Analysts estimate that the crypto Metaverse could be worth up to $800 billion USD by the year 2024. It’s already changing the way we live, from our working patterns to the way we invest our wealth.

But as practicing Muslims, we have a responsibility to approach the opportunities of the Metaverse with care. We need to ensure that our investments are in line with Islamic values. In a fast-moving space like the Metaverse, it’s never been more important to do research before getting involved.

How does blockchain technology work? Is crypto investing halal or haram? We’re here to help you understand cryptocurrency and the Metaverse from an Islamic perspective.

Read on to find out more about the possibilities of a Shariah-based Metaverse, and how Muslims can integrate into this exciting new world.

What is Blockchain Technology?

Blockchain technology isn’t only used for cryptocurrency, but it is a key part of how cryptocurrencies work.

It’s a decentralised ledger that keeps immutable records of transactions between users. Because all users have their own local copy of the ledger, it’s much harder to alter than a regular centralised system.

How Does the Blockchain Work?

Imagine a database of internal information for a business. All employees would be able to view the same document, stored in one place on the business’s servers. A handful of employees would have permission to make changes to the database.

In theory, any one of those few employees would be able to make unilateral changes to the database without anyone else knowing. That would put the legitimacy of the information at risk, potentially harming the business.

With a decentralised ledger, all users have a local copy of the database. To make verifiable updates, they need to reach a consensus on any new information.

In simple terms, that’s how the blockchain works. Without a single point of failure, it’s much harder for bad actors to manipulate the information it contains. That added security makes cryptocurrency viable.

Blockchain and the Quran

In the early days of Islam, the Quran was compiled in a way that resembles today’s blockchain technology.

Each ‘block’ in the blockchain is linked to the previous block and the next block using cryptography. The link will be broken if anyone alters information in a completed block, which makes the blockchain so secure.

In the process of preserving the Quran, each new verse would be provided to the Huffaz. The record-keepers who protected the Quran would be told where each verse should be recorded in relation to every other verse in the Quran. If we think of each verse as a block in a chain, the comparison to blockchain technology is clear.

So while it may seem improbable, blockchain technology has real precedent in the history of Islam.

What is Cryptocurrency?

A cryptocurrency is a currency that exists on the blockchain. It isn’t tied to a central bank, and it doesn’t have any physical form. Records of who owns what amount of a cryptocurrency are stored securely on the blockchain.

The most popular cryptocurrency in the world is Bitcoin (BTC), with 1 BTC currently worth $46,500 USD. The second most popular is Ethereum (ETH). But while these two coins are the most well-known, there are many more out there, each with a dedicated user base.

While cryptocurrency is exploding in popularity, its uses are still limited. Because each transaction updates each user’s local copy of the ledger, making a purchase with crypto can be very slow. It can also be expensive, with Ethereum requiring extra ‘gas fees’ to complete a transaction.

But if we treat crypto as an investment, not a regular currency, it unlocks a whole world of possibilities.

Why Does Cryptocurrency Matter?

Cryptocurrency is an exciting new way for investors to back projects they believe in.

A project or start-up might sell itself to investors by offering digital assets such as non-fungible tokens (NFTs) in exchange for funding. Ownership of a token might enable the investor to take part in the project in the future.

An investor might also buy cryptocurrency because they believe in its values. This is especially important for Muslims and our commitment to Islamic social ethics.

Is Crypto Investing Halal or Haram?

This question has caused some debate among Islamic communities. Our own view is that as long as the currency or project is halal, then investing in crypto is compliant with Shariah law.

We’re not alone in this opinion, either. Mufti Muhammad Abu-Bakar has written an in-depth Shariah analysis of cryptocurrency.

Crypto and Shariah Law

In Islam, currencies themselves are halal. However, they can be used for haram purposes. Whether cryptocurrencies are considered halal or haram depends on whether you view them as:

  • A currency, and thus halal (but with haram uses)
  • An asset with inherent value, and thus halal
  • Having no value, and thus speculative and haram

To complicate matters, each cryptocurrency uses a different blockchain. One coin might have associated risks that another coin doesn’t have.

Shariah law also prohibits exploiting others to acquire excessive wealth. Some cryptocurrencies may have more scope for criminal activity than others. This would make any investment counter to Islamic values.

Choosing a Cryptocurrency

For anyone looking to invest in crypto, research is vital. This is especially important for Muslims, given the uncertainty about whether crypto is halal.

We have a social responsibility to research coins or projects we want to invest in. The more information we have at our disposal, the easier it is to reach informed conclusions.

From there, we can make choices in keeping with Islamic social ethics and Shariah law.

What is the Crypto Metaverse?

In 2021, Facebook changed its name to Meta and focused on developing the Metaverse – a virtual world meant to look and feel like real life. We can connect to it using virtual reality devices, or by creating an online avatar of ourselves.

But where does cryptocurrency factor into this? In brief, it will be the foundation of the Metaverse.

Blockchain Technology and the Metaverse

Blockchain technology already powers cryptocurrency. It can also ensure that the Metaverse stays decentralised – not owned by any one company. Users will be able to move between various connected digital spaces with ease.

It will also keep track of who owns digital goods so that any user can transfer their digital assets between different spaces in the Metaverse.

Our cryptocurrency and blockchain-based digital assets will be available to us wherever we go online. That includes NFTs, which offer amazing possibilities for Muslim artists to showcase their work on a global platform.

What Will the Metaverse Look Like?

The Metaverse is still in its early stages, and most of its advocates still talk about it in aspirational terms. But we can still make some informed assumptions about the opportunities and principles at the heart of the Metaverse:

  • An immersive virtual reality that interacts with the real world
  • Digital representations of real people in the virtual space
  • An online space that develops and changes even when users are not interacting with it
  • The online exchange of goods and services
  • Independent and fully-functional digital currencies

Games like Roblox offer an early look at what the Metaverse could look like. Roblox lets people create avatars and interact with each other in a 3D digital world. They can exchange in-game currency for assets that let them customise their avatars, and can even create their own games within the game.

Muslim Artists in the Metaverse

In fact, a surprising number of Muslim artists are already using the metaverse to share their art and build an Islamic community.

MetaKawn is an NFT and Metaverse project created by and for Muslims. It aims to create the first Metaverse space for modern Muslims united by their shared Islamic values.

The Muslim American Leadership Alliance (MALA) has also embraced the Metaverse with a new NFT project. These digital keepsakes aim to bridge the gap between Islamic history and Muslim American life today.

MetaKawn Huffaz Club

MetaKawn’s first NFT collection represents the Huffaz. These were guardians of Islamic values who defended the Quran.

The collection contains 6,348 avatars to represent the number of Ayat in the Quran. One Aya will be dropped to the holder of each Huffaz NFT by the end of the holy month of Ramadan. The creators of MetaKawn view this as a way to inscribe the Quran itself into the blockchain.

The avatars in the collection represent a generation of modern Muslims, and grant their owners access to the MetaKawn Huffaz Club. Members have access to exclusive NFT drops and events, and they can vote on how MetaKawn uses its funds.

MetaKawn is committed to supporting Islamic charitable work and social causes, all while respecting Islamic rules against speculation and trading.

MALA NFT Collection

MALA’s first NFT collection features art that displays the beauty of Islamic symbols. In particular, it focuses on the month of Ramadan.

Like MetaKawn, MALA hopes to use NFTs as a means of philanthropy. The proceeds from NFT sales will benefit Islamic social causes. These will include iftars for community members in need, humanitarian relief for refugees, and funding for first-generation students.

But beyond that, MALA intends to use blockchain technology to preserve the work of Muslim artists. Once verified, it is impossible to make changes to the blockchain. Everything recorded in its digital ledger will stay there forever.

By recording important symbols of Islamic values and culture on the blockchain, MALA hopes to preserve them forever. These symbols of Islamic culture will be recorded in the Metaverse for future generations. MALA’s NFT collection ensures that a huge new audience will be able to learn about and appreciate Islam.

Building a Shariah-Based Metaverse

A guiding principle of Shariah law is that unless there is a clear ban in place, anything new can be treated as acceptable.

This encourages Muslims to be innovative and creative, rather than fearing new things. Ideally, we should work to create new things in line with Shariah values.

The Metaverse offers unprecedented opportunities for creativity and entrepreneurial thinking. As Muslims, we have a once-in-a-generation chance to shape the Metaverse to reflect our Islamic social ethics. We can embrace this incredible new technology and make it our own.

When participating in the Metaverse, we need to be mindful of these principles of Shariah law.

Benefit and Utility

Under Shariah law, whatever we do should bring us either worldly or spiritual benefit. This applies to activities in the Metaverse, too.

The law has some flexibility around gaming. However, it also recognises the danger of addiction. The Quran also specifically forbids Laghw, activities which are unproductive and futile.

As such, we need to consider the utility of any action we take in the Metaverse, just as we would in real life.

Shariah Obligations

We know that Shariah holds us to certain obligations, including regular prayer. The law prohibits any activity which interferes with these obligations. It doesn’t matter whether the activity in question is real or virtual.

That means that we aren’t permitted to participate in the Metaverse at the expense of our spiritual duties. The practice of Islam should always come first.

Representing Ourselves

The Metaverse offers huge scope for creativity. However, as with designing and creating in the real world, we need to take into account Shariah law on depictions and representations.

We shouldn’t use the Metaverse to depict anything that Shariah considers unlawful to see. This includes depictions of the Prophet, of ridiculing or mutilating others, or of body parts that Shariah asks us to conceal.

We also have an obligation under Shariah to represent ourselves and others honestly. Fake identities in the Metaverse would be forbidden.

Unlawful Activities

If it’s permitted in the real world, then it will most likely be permitted in the Metaverse. On the other hand, if Shariah forbids an activity in real life, it will also be forbidden in the Metaverse.

Metaverse-based gambling, for example, would be forbidden under Shariah. This would be true of anything considered haram.

Unlawful Trading

Shariah has prohibitions on certain kinds of trading in the real world. Interest-based earning and the sale of risky assets would both be forbidden in the Metaverse, too.

Any goods and services being traded in the Metaverse should also be compliant with Shariah. Again, it’s important for us to research any cryptocurrencies and tokens we want to buy or sell!

An Ethical Investment

At Crescent Wealth, we understand the benefits of developing technologies like the Metaverse. We also understand how crucial it is to live by Islamic values in a rapidly-changing world.

We as Muslims stand to gain a great deal from the crypto Metaverse. We also have a social responsibility to shape its development in line with Shariah values, which are beneficial for humanity as a whole.

We don’t have to compromise our values in order to invest in new technologies. Contact us today to discuss how to invest ethically, charitably and Islamically in your future.

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Chief Investment Officer

Strategic leader with 19 years of industry experience and over 7 years in executive and senior management positions leading small to medium sized multi-functional operations in the funds management and superannuation industry. A record of delivering outstanding investment outcomes for members and a proven track record in driving member engagement through investment education and insights.

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