actually starting to reach out and ask, Hey, can we contribute to sponsoring students by way of,
you know, NF Ts? Can you make can you guys make it sound like I don't know what an NFC is, I don't know what to tell you want me to just do some people just saw my toe up here, and then maybe I should get my toe like, somebody. That's the kind of thing that goes really viral? I think it'll work.
Just judging from the interesting.
I was literally thinking that I was like, I need to take a picture of this and try and record it on the blockchain now.
I think there's, there's actually like a, there's a thought here, which is that, you know, like, the,
the thing that gives value to artwork is our, our society, you know, we don't like looking at like, Monalisa we look like looking at a real one. So, you know, and we've grown up in this society, especially, you know, people under 20 In this meme world. So you know, you've got the Will Smith and Chris Rock meme, doing the rounds, right? You've got all these other memes doing the rounds. Like, you know, if you've been growing up in that world, and now you're in this Metaverse, where you spend at least half your time, the value of digital assets just massively changes. Like you know what you were in the metaverse becomes really material as material, as you know, the real world because you
know, what, why wouldn't it?
Yeah, people are buying enhancements in video games all the time, new skins and things like they're, they're paying money for it. Now, the side of it that I wanted to ask what these are like. So from the Islamic point of view, what are some glaring criticisms? Or somebody might have that say, Okay, well, this is why this violates a shadow principle.
And feasibly, what could they be? It all comes down to utility, right? Every from a Sharia perspective, everything which has utility is beneficial for people is typically permissible, right? Wherever helps people get closer to Allah be beneficial in the world be productive. It all falls in the permissive permissibility. Now, if we look at this space, where people are just gaming spending money on skins within a game, are they wasting time isn't really beneficial for people? Would we want our children's spending 10 hours on some kind of headset? Is that good for them? Right? There's so much, you know, research written on children, and the harmful effects of just gaming
continuously, right? Yeah. So is that something beneficial? These are some of the discussions we need to have, I think as adults and really think about it, and also when it comes to NF T's I think some of the Sharia principles, and I've written an entire article on this is like, if it's animation, and images, of course, one of the first considerations is that the animation should represent something which is lawful to see, right. You can't be mocking people, either through your animation, you can't be violent, or the core principles of the theme. Yeah, all of those things, email, etc, etc, right? Can't do any of that, right. So these are some of the things to consider
when it comes to NF T's an OT, in particular, but then NF T's can also be tickets, right? You get NF T's which are tickets to events, because these two events are unique. So anything which is unique, can be
tokenized by an NF t. So that data can be put into an NF T token, and you'd have access to that thing that you've tokenized, right, or you can have an event at a beta event where you need an NFT for entry. Right? And only if you have an NF T, there's so many things you can do, right. But this is one of the even tokens can be used as a normal token. But these are some of the use cases that we can have, which is beneficial, no problem. It's just another means of
interacting people. I heard somebody raise a criticism to me and you know, I like to give any thought that that is countering what I'm thinking about a real, you know, let it rattle in my mind for a little bit and process it and somebody talked about how, you know, there's a, there's a shadow requirement for an asset to be backed by something.
Right, something along these lines. And I started questioning that idea at its core, you know, I really wanted to understand it well for myself, like
you know, if much of the value in the world in the in the tangible world
comes actually from perception. I mean, even something as tangible as gold has value because humanity has ascribed a value
to it. So with and the dollar or a company, like the stock market, but even something as basic as you know, a vintage car, it is valuable not because it's old, because technically the older a car gets, the less valuable it should be. But there's a perception. And there's a social value. We could call it arbitrary because it's not tangible. But it was ascribed to it as such. And we, the world operates in that way historical documents like these, the Constitution has an enormous amount of value. While the paper isn't, you know, it's worthless scrap, you get much better quality paper at your local paper store. Right? So it's, so I started questioning this idea that you have to have
some kind of tangible or solid backing behind an acid beyond perception, at a principle level. Am I wrong in thinking like this? Oh, I totally agree with what you're saying. Look, there were some scholars classically, like Elon Musk, a few Rahimullah famous jurist. He just mentioned the word aim, which means tangible asset, right? From a legal perspective, yeah. But they were speaking in that context, when a digital world wasn't even, like feasible, nobody would even perceive that. From a Sharia perspective, it's not about tangibility. Neither is about this word, we hear intrinsic value, because what is value, it's just real, it is relative, right? It's a philosophical term. It's
not like a shirt.
But from a Sharia perspective is all about utility. It's all about money for our Nafa. That's the word that fuqaha and jurists use, so wherever this benefit, or whichever asset has benefit, whether the asset is in the real world, the financial world, or the digital world, you can potentially buy that sell that own transfer and all these things. Yeah, so let's benefit for a little bit, let's, let's explore that for a second. So, you know, obviously, a toothbrush has benefit. And,
but but there are things that are in the world of art, in the world of, you know, literature, that are extremely valuable to humanity and to culture,
that don't really have tangible benefit. Or it's not like maybe black and white benefit, like a car or a bicycle or something like that a vehicle that gets you from A to B, right.
Even in the world of education, if I if you know, there's a kids are taking a math class, you say, oh, there's a benefit, or there's a science because oh, there's a benefit, this leads to this, this and this, and they're taking an art class, or they're taking a storytelling, or whatever it is, even in the world of art, there's enormous benefit art, for example, impacts a lot it in it, there's so much data around how art and color scheming and branding and these things impact sales and commerce, and you know, how book is packaged and there's so much that goes into every single successful product in the world that is not related to tangible benefit, or something like or not just using
the wrong word when I say tangible, but really
easily gauge utility. You know, when we say mantha, then one car is actually not necessarily, you know,
a black and white thing, it's a broader, you know, thing and modifier can be relative, depending on who you're talking, you know, you know, someone has a certain space sees a lot of money, find something and someone else doesn't see it at all. So in different industries, different things have value, right? I'm reminded of baseball cards back in the day, right? Those things in America, these things are like, they were a crazy hot commodity. And now even there's a market for people who want to buy this old stuff. And it's, you know, these old pieces of cardboard that are insanely valuable. And I don't see how the the principle that I come back to is okay, so it's an office something
condemned in the the veto or something cuz then you know, overspending, and excessiveness and all this kind of stuff. But that doesn't necessarily invalidate the value, the perceived value of
you know, these kinds of assets. If, if a Muslim that I know is like, Hey, I invested in this baseball card, and I say it doesn't have a real benefit in society, therefore you violated I don't see it that way. I think it's an investment. It's an invested asset. You know, and it has real value in a certain industry. And he's, it's an investment that this person made others that other people are actually you know what my contractor, he buys crazy enough. He buys Nike sneakers like, like, what? There's only four of these ones made. He's got Nike sneakers under like, $10,000 you got an entire gallery in his house of shoes. Right? Has the weirdest dignity that he has. He has sneakers
and he invests in this and he's makes a lot of money doing this stuff, right? It's still the same rubber and leather and shoe laces.
You know, but it's there's a perceived value
So, this is what I wanted to get validation from you on, like, from a from a surety perspective, from a fiscal perspective, how is there a scope? Is there is there a broad scope possible for manfaat? For benefit? You know? Yeah, in 20 There is definitely a broader scope than what is said like, he has to be tangible, right? Of course, as long as nothing is infringing Sharia principles, right. You can get, you can get inspirational benefit, inspirational man far like art, if art I get inspired. Yeah. So that is also a benefit, a mental benefit, it can be emotional benefit, right? Because that's a whole nother dimension that humans humans are made up of so many different parts
right? Now, it doesn't have to be something physically consuming or physically doing, right. But it's benefiting us. So anything which is inspirational, educational, or even physical benefit, all of these are different forms of benefit, which are absolutely fine. As long as it's not infringing any Sharia principle, you can benefit. And I would say the key thing is, it's something which people are naturally inclined to, and they want to do, because people naturally are in Allah designers with a natural inclination towards things which are of benefit to us. Right. Right. Most of the time, generally speaking. Right. Right. So it's a very difficult thing to gauge as well. It's something
which you know, is this common people do? Right? I really want to thank all of you for this really, absolutely remarkable conversation. I think it's a good starting point. I think we got lots and lots of engagement online. So people have thrown up, thrown out a lot of questions, what I'm going to do after this broadcast is done, I'm gonna, if I can get a link to your article of difference, I'd like to post that on the Facebook page so people can read that. And also, you know, if you guys are on Facebook, or any other social media send that my way, so I can post those so people can engage with you and Chawla and interact. If there's a need to have a follow up discussion on some of the more
emerging questions other than my toes, by the way, just for the rest of you, here you go. This is this one's for you. This is for you. Okay, so now that's all your system. But if there are other, you know, consistent questions that are coming intelligent questions that are coming that I think deserve a conversation, perhaps we'll have this conversation again, but this has been really insightful. I really appreciate all of you coming onto this platform and to discuss this and I'm hoping to create a culture of doing that just to you know, if I have a curiosity about something, I just want to go to people that are that are immersed in that space and are experts and are studying
it from a Sharia point of view and also from a real word, world marketplace point of view, and just gain some insights from them. So thank you so very much all of you for coming, and inshallah we'll continue talking at some point