Islamic economics and Islamic finance are not only a set of certain rules on the basis of which the Islamic economic system operates. Unlike traditional Western financial institutions and banking organizations, Islamic finance was largely formed on the basis of a certain worldview, beliefs, thoughts, opinions and ideas.
What are the main differences between the secular and Islamic worldviews regarding the economy?
The worldview of the Islamic economy is based on the fact that a person’s life is a test, according to the results of which he will receive a reward from the Almighty. Islam instills in a person responsibility for all his actions, and therefore the economic and financial component of the relationship is also considered in Islamic finance as part of this test.
Islam does not encourage materialism and therefore economic relations in the system of Islamic finance do not necessarily have to be associated with accurate monetary statistics (for example, income and expenses, exports and imports), although this is important. Islamic finance is aimed at achieving social justice and responsibility to oneself and the Almighty.
Motivation for success in Islamic finance is considered mainly in the context of achieving happiness based not on personal interests, when sellers maximize profits and buyers seek to satisfy their unlimited desires, but on creating conditions where material benefits benefit everyone around them.
In the Islamic economy, decision-making is based on the laws of the Holy Quran, Sunna and Shariah rules, and therefore wealth must be acquired by legal means. Wealthy Muslims have a responsibility to society as a whole, which they fulfill through obligatory zakat, thus increasing the economic well-being of the entire Ummah.
The prevailing type of economy is now guided by logic and reason. It encourages the collection of interest (Riba), which forms the basis of the welfare received by financial institutions. And since the acquired wealth does not flow from legitimate means and there is no responsibility to society in the form of charity, economic well-being is provided only for the elite, which leads to social injustice. And the elite strives to satisfy their desires and needs at any cost, even at the cost of unethical behavior that causes harm and destruction to people or the environment.
In the Islamic economy and in the principles of Islamic finance, there is no direct prohibition on enrichment, but consumers must follow a certain hierarchy of needs. In accordance with this hierarchy, the purchase of a luxury item can be carried out only after the poor and needy are given due attention.
The Islamic economy does not recognize the deficit from the point of view of the secular economic system. Thus, in Islam, the unethical behavior of society, in fact, is not the result of “limited resources”, but rather the result of the greed of society, unlimited desires and the absence of systems in which the receipt of benefits would be based on the principles of general social justice.
There are at least six basic principles that are taken into account when making any Islamic financial transaction. These principles distinguish a financial transaction from a Riba/interest-based transaction from an Islamic banking transaction.
1. Sanctity of the contract: Before executing any Islamic banking transaction, counterparties must verify whether the transaction is halal (valid) in the eyes of Islamic Shariah. This means that an Islamic bank transaction should not be invalid or disputed. An invalid contract is a contract that, by its nature, is invalid in accordance with the rulings of the Sharia. Whereas a contested contract is a contract that by its nature is valid, but some invalid components are inserted into a valid contract. If these invalid components are not excluded from the valid contract, the contract will remain invalid.
2. Risk Sharing: In every Islamic banking transaction, an Islamic financial institution and/or its deposit holder assume the risk of owning a tangible asset, real services or capital before making any profit from it.
3. No Riba/Interest: Islamic banks cannot participate in operations related to riba/interest. They cannot borrow money to earn an additional amount on this. However, as stated above, he makes a profit by taking on the risk of tangible assets, real services or capital, and transfers this profit/loss to the holders of his deposits, who also risk their capital.
4. Economic Purpose/Activity: Each Islamic banking transaction has a specific economic purpose/activity. In addition, Islamic banking operations are backed up by tangible assets or real services.
5. Justice: Islamic Banking instills justice through its operations. Transactions based on questionable conditions cannot become part of Islamic banking. All terms and conditions included in the transactions are properly disclosed in the contract/agreement.
6. The absence of an invalid item. When performing an Islamic banking transaction, it is guaranteed that no invalid item or activity is funded by an Islamic financial transaction. Some items or activities may be permitted by the law of the country, but if they are not permitted by Sharia, they cannot be financed by an Islamic bank.
The teachings of Islam underlying the entire Islamic financial and economic system are not limited to Muslims. They are equally addressed to non-Muslims because of their universal nature. Islamic banks are based on ethical values and a socially responsible system. Values such as fairness, mutual assistance, free consent and honesty on the part of the parties to the contract, avoidance of fraud, distortion and distortion of facts and denial of injustice or exploitation form the basic principles of Islamic banking. Thus, the principles of Islamic finance lead the economic system to achieve the common good and economic prosperity.
All of the above applies to modern digital technologies and digital finance to no less, and perhaps even more. After all, this is a relatively new way of financial and economic interaction. And the future of the entire digital economy depends on how it will be.
IslamicCoin is the first project to provide the community with powerful financial technology that allows for seamless transactions, support innovation and charity. The project is 100% compliant with Shariah law and benefits the community. Developers focus on sustainable development and use technology and innovation to ensure financial sustainability.
“At the heart of Islamic finance is the prohibition on charging interest. Islamic finance has always been focused on not shifting most of the risks to one side of the financial relationship. In Islamic finance, balance and transparency of transactions should be observed, which can negatively affect our society,” says Mohammed AlKaff AlHashmi, one of the founders of IslamicCoin.
IslamicCoin targets 1.1 billion Muslims using the Internet. The project creates convenient tools designed for users who have never been owners of cryptocurrencies. The mission of the project is to provide the international community of followers of Islam with a reliable and promising financial instrument that allows for independent financial interaction, support innovation and philanthropy.
Using the power of the Muslim community, IsalmicCoin can become one of the most important and valuable crypto assets. If 3-4% of the Muslim online community own an Islamic coin, it will become a bitcoin-scale crypto asset, bringing its holders a trillion dollars and $100 billion for the Evergreen DAO.