Last updated on June 29th, 2023 at 04:24 pm
Introduction
The use cases for cryptocurrency and blockchain technology are continually expanding across various domains, including areas related with faith or religion. Though unlikely at first glance, the intersection of cryptocurrency and blockchain with Islamic finance is gaining significant traction.
Islamic finance, a sector valued at $4.2 trillion and projected to reach $5.9 trillion by 2026, encompasses financial activities that adhere to the principles of Islam. These activities are Sharia-compliant and permissible (halal) within Muslim communities. Despite the massive size of the Islamic finance sector, the crypto industry has yet to fully embrace this predominantly unrepresented community.
Recognizing this gap, the founders of Islamic Coin embarked on a mission to create a project specifically tailored to the needs of the Muslim community. Islamic Coin is a cryptocurrency that operates under the principles of Islamic finance, ensuring its compliance with Sharia law.
With its first-mover advantage, Islamic Coin has the potential to become a catalyst for the active participation of the 1.8 billion-strong Muslim community in the world of cryptocurrencies.
This article explores the unique nature of Islamic Coin, its benefits, and the challenges it may encounter.
An Overview of Islamic Coin: Bridging Islamic Finance and Cryptocurrencies
Financial activities within Muslim communities are conducted in accordance with the principles of Islamic laws, known as Islamic finance. These principles emphasize fairness, transparency, and risk-sharing.
Unlike conventional corporate finance, Islamic finance prohibits interest-based transactions (riba) and speculative activities like gambling (maysir), which are considered “haram” or forbidden in Islam. Islamic finance focuses on promoting social responsibility, investing in ethical products, and mitigating financial risks.
Traditionally, the cryptocurrency market and the Islamic finance industry have operated separately due to perceived conflicts between Islamic banking principles and the nature of cryptocurrencies.
However, projects like Islamic Coin aim to bridge this gap by combining the principles of Islamic finance with the innovative features of cryptocurrency, creating new opportunities, fostering inclusivity, and providing representation for the Muslim community.
What is Islamic Coin?
Islamic Coin is a pioneering initiative that merges cryptocurrency, blockchain technology, and the principles of Islamic finance. It introduces the world’s first Sharia-compliant cryptocurrency, Islamic Coin (ISLM), specifically designed to adhere to Muslim laws while facilitating the exchange of goods and services.
One notable feature of Islamic Coin is its community-driven governance structure. Token holders possess the authority to influence the direction and decision-making process within the community through voting.
By shifting the focus from cryptocurrency as a speculative asset to a utility-driven asset, Islamic Coin aims to foster greater Muslim participation in the cryptocurrency market while upholding its beliefs and ethical values. It presents an opportunity for Muslims to actively engage in the cryptocurrency space without compromising their principles.
How Will The Islamic Coin Work?
Islamic Coin is based on the Haqq blockchain, a decentralized network that allows open participation, similar to public blockchains like Ethereum. However, to maintain an Islam-compliant crypto community, the network verifies projects using a blockchain oracle to ensure their adherence to Sharia principles. Verified projects are awarded a Halal verification badge, allowing the community to easily identify them as Sharia-compliant.
The Haqq blockchain employs the Proof-of-Stake (PoS) consensus mechanism to verify transactions and secure the network. With high throughput and instant finality, the Haqq blockchain confirms transactions swiftly, making it well-suited for projects requiring instant finality.
The Haqq blockchain is also compatible with Ethereum and supports Inter-Blockchain Communication (IBC). Developers already working on Ethereum can deploy their contracts on the Haqq blockchain without needing to learn a new programming language. Moreover, Haqq is interoperable with other blockchains on the Cosmos network.
Both Islamic Coin and the Haqq blockchain are Halal products, meaning they were created in accordance with Islamic principles. Similar to other cryptocurrencies, holders of Islamic Coin can utilize their coins as they see fit.
Evergreen DAO
The Evergreen DAO oversees the activities of the Islamic Coin community and the Haqq network, aiming to foster community growth and benefit Muslim communities worldwide.
Decision-making within the DAO follows the governing laws set for its operation. It operates as an independent entity with a Sharia board and a council, allowing Islamic Coin community members holding ISLM coins to participate in governance.
Tokenomics: Century Coinomics
The total supply of ISLM coins is fixed at 100 billion, with only 20% entering circulation at project launch. The remaining ISLM coins will gradually be released into circulation over 100 years.
ISLM is used for gas fees in Haqq network interactions. Validators mint a new ISLM coin each time they verify transactions using the network’s Proof-of-Stake (PoS) consensus mechanism. These newly minted coins serve as rewards for validators and delegators.
The Evergreen DAO receives 10% of newly minted ISLM coins. The DAO would have accumulated a total of 10 billion ISLM coins by the time the last coin is minted.
Builders and developers are also rewarded with Islamic coins for their contributions to the Haqq blockchain. Additionally, 50% of the gas fee paid by users for interacting with decentralized applications (dApps) on the Haqq network is allocated to the respective dApp creator. This incentivizes developers on the Haqq blockchain and fosters innovative development.
How To Buy Islamic Coin
Islamic Coin private sales to accredited investors ended on May 15, 2023. The team has promised to make Islamic Coin available on different crypto exchanges upon its official launch. There are currently no ways for the public to buy the Islamic Coin, and any such campaign is a scam.
Potential Benefits of the Islamic Coin Project
The success of the Islamic Coin project can bring about significant advantages for both the crypto community and the Muslim community. Let’s delve into these benefits in greater detail:
For the Muslim Community
- Ethical Investment: By participating in a Sharia-compliant ecosystem, Muslims can invest in projects that align with their beliefs. The management of Islamic Coin is based on Islamic principles, making it a suitable medium for investment in new projects that share similar values. Unlike investing in well-known cryptocurrencies, investing in Islamic Coin is not considered a speculative activity.
- Representation: Islamic Coin actively represents the Muslim community in the cryptocurrency market. By incorporating Muslim finance laws into the realm of cryptocurrencies, Muslims become integral members of the overall crypto landscape and are encouraged to introduce innovative ideas.
- New Opportunities: The adoption of Sharia-compliant cryptos, such as Islamic Coin, opens up new avenues of opportunity. In Sharia-compliant finance, transparency holds great importance. By leveraging blockchain technology as a tamper-proof solution, compliance can be maintained effectively. This enables the realization of fairness and risk sharing, as stipulated by Islamic finance principles.
For the Crypto Community
- Increased Participation: Islamic Coin provides a platform for welcoming new participants into the cryptocurrency industry. Muslims with a good understanding of Sharia-compliant finance can confidently engage with cryptocurrencies that align with their beliefs. This helps alleviate uncertainties that Muslims may have regarding the crypto industry.
- Improved Investment Opportunities: The success of a Sharia-compliant cryptocurrency can introduce a fresh wave of investment opportunities for crypto enthusiasts. While most crypto investors are accustomed to the volatile nature of the market, less-volatile Sharia-compliant cryptocurrencies like Islamic Coin offer an avenue for diversifying portfolios and reducing risk exposure.
Challenges and Criticisms of The Islamic Coin Project
The success of the Islamic Coin project and other Sharia-compliant cryptocurrencies hinges on overcoming certain challenges. Let’s explore some of these challenges in detail:
Regulation
The introduction of Islamic-compliant cryptocurrencies can potentially prompt a wave of new regulations within the crypto industry. Sharia finance itself is a complex financial system, and cryptocurrencies are still lacking clear regulatory frameworks.
The amalgamation of Sharia finance and cryptocurrency creates intricate problems and ambiguous regulatory guidelines. Operating within such an environment might prove problematic for Islamic Coin.
Slow Adoption
Some potential users may harbour reservations or have limited awareness about holding a cryptocurrency specifically marketed as Sharia-compliant.
Sharia-compliant cryptocurrencies are still finding their footing in the market and will likely require a considerable amount of time to gain widespread adoption. Even individuals well-versed in the crypto space may need time to accept and embrace these cryptocurrencies.
Market Uncertainty
The cryptocurrency market is notorious for its volatility and speculative nature. Most participants in the market are primarily driven by profit motives, leading to irregular trading patterns and unstable market conditions. This volatility may not align with the investment preferences of individuals seeking moderate-risk investments that adhere to Sharia laws. Sudden spikes or drops in the value of Islamic Coin can pose challenges for investors seeking stability and consistency.
In Conclusion,
- Looking ahead, Sharia-compliant finance is expected to continue growing, with new markets and opportunities emerging.
- Projects like Islamic Coin have the potential to reshape the financial landscape by addressing the specific needs and values of the Muslim community. This can drive greater adoption and acceptance of cryptocurrencies, paving the way for wider financial innovation and engagement.
- The project not only promotes diversity, inclusivity, and financial empowerment but also showcases the compatibility of blockchain technology with different cultural and religious contexts.
- As the industry evolves, it will be interesting to see how the challenges to ISLM adoption are addressed and how Sharia-compliant cryptocurrencies evolve to meet the needs of their target audience.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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