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What makes a crypto coin Shariah Compliant?
JoeBradford.net
| 11/16/2021
For those of you concerned with the Shariah compliance of the coins you are buying, Asking yourself these 5 questions will help guide your coin selection:
#1 – It is a store of value.
#2 – It is a medium of exchange.
#3 – Transparency about recourse.
#4 – Tokenomics are not ponzi-esque.
#5 – It has an established or projected, permissible real world use case.
#1 – It is a store of value.
If the coin you want to purchase isn’t clear that the value you exchanged for it is protected by security protocols and safe from malicious devs, then you can’t buy it.
#2 – It is a medium of exchange.
The ability to use the coin is what makes it a coin to begin with. If devs are telling you that you’ll make more money just by holding it, the purpose of why it was made it defeated and there’s something else going on.
#3 – Transparency about recourse.
If it is decentralized, you should not have to worry about rugpulls and hacks. If centralized, the devs should be regulated and you have legal recourse. If it falls in between, it means something is being hidden and not for a good reason.
#4 – Tokenomics are not ponzi-esque.
A ponzi scheme, and similar an MLM, is a means of marketing that takes money from new customers and distributes it to older ones. If your coin has a staking or rewards structure like this, its a scam and money made this way is Haram.
#5 – It has an established or projected, permissible real world use case.
If the coin is simply “for fun” then you’re taking money from others without right and exchanging something with no value. If the coin is for something that is Haram, then it follows it too is Haram. If there’s a roadmap with a clear, permitted use, then its acceptable.
Please note:
This is not an exhaustive list, and the full reasoning for each cannot be listed here.
These five questions are my conclusions up to 15 Nov 2021.
There are other considerations I am still researching, but these 5 are sufficient as rules of thumb. As I improve them, I will edit and update you.
