Is Ethereum compatible in Islamic finance? by Wan Hafizi Wan Halim & Mohd Daud Bakar (Devcon4)

basically Sharia is something that is close to my heart because by profession I'm the Sherriff scholar advising a number of client throughout the entire world and one of our newest client it's hello goal the first sharia-compliant coin or token I wish you happened us a few months ago and we look forward to have more and more products on the crypto on the blockchain on this but only to be indoors a sharukh compliant because you know why we have been listening to many speakers we have to be inclusive we have to open up the whole industry to be not exclusive but to be able to interact and to embed with everyone on this planet and perhaps Sharia is the new entrant to both of you to consider how the share can work together to make your products your sub products your upstream and downstream services and products are compatible to something that the Muslim at large would like to be part of the whole industry so I have a few slides to go through basically so this is some of the table of content that we have to go through I'm gonna advise us it's my own company I set up the company what 12 years ago base in KL kuala lumpur in dubai and some other countries around the globe so we do what we are best at to look into the sheriff principle we service financial products and nowadays technology and I'm personally very interested and very keen to look into in and out of the technology and we are now working with helium to provide the Sharia what pepper hopefully we can launch the white paper in the next few weeks if not you know a few days to make sure that we have something to contribute and to share the Sharia high-level micro perspective on this technology and how could this product can be a role by beyond you know beyond specific segments of the client and the market so this is some of the what we do in the past 12 years this our Sharia what scholars we have engaged reputable people from across the world to give the endorsement you know why because whenever it is endorsed by a group of scholars who are well recognized internationally the product could be received without any you know hesitation and without any fear or any dispute by the world community this is what we do I will skip some of the issues perhaps not relevant to you but you can see from the from the slide we do almost everything product development enhancement and audit to make sure that whatever we endorse is taken all the way through until the end of the day to sustain the share a compliant feature of the product this is a funny I said two point three trillion very small industry but growing at the sea AG are 20% a year then going to grow bigger and bigger and hopefully with the technology this technology with the big data we did you know active intelligence and the blockchain will push further the technology industry further because it is now become borderless and everyone can participate both who are bankable and both who are not unbanked many Muslims around the globe they are not back they are not bankable so then expected my technology to be part of the whole industry and this is the revolution we are looking into Muslim in Indonesia and the part of the world they have the desire to be part of the system but they can because they are not bankable as yet but this much technology we have seen that happening around the globe can push up the market share of this industry hopefully in the next five to ten years and we can achieve a higher market share of differential access of the world some of the numbers you might be interested to know where is if I'm finance at the moment in both Islamic countries and also non-islamic countries in UK in United Kingdom in Hong Kong such Africa in Europe we have some spot of the activities happening around the globe but not on blockchain as yet on their born and fun and the banking and you know all the sophisticated products purely financial in nature so what is a fine and I tried to make it simple for everyone it's a final is basically a system which is based on transparency based on traceability and away from the interests or if you like the usually component of the financial products because there is a very first prohibition and a fine and we cannot charge interest on money lend out because money has no value we need money to exchange to buy goods and services of course if everything is free of charge in this world there's no value for money from the Sharia perspective we need money to simply buy and you know and pay for our needs in the society so this is the whole idea but to impose a premium on the money lent out is something that which is not permissible not only under Islamic perspective and the other religion as well because it is very much giving something which is beyond the full meaning of medium of exchange the second element is about uncertainty and it's very important for the blockchain and encrypt us because it can help to fight again anything which is dubious which is not clear enough which is uncertain which is not up to the standard to make sure that finance is beyond any issues of uncertainty and the third is very much gambling or you've liked game of chance we have to put aside any products any transaction which is very much you know based on a game of luck a game of chance at the end of it is you have to be real in your economic activities you have to put the money in real economy to generate wealth for the whole society you cannot simply go to the bank put the money in the bank and expect to be rewarded by putting the money in the bank or by simply putting the money in the casino and what-have-you so this is something that Islam would not be you know tolerant with because this is not only not good from the ethical perspective it does not help to grow the economy in the long term next please so Kryptos Sobe were I'm also a scholar for the last 25 years I didn't hear anything about cryptos but I was part of the other group of scholars in the world we were astonished to see how the world has responded to the if you like blockchain revolution at any point in time and we were invited by a default not by the Denko to look into what would be the sharing aspect of these Kryptos and i started doing my own research attaining so many seminar conferences try to understand what is basically crypto is all about and I have given many lectures and what have you there is a history and which will call me up and invite our money to be part of the consultant to put the Sharia mindset to look into the eternal foundation this is my country and the ether at the end of the day to see how to make everything compatible to the sheriff principle so that everyone in this world can be part of the whole revolution of cryptos and we are very excited we are at the end of the journey and for help in the next few weeks we can share the white paper that we have worked together our money Virgil and Activia cook one of good friends supporting us all the way to make sure that the paper is ready for the consumption of the whole community of course and a crypto there are three issues currency which is the most debatable issue at the moment the commodity weather is a commodity or token of utility or just neither so we are we are putting our own thought our own process and we have discussed for each and every aspect of it whether it is a currency or which is a commodity or it is neither earthly speaking if I can share with you my point of view I would argue that Kryptos subject to the technical compliant M of cryptography and blockchain and high standard of the technology they are not currency in nature but they are a good medium of exchange not amounting to currency so this my personal point of view which I'm trying to argue and put it in many other seminar and conferences and I am very friendly to the Kryptos hopefully that will be the new digital currency in the future next this is important slide I think we can take away this like with you this is what I'm trying to say and to share with you Shara is very close to Kryptos and the blockchain because Sharia Islam in general is based on five important vertical decentralized we don't have centralized system even for the interpretation we do have one comment institution to dictate we open up the freedom of expression safety and security we try to help to protect the interest in the rights of the people at the end of the day change of data perhaps again you are not aware of in Islamic history from for the last 1,000 four years ago we don't have blockchain by then of course we do have the data we have the technology but we have used the change to reinforce the security of data so we have many many transmitters they have to transmit the knowledge for one person to another and that quality of transmitters should be reinforced by the number the quality of notes if you like in the current time they cannot spur in the past we call transmitters of the knowledge and the data and they are immutable and fairness and transparent these are the fourth vehicle of sheriff compliant perspective and perfectly you know suit the whole architecture and algorism of blockchain and smart technology to a large extent status of ETA I will skip this one basically we are putting the right the final conclusion on either we are finalizing the research and we are very much you know saying that it is a Shariah compliant token that can be used for many other transaction but we have to share with rich you and with the whole community the basis of our argument and next I will skip this one okay it's either a compliant we have to wait for that okay otherwise there's no more fun to share in the next few weeks and smart contract I am very intrigued at smart contract a very shut up compliant I can see it now I can share with our smart countries very much our compliant and very very happy to see that because it has all the political and features to make sure it is sure a compliant and provided no we have to exclude the purpose the sector and the features which are complain like all the alcohol and non halal food and so and so forth this interior you cannot run away we have to stick to that sector which is prohibitive but the rest other than these three four or five restricted sectors the rest should be sure compliant and acceptable and the last one fizzy would be this is something little bit at the moment proof of work which is not the issue proof of stick we are almost there persuade speaking and not to cut my other surely about scholars I would personally argue proof of stake it's not only sure a compliant but it is the best way of doing thing to make sure we can cut cost it can give more efficiency to our own system and we hope that prof estate will be a new technology to support the whole industry with that I would like to thank you very much okay and I would like to end my presentation by quoting the Mithila tic Martin Luther King when he was saying there's always the right time to do what is right and the time is right to do Sharia and cryptos thank you very much yeah more than happy to the easy question only hello thank you very much for taking the time to talk to us about this topic it's very fascinating one question I do have you quickly mentioned it so proof of stake is inherently some type of form of getting interest on your investment so if the whole system would rely on such a consensus algorithm with that inherently make ether non sharia-compliant and would you still consider smart contracts therefore to be sure you're compliant thank you yeah it is very much on a compliant we caught it at the enhancer the value of the whole system cheaper faster quicker and safer if you like and anything that can lead to that high level of satisfaction that is should we shall compare remember my slightest now we have to offer three things only interest or usually a gambling or uncertainty and the rest it's a free world for everyone to do [Music] definitely from my perspective it is not a currency it is not a commodity it is a new way of doing T it's a medium of exchange but not amounting to currency as I speak at the moment so it's very unique because it has all the features of currency medium of exchange to a value unique measurement and what have you but it might like you might like some of the element of it so at the end of the day it might not be harmful to use it as the currency acceptable to the community given any community in the world so this is my very much sharia-compliant way of looking at it as we speak please sorry I think you're managing yes sorry I have to follow the okay so you had a slide about this but I was wondering if you could elaborate more on the principles you said of like the crypto community the things that we value that overlap with some of the things that you talked about you had like the five things on the slide yeah yeah could you talk a little more about that sure but we need one over for that I mean okay basically we are more than happy to put that in our slide that mean email or whatever after this because in it's very much a society discussion because the five vertical just now because these are the very fundamental of Sharia and how blockchain sorondo DC from the very first day of Sharia 1400s ago this are the vertical of the financial dealing in Sharia it is about transparency it's about you know the proof of security and what have you so they I'm very delighted to see how the blockchain comes and how the crypto comes to reinforce this kind of five vertical of the Sharia financial algorithm for the past how many years or centuries but identity I can go through because we'll take some time I'd want to take other speakers time if you allow me to say that thank you one quick question following up on for those of us who very interesting topic thank you by the way feel really well presented I appreciate that for proof of stake where it's sort of considered a good community reward that does something very useful can you just it would be really helpful to owes it those of us who don't have the nuance on what bad interest is because people call the proof of stake reward interest in the Western systems and so what is like a bad interest that would have made it like not allowed and regular okay interestingly I was being engaged by some other colleagues someone in the in the fertility and I have gone through the discussion I don't need this interest from the share a point of view it might not you might call interest but interest has many meanings in the financial chénier recall carried interest recall you know many other thing interest but they are not clinically from the clinical definition interest from share perspective because it's not a guaranteed amount of money given to your stick in the in the platform number one number two you are coming as a membership so if kind of membership kind of structure and you might have some reward for taking that risk initially so and move and on and on at the end of the day I can sum up with confident for me personally this not only interests and this is away from interest and this is something a smart way of doing to cut cost and to make sure that the proof of stake is the way forward to do any but doing about the interest internet we use for many other thing which is not interested in SN even in the financial world at the moment I'm third year process of trying to achieve compliance where have you been where were the biggest hurdles throughout the entire process if you're trying to achieve compliance and ensure compliance which are perspective where have like where were the biggest hurdles you know where biggest problems and the biggest problem isn't trying to get solution yeah I think we have to see whether it has all the features of whatever you mentioned no issue of interest and and gambling and uncertainty everything should be transparent and the purpose of you issuing any token should be sure a compliant I mean in Islam we have certain prohibitive sectors like tobacco sorry for some of you you know the the the weaponry the liquor and what have you so we have to respect that kind of sector and in the rest we can roll out the technology without any problem you mentioned that you consider either a medium exchange but not a currency I would confused how how would it be considered medium exchange but not a currency yeah I think one of the points you made is that it's not globally accepted he has a currency and just another currency but making if a currency is only used with one one nation or one communities that doesn't disqualify it as yeah I think I would I would agree to that point of view because to be deem as currency it should be accepted by the whole community but at the moment it is not the case it is a currency within the group and that is good enough because we can use the you know the ETA on the interim platform to buy and sell it is good enough to transact and to behave like one which is not necessarily currency from shallow perspective it doesn't matter either way you call it currency or you call it token of utility as law it can serve the purpose for you to buy and sell goods this is good enough and from from that perspective here ok so I got one so I'm talking with the with you with it the proof of stake research team and they want to know hypothetically if there were zero rewards and there was only transaction fees would that improve proof of stake in relation to Sharia compliance I'm neutral on debt that's it yes you