Halal Ratings for Solana, Avalanche, Cardano, Terra and XRP
I recently reviewed the top 5 cryptocurrencies by Market Cap and determined my comfort level in investing in them from a halal perspective.
While generally halal, I think a cryptocurrency can be haram if it is primarily used for haram purposes.
Therefore, I will be checking the utilities of these cryptocurrencies to determine my comfort level, investing in them from a Halal perspective.
When giving my halal ratings for cryptos and assets in general I don’t like to use the terms “Halal” and “Haram” in light of the weight that these words carry.
Instead, I use the terms: Comfortable, and Uncomfortable to represent my ratings and as a reminder to the listener that this is ultimately a judgment call that I am making which could be wrong so be sure to do your own due diligence.
Solana (SOL), Cardano (ADA) and Avalanche (AVAX)
I’m going to lump Solana (SOL), Cardano (ADA), and Avalanche (AVAX) together in one review since all three blockchains and their associated cryptocurrencies have the same intended utility and utility determines my comfort ratings.
Based on this, I find no material ethical differences between these platforms. Rather the differences between them relate to the particular tradeoffs they’ve made about speed, costs of transactions, scalability, security, and degree of decentralization.
These three cryptocurrencies and their associated blockchains are all essentially trying to do the same thing which is to compete with Ethereum as blockchain networks that are compatible with smart contracts and Decentralized Applications (Dapps).
Decentralized Applications differ from the Applications we are accustomed to today in that they provide their services to the contracting parties without the need for middlemen.
As an example, imagine an AirBnB type service where the host and the guests could transact directly with one another without having to pay a fee to Airbnb.
This is the vision behind Decentralized Applications and I find nothing inherently haram or objectionable about them.
Certainly, some applications can be built on these platforms which are haram, in which case I would find fault with that particular Application’s creators and not the blockchains themselves which are simply infrastructure providers.
When the internet first started it was strictly used for military purposes but as it matured it became useful for pretty much everything.
Similarly, I suspect as these platforms mature, the percentage of applications that are built on them that I find objectionable will likely decrease in comparison to the total number of applications.
Are Solana, Cardano and Avalanche Halal?
I am comfortable investing in Solana, Cardano, and Avalanche from a Halal perspective.
Terra (native token LUNA)
Terra is a blockchain that issues traditional currency-pegged stable coins.
These stable coins which are pegged to traditional currencies have the advantage of being easily spent, sent anywhere with very low fees and without bank limits.
For example, Terra issues a stablecoin called KRT, which tracks the South Korean won’s price.
Without going into too much detail on the mechanics of how Terra keeps the price of its stablecoins pegged to the traditional currencies they follow, Terra’s native currency Luna is burned when demand for Terra stablecoins is high and it’s minted when demand is low.
Therefore the price of Luna rises the more demand there is for Terra’s Stablecoins.
I find nothing inherently objectionable about stabelcoins, how Terra is issuing them, or the role of Luna tokens in this process.
Is Terra Halal?
I am comfortable investing in Terra from a halal perspective.
XRP is the native cryptocurrency of Ripple.
Using XRP, Ripple plans to rival money transfers usually conducted by the banking system.
XRP allows users to send money at a very low cost while offering transaction finality in under five seconds.
Transferring money is not haram nor are the means to enable these transfers to happen.
Is XRP Halal?
I am comfortable with XRP from a Halal perspective.
Disclaimer: Anything you read in this article is an opinion. It is not to be considered personalized financial advice. Make sure you do your due diligence before making any investment decisions.