In order to encourage Muslims to invest in digital currency, a Dubai-based startup has introduced sharia-approved cryptocurrency which can comply with the Islamic faith.
The concept of cryptocurrencies hasn’t gone down well with the Muslim nations. as according to the Islamic faith, the economic activity should be based on real physical assets and not mere speculations.
The new sharia-approved cryptocurrency is backed by one of the oldest and stable assets around the world; Gold
The startup called OneGram reveals that each unit of pf digital value is backed by at least a gram of actual gold that will be kept in a safe. This practice limits volatility and speculation aspect of the cryptocurrency, making it acceptable under Islamic laws.
Islamic teaching frown upon on pure monetary speculation also bans investment in banking products that offer returns via interest payments.
Ibrahim Mohammed, co-founder of the startup while talking to Reuters said, “Gold was among the first forms of money in Islamic societies so this is appropriate. We are trying to prove rules and regulations from sharia are fully compatible with digital blockchain technology.”
OneGram has already issued tens of millions of dollars worth sharia-approved cryptocurrency and will sell 60% of the planned number of coins before listing them on the exchanges before the end of May.
The price of gold is still used to measure how the global economy is doing as is it is unstable, the people will see a spike in the price of the metal. The reason for its acceptance in Sharia is that the gold is a safeguard against economic unrest or inflation as at the end of the day a person will have the physical asset to its name.
Recently, State Bank of Pakistan has banned all forms of cryptocurrency in Pakistan saying that “virtual currencies provide a high degree of anonymity and potentially can be used for facilitating illegal activities.”
Maybe in the future, a gold backed cryptocurrency will change the government’s decision about digital money.