In one of our articles, we have already considered the possibilities of Islamic crowdfunding and talked about how this method of financing correlates with the rules of Islamic finance and Shariah. In this article, we will delve into the topic of Islamic crowdfunding and talk about the benefits for the Muslim community of such a way of investing in the field of financial relations.
Meeting the needs of the Ummah
Crowdfunding, in fact, unites sponsors with companies, projects and companies. If the need for financing is attractive to the market or a segment of potential sponsors, it will have good crowdfunding prospects. This is a manifestation of one of the unique attributes of the Internet – the ability to form online communities with similar interests.
Muslims form one giant global community with strong fundamental similarities, preferences and identity. A large and diverse Muslim population is both an opportunity and a challenge for Islamic finance. A common standardized approach to Islamic finance can lead to greater division when one segment of the community accepts it while another segment rejects it.
Islamic crowdfunding platforms can potentially solve this problem by creating standards for checking projects according to Sharia norms. The introduction of such standards will make the Ummah more united and allow Muslims to choose and create systems in which financial interaction will meet their needs and beliefs.
Balancing the wealth of the Ummah
The laws of Islam and Sharia say that wealth is entrusted to us so that we can use it for good, and not to accumulate it to satisfy excesses and attachment to money. The world Muslim Ummah has huge amounts of funds, but they are not distributed evenly. It can be noted that over the past few decades, a significant part of the financial surplus of the ummah has gone to consumerism, and significant investments with high net worth have been spent on the purchase of ostentatious luxury goods.
At the same time, the Muslim population worldwide tends to be concentrated in low-income developing countries and emerging market economies. Turkey, Indonesia, Pakistan, Kazakhstan and a number of other Muslim-majority countries are among the most promising emerging economies today. The next few decades are likely to be a period of strong and sustained growth in the global Muslim community, despite geo-economic problems and internal growth problems. And in order for this to happen faster, Islamic investments and crowdfunding should be aimed at developing and improving the well-being of the most financially vulnerable segments of the Muslim population. Crowdfunding can and should be a priority area of financing and supported by the rules of Islamic finance to promote investments in ecosystems and charity, which effectively and transparently direct funds to companies, projects, charities and people.
One of the most popular financial services provided by Islamic financial organizations is related to the availability and ease of lending. However, most Islamic microfinance companies operate in countries with high financial risks and very few opportunities to expand their customer base.
Islamic crowdfunding in microfinance activities, based on the interest-free loan model (charity loan), has great prospects due to the fact that this method of financing is more than any other associated with raising funds for the development and improvement of the models of microfinance companies. People applying for small amounts are mostly those who would not be able to get financing from traditional financial institutions, mainly due to the lack of official income documents or credit history problems.
Thanks to the introduction of crowdfunding, microfinance companies can apply more flexible approaches to approving funding requests and increasing demand for Islamic crowdfunding platforms. Moreover, it is very difficult for most of them to rely on their own financing because of the above problems.
Potential for creating new financial flows
Good, trustworthy platforms that create and test crowdfunding projects and proposals that are attractive to the Muslim community will attract more and more funds in the next few years. As the volume of crowdfunding funds grows and meets the needs of both sides of the financing market, the market needs digital platforms for fast and high-quality implementation. Imagine a world in which zakat is distributed directly to the most needy at the touch of a button. You just go online, browse open campaigns and choose one or more to donate. Crowdfunding is truly an unprecedented opportunity for the Muslim world to revive and rebuild the community by pooling finances and ensuring their reasonable and responsible distribution.
The HAQQ blockchain can be used to create projects and platforms for Islamic crowdfunding with a high degree of efficiency and trust. This blockchain network fully complies with the rules of Sharia, has its own digital currency and a Fatwa issued by well-known Shariah scholars.
The Evergreen DAO Fund, funded by the issue of Haqq base tokens and managed by network participants, is designed to support innovative projects for the international Muslim community. High bandwidth makes Haqq an ideal tool for implementing digital crowdfunding campaigns.
Islamic Coin is a digital currency conforming to the norms of Islam and Shariah, functioning in its own blockchain Haqq, which means “Truth”. Already at the stage of closed sales, IslamicCoin aroused huge investor interest and was able to raise more than $ 200 million in just a few weeks. Unlike technically outdated Bitcoin and Etherium, which have a lot of problems, IslamicCoin uses the full power of the most progressive blockchain technologies and is based on the most fair and reliable ideology and rules of conduct.
Successful investors choose ideologies, technologies and prospects based on something more than minor fluctuations in price charts. For almost 20 years of the existence of a new type of digital money, cryptocurrencies have not brought a drop of real value into this world, have not made people free, independent and happy. And this means that it’s time for a new type of finance based on responsible choices and new values!