One Company’s Cryptocurrency That Could Disrupt The Current Islamic-Friendly Lending Programs…
Microfinance is believed by many to be the potential key to helping fight even the most stubborn strains of poverty. The BBC reported that “microcredit lifted 10 million Bangladeshis out of poverty between 1990 and 2008.” Think 10 million is a lot? Well, the truth is that microfinance could be helping a number of people exponentially larger.
Though it seems to have made quite an impact on Bangladesh, microlending has barely made a dent in helping a pervasive demographic of poverty: Muslims.
Did you know?
“An estimated 72 percent of people living in Muslim-majority countries do not use formal financial services (Honohon 2007). Even when financial services are available, some people view conventional products as incompatible with the financial principles set forth in Islamic law,” according to CGAP.
Islamic law forbids paying or receiving interest — a.k.a. riba. Therefore, most Muslims simply refuse financial services that would positively impact their lives. This means many Muslims in third world countries would sooner choose life-threatening poverty over an after-life threatening risk.
Still… there are few Muslims silently but deliberately violating Islamic laws in order to build better futures for themselves. Money lending is a crucial part of the process of buying a home, financing a car, and investing in a business opportunity. Microlending — albeit on a much smaller scale — is still money lending. That means that no matter how they do it, investing in their future means investing in guilt and shame, too.
Over the last few years, several Islamic-friendly lending programs have sprouted up throughout the world to help solve this problem. They provide creative alternatives to circumvent the laws against riba by creating joint-owner partnerships or charging lease fees instead of interest. However, the differences between these programs and other microfinance programs are largely semantic.
Loopholes are enough to skirt Islamic law,
but is “skirting the law” truly honest in the eyes of Islam?
I’m no Islamic scholar, so I don’t have an answer to that. The truth is that there are still millions of Muslims rejecting microfinance products despite the fact that there is a niche market for Islamic-friendly, halal “loans.” So how do we help those 72% of people living in Muslim countries and refusing financial services to let us help them?
L-Pesa is one microfinance platform to get excited about — as it may have an answer to this. Their team is creating a solution that isn’t solely driven by “finding the loopholes” in Islamic law. Rather, they’re looking far enough forward that their eyes are set on such advanced innovation that religious violation is rendered irrelevant.
Hello, Kripton Coin.
The Kripton Coin is L-Pesa’s new cryptocurrency that is about to make an enormous impact on the economy as we know it. One Bitcoin now sells for $15k+ so taking a loan to buy one requires good collateral — not to mention: plenty of stress. For Muslims, such a loan also requires choosing finances over faith once again — an impossibly difficult decision that makes most simply refuse the concept of financial services altogether.
Instead, L-Pesa is introducing a coin so cheap that even L-Pesa’s microlending customers seeking to put an end to their poverty can afford it. Buy L-Pesa coins and then wait for them to grow in value. They’re predicted to skyrocket. When the coin value gets high enough, you can use a few Kripton coins to trade for Bitcoin, Ethereum, or cash. This way, you avoid loan repayment hustles — and eliminate the need for paying interest. This isn’t to say the L-Pesa hasn’t already quietly helped plenty of Muslims. The tragedy is that their effusive emails of thanks must be kept secret for fear that they’ll be cast out by their communities and society. The beauty of trading cryptocurrency coins to gain wealth is that it can happen completely commission-free. No ounce of fear need be mixed with something providing so much good.
This is not only the future of our economy — it’s something quite different from what halal lending programs have established thus far. It’s trading. And what does Islamic law say about trade?
“By differentiating trade from usury, the Qur’an reaffirms the practice of trading as a respectable profession. The importance of trading partnerships has motivated financial intermediaries to find creative ways to help Muslims access loans without violating Islamic law,” says CGAP.
So. Any Muslims out there? I’d love to ask you directly: if you could choose between a program specifically designed to function through religious loopholes or a brand new system that renders the need for looking for loopholes unnecessary… which would you choose?
SOURCES:
http://www.nytimes.com/2005/08/07/realestate/for-muslims-loans-for-the-conscience.html
https://theislamicworkplace.com/2011/08/21/some-rules-for-borrowing-or-lending-in-islam/
https://www.kiva.org/blog/kiva/2012/05/01/kivas-approach-to-lending-and-islamic.html
http://www.cgap.org/publications/islamic-microfinance-emerging-market-niche
