Is Ethereum Halal? Scholars agree

Is Ethereum halal? A recent publication by a prominent Shari’ah advisory firm agrees.

Ethereum is the biggest decentralized blockchain that supports smart contract applications. The ecosystem is powered by the native cryptocurrency Ether (ETH), which is currently the world’s second-largest crypto with a $201 billion market capitalization. 

There has been a long-ranging question among the Islamic cryptocurrency community, or perhaps new users, on whether Ethereum is halal. Recently, prominent Muslim scholars confirmed that Ethereum is halal – Shari’ah compliant. 

Is Ethereum halal?

Shari’ah is the legal system of the Islamic community derived from the holy book Quran, including the Sunnah and Hadith. The law forbids “lending money to make profits through interest.” Also, Islamic law doesn’t consider money or any currency to be a commodity but rather as a medium of exchange. Hence, it should have no intrinsic value. 

In a recent publication, one of the leading Shariah advisory firms, Amanie Advisors, stated that Ethereum is halal. After analyzing Ethereum’s core functions and initial objective for its creation, the advisors agreed that the Shari’ah law doesn’t affect Ether because it was designed to function as a utility token. 

Ether is used as the transaction fee and reward to compensate miners for performing the requested transaction on the blockchain. 

Unlike Bitcoin which does not have a particular function apart from being the token of the Bitcoin blockchain, Ether is the utility token needed to ensure the Ethereum platform is working properly and sustainable.

Amanie Advisors’ report.

For Ethereum-based tokens, Amanie Advisor noted that they wouldn’t be Shari’ah compliant if used to generate profit from interest, likewise Ethereum, if the developers change the function from utility to an actual currency. They also intend to review Ethereum’s status after the transition to the proof-of-stake consensus mechanism. 

The new report by the Amanie Advisors coincides with previous statements from other prominent Islamic bodies that Ethereum is halal. Back in 2018, the Shariah Review Bureau opined that Ethereum is halal, and buying the coin is allowed under the Shari’ah law. They said there is no form of interest in Ethereum and it can be considered as a property (maal).

What is Ethereum 2.0?

Ethereum 2.0 is the next iteration or version of the current Ethereum blockchain. It marks the transition of the blockchain from proof-of-work to a proof-of-stake mechanism, which will terminate the need for miners on the network. Transaction validations and block creation on Ethereum 2.0 will be achieved through ETH staking. 

Eth2 is expected to launch later in September 2022. It’s believed to be more scalable and will permanently resolve the low and expensive transaction fees experience by users on the blockchain. 

Is Ethereum a good investment plan?

If you are new to the world of cryptocurrencies, there is a good chance you have heard of Ether. It’s the second largest cryptocurrency by market capitalization after Bitcoin. It is a decentralized platform that runs smart contracts – applications that function automatically based on coded agreements. 

There are many reasons why Ethereum is a good investment. First of all, Ethereum is an incredibly versatile platform. It can be used for a wide range of applications, from financial contracts to decentralized voting systems. Ethereum also has a very active development community, which means that it is constantly evolving and improving.

The previous price performance is another reason Ethereum is a good investment. Ethereum has been one of the most successful cryptocurrencies when it comes to price appreciation.

Conclusion

Is Ethereum halal? Many prominent Islamic bodies agree that Ethereum is halal. This is primarily because the token functions more as a utility token, and no form of interest is involved in the token’s operations.