April 12, 2022.
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Disclaimer: Anything you hear in this podcast is an opinion. It is not to be considered personalized financial advice. Make sure you do your own due diligence before making any investment decisions.
I recently reviewed the top 5 cryptocurrencies by Market Cap and revealed my comfort level investing in them from a halal perspective.
I’ve decided to review the next 5 cryptocurrencies by market cap.
I’m going to give you my comfort level investing in Solana, Terra, Cardano, XRP, and Avalanche from a halal perspective.
You can see a full up-to-date list of cryptocurrencies which I’ve reviewed on Practical Islamic Finance.com for free, link in the description.
While generally halal, I think a cryptocurrency can be haram if it is primarily used for haram purposes.
So I will be checking the utilities of these cryptocurrencies to determine my comfort level investing in them from a Halal perspective.
On this topic, When giving my halal ratings for cryptos and assets in general I don’t like to use the terms “Halal” and “Haram” in light of the weight that these words carry.
Instead, I use the terms: Comfortable, and Uncomfortable to represent my ratings and as a reminder to the listener that this is ultimately a judgment call that I am making which could be wrong so do your own due diligence.
Now with that out of the way, all that is left to say is if you're new here my name is Rakaan Kayali founder of practical Islamic finance where we help people globally build wealth in a halal way. If you would like to follow my crypto and stock portfolios and access exclusive content, consider becoming a member link in the description so without further adieu, let’s get started.
I’m going to lump in my review of Solana with the symbol SOL, Cardano with the symbol ADA, and Avalanche with the symbol AVAX together in one review since all three blockchains and their associated cryptocurrencies have the same intended utility and as I mentioned, utility is what is determining my comfort level investing in crytptocurrencies.
Based on this, I find no material ethical differences between these platforms. Rather the differences between them relate to the particular tradeoffs they’ve made in relation to speed, costs of transactions, scalability, security, and degree of decentralization. So they are technical differences not ethical ones.
These three cryptocurrencies and their associated blockchains are all essentially trying to do the same thing which is to compete with Ethereum as blockchain networks that are compatible with smart contracts and Decentralized Applications or Dapps.
Decentralized Applications differ from the Applications we are accustomed to today in that they provide their services to the contracting parties without the need for middlemen.
As an example, imagine an AirBnB type service where the host and the guests could transact directly with one another without having to pay a fee to AirBnB.
This is the vision behind Decentralized Applications and I find nothing inherently haram or objectionable about them.
Certainly some applications, can be built on these platforms which are haram, in which case I would find fault with that particular Application’s creators and not the blockchains themselves which are simply infrastructure providers and I suspect as these platforms mature, the percentage of applications which I find objectionable and are built on them will likely decrease in comparison to the total number of applications.
Similar to how the internet was first built for military purposes but as it matured it became useful for pretty much everything.
Therefore, I am comfortable investing in Solana, Cardano, and Avalanche from a Halal perspective.
Next on our list of top cryptocurrencies is: Terra with the native token LUNA
Terra is a blockchain that issues traditional currency-pegged stable coins.
These stable coins which are pegged to traditional currencies have the advantage of being easily spent, sent anywhere with very little fees and without bank limits.
For example, Terra issues a stablecoin called KRT, which tracks the South Korean won’s price.
Without going into too much detail on the mechanics of how Terra keeps the price of its stablecoins pegged to the traditional currencies they follow, Terra’s native currency Luna is burned when demand for Terra stablecoins is high and its minted when demand is low.
So the price of Luna rises the more there is demand there is for Terra’s Stablecoins.
I find nothing inherently objectionable about stabelcoins, the way in which Terra is issues them, or the role of Luna tokens in this process.
Therefore I am comfortable investing in Terra from a halal perspective.
The final cryptocurrency on our list is: XRP
XRP is the native cryptocurrency of Ripple.
Using XRP, Ripple plans to rival money transfers usually conducted by the banking system.
XRP allows users to send money at a very low cost while offering transaction finality in under five seconds.
Transferring money is not haram nor are the means to enable these transfers to happen.
Therefore I am comfortable with XRP from a Halal perspective.
As I mentioned If you want to follow my crypto and stock portfolios, access privilege content, and a whole host of other perks, consider becoming a PIF member, link to do so is in the description.
Until next time, make sure to take care of yourself.
Assalam ‘Alaikum and peace be upon you all.