Crypto-Assets Funds through Islamic

Lens
Webinar at Iranian Association of Islamic
Finance, Monday 13th June, 16:00 Iran
Time. See
https://webinar.iaif.ir/ch/iaifweb

For video of this talk, see:

http://bit.ly/AZcrypto

Before discussing how crypto-assets

work within a society, we must discuss
how the society is organized.
Fundamental Issue: How to Organize
Society?
• Economics
• Politics
• Social Institutions: Family,
Neighborhood, Community
• Environment: Water, Air, Forests,
Plants, Trees
• Other Creations of God: Fish, Birds,
Animals
• Relations with other Societies,
organized differently.
What is the role of MONEY, within a
society?
• The Grand Deception: Social Science
Use of word science makes two false
claims:
• Universal Applicability to all human
societies
• Objective validity similar to the laws of
physics, across time & space
In fact, social science is EUROCENTRIC: It
takes lessons from European historical
experience, and templates for European
social organization, and applies them to
all societies.
See: The Grand Deception: Western
Social Science http://bit.ly/AZgdss1
Two VERY Different Questions
Within a Capitalist Society
• What is the role of money within a
capitalist society?
• How does crypto currency work within
a capitalist society?
• How should muslims, living within a
capitalist society, deal with crypto
currencies?

Within an Islamic Society

• What is role of money in an Islamic
Society?
• How would crypto work within an
Islamic Society?
ANSWER: Crypto currency has no role,
and would not be permissible within an
Islamic Society.
Further explanation requires looking at
historical contexts.

The Revolution of Islam

• 14 centuries ago, ignorant and
backwards Bedouin were transformed
into world leaders. Islamic Civilization
enlightened with world with
knowledge for more than a 1000 years.
It developed unique forms of political,
economic, and social organization.
• European barbarians conquered
decaying and degenerate Al-Andalus,
steeped in luxuries. They acquired the
treasures of millions of books.
Translations of these books ended the
dark ages of Europe.
• New knowledge conflicted with
Catholic teachings, led to creation of
Protestants, and more than a century
of bloody factional warfare.
• The Great Transformation to Capitalism
• Religious warfare led to need to create
knowledge without religious
foundations. But all human knowledge
must be founded on a moral basis
• This led to the creation of a deceptive
form of knowledge, which claims to
 objective, but has hidden moral
foundations.
• Secular Modern Knowledge CLAIMS to
be universal, objective, based purely on
observations and logic, verifiable by all
rational human beings.
• The Puzzle of Western Social Science:
http://bit.ly/AZpss
• The Origins of Western Social Sciences:
http://bit.ly/IR3owss

Key Elements of Great Transformation

European societies were like other
societies across the globe, built on
foundations of generosity, cooperation
and social responsibility. To understand
European thought, we must study the
historical events which led to the rise of
the opposite principles of greed,
competition, individualism, and
hedonism.
• Industrial revolution led to the
production of MASSIVE amounts of
surplus. What to do with it?
• Social Norms: Change from self-
sufficiency to consumer society.
PURPOSE of life is to maximize
consumption!!
• Creation of money, and social compact
to honor money.
• Surplus marketed for money, which
creates claims on future purchasing
power. PURELY a social construct, valid
because everyone accepts its validity,
enforced by governments.
“The Great Transformation in European
Thought” http://bit.ly/AZGTET
Creation of New Social Constructs
• Objects which exist due to social
consensus.
Among the fresh gods, the biggest is the
nation – the dress it wears is the coffin of
religion (Iqbal)
• Imagine a world without countries: By
consensus, we agree to disregard
national boundaries and legal
frameworks.
• Imagine a world without money.
GOAL of thought-experiment is to
liberate our minds from the narrow
boundaries of the market economy.
How to think out-of-the-box
Learn about the boxes created by
Western education, and spread of
market society: Three Mega-Events
Which Shape Our Thoughts: see:
http://bit.do/azgt4
• Excess Production => Market Society
• Rejection of Christianity => Positivist
Ontology & Epistemology
• European Global Conquest =>
Colonized Minds in East
In particular, Social Science is the DEEN
(way of life) of secular modernity,
directly opposed to the FIQH of Islam.
Failure to recognize Social Science as
DEEN leads to enormous confusion in
Islamic Societies.
Market Society Versus Islamic Society
Market Society
• Money is necessary for survival
• Competition
• Greed
Labor Market requires poverty
EVERYTHING is for sale. Money can buy
everything. Goal of life is to make
money.
Islamic Society
• Social Responsibility
• Cooperation
• Generosity
Human lives are infinitely precious
The most important things are NOT for
sale. Money can ONLY buy secondary
goods.
What is Money (worth)?
• Everything in a market society: Goal of
life is pleasure, power, profits.
• Useful for comforts and luxuries, but
not for essentials. Not essential in an
Islamic Society. Goal of life is success in
the Akhira, achievable without money

Types of Money
To understand different types of money,
we must focus on the following
questions:
• Who can CREATE money?
• What are the mechanisms used to
create TRUST in money?
• How is the value of money
determined? Is this anchor stable?
The Capitalist System
See: The Battle for the Control of Money:
http://bit.ly/AZRiba1
Should Government or Private Banks
create money?
Currently, in capitalist world, 90% or
more money is created by financial
sector. High Finance controls the
Western world.
In the third world, financial penetration
is lower. 30% of money is created by
private banks.
Crypto is an attempt to break
stranglehold of the financial sector, but
does not deliver power to the people.
Crypto:
• Who can create it? Private sector
entrepreneurs with access to
specialized skills and with low energy
costs.
• Mechanisms to create value and trust?
ABSENT.
• Value for Islamic World? Negative
See: Future of Money: Cryptocurrencies
& Libra http://bit.do/azfom
Current Monetary System
• USD is global currency, equivalent to
gold.
• System created by Nixon shock in 1971,
renouncing Bretton-Woods.
• Creates enormously lopsided global
trading system. USA prints paper, all
other countries must increase exports
to get this paper.
See: A Lopsided Monetary System:
http://bit.ly/AZlms
A Brief History of Money
• Pre-1850: trading within colonial
empires
• 1850-1914 WW1: emergence of gold
standard
• WW1-WW2: Transition period,
attempts to restore gold standard
• 1944-1971: Bretton-Woods Era: Dollar
linked to Gold
• 1971-1990: Floating Currencies; Petro-
Dollar is the new gold.
• 1990 onwards: De-regulation, creation
of shadow banking and derivatives.
Massive creation of shadow monies,
including crypto, validated by a
crooked financial system.
To have opinions (and to give fatwa)
about money, we need to know this
history. Money cannot be understood
outside of its historical and cultural
context.

The Way Forward for the Islamic World

• Create economic and monetary
integration (like Europe)
• Create common currencies, fluid
borders, the “gold” dinar
• Use labor backed currencies, or
petroleum plus labor, or community-
based currencies.
• Use the idea of currency as a public
resource.

Monetary Dilemma: Who should create

money?
• Capitalist System: Financiers create
money, creating massive concentration
of wealth and power.
• Proposed Alternative (MMT: Modern
Monetary Theory): Governments
should create money, on behalf of
public. Problem: governments
everywhere are corrupt.

Islamic Solution: Public-Private

Partnership
For details, see: Islamic Monetary Policy:
http://bit.ly/AZRiba1
Local Communities should create money,
backed by public guarantees.
Money creation must be directed at
productive activities.
Job Guarantee Program: Everyone
enabled to contribute productively to
society, and provided with sufficient
money for this contribution.
Life-Loans: All babies born should be
guaranteed money for health, education,
and all basic needs required to become
productive citizens.

Concluding Remarks
• Islamic teachings launched a revolution
in world history 14 Centuries ago.
• The last revelation of God to humanity
is still just as powerful as it was 14
centuries ago.
• Today, Muslims have stopped looking
to the Quran for guidance. Instead they
are looking to the West (crypto, etc.)
• This problem arises because of shock-
and-awe of Western knowledge.

A Solution to this problem is offered by

the Ghazali Project
• The Ancient Mu’tazila were awed by
Greek philosophy, and wanted to put it
on par with the Quran.
• The Modern Mu’tazila are in awe of
Western knowledge and want to put it
on par with the Quran: See:
http://bit.do/aztmm
• The Ghazali Project is the solution to
the problem of the Mu’tazila
Three Steps of the Ghazali Project
• Deliverance from Doubt: Build
strong faith in Quran, as the source
 of wisdom, far superior to Western
sciences.
• Incoherence of Western
Philosophers: Exposing the false
foundations on which Western social
sciences have been built.
• Revival of Religious Sciences:
Rebuilding all structures of
knowledge on the powerful and deep
foundations provided by the Quran
and Sunnah.
For details, see: The Ghazalian Webinars:
http://bit.ly/AZwebinars