Is Ethereum Classic Halal?

Is Ethereum Classic Halal?

Ethereum Classic Quick Facts:

Founders: Vitalik Buterin, Gavid Wood, and the Ethereum Foundation.

Date Founded: July 2015 

Current Developers: Open-source software development

Max Supply: 210,700,000 ETC

Practical Islamic Finance Rating: Comfortable

Ethereum Classic (ETC) is an open-source, decentralized, blockchain-based distributed cryptocurrency platform that runs smart contracts. It was created in 2015 when Ethereum’s blockchain split into two separate chains following a disagreement among members of its community.

The old chain that remained after the split became known as Ethereum Classic and has further separated itself from Ethereum over time by adopting a deflationary monetary policy with a hard cap on the total number of ETC that will be created.

Ethereum Classic Utility

Since the split, there have been many upgrades and improvements to the Ethereum Classic project. The goal of the project continues to be working toward becoming a global payment network using smart contracts that can function without centralized governance.

As with other cryptocurrencies, Ethereum Classic will likely continue to strive to be a digital store of value, meaning it can be saved and exchanged while retaining its value. The digital store of value for crypto includes its purchasing power that can be quickly turned into cash or used to buy another asset, similar to money.

The purpose of Ethereum classic is the same purpose of Ethereum which is to provide a platform for decentralized applications and smart contracts.

Therefore the considerations with regard to the permissibility of investing in the native token of either blockchain from a halal perspective are essentially the same.

As a result, just as we are comfortable with Ethereum from a halal perspective, we are also comfortable with Ethereum Classic.

What is Ethereum’s ESG Rating?


Governance refers to the incentive structures, level of integrity, and decision-making processes that control Ethereum Classic.


Generally speaking, it is harder to corrupt systems that are decentralized. This is because decentralization makes it difficult, and sometimes impossible, for a corrupting force to affect all points of influence simultaneously.

To determine Ethereum Classic’s level of decentralization, we will look at three different metrics, nodes, distribution of mining power, and distribution of funds.


A node is a computer connected to the network that stores, spreads, and preserves the blockchain’s data for others to be able to use and download.

Ethereum Classic had around 519 globally distributed nodes as of the date of writing this article. You can find the most recent number of nodes here.

Distribution of Mining Power

The more mining power a single entity has, the more leverage it can exercise over the ecosystem.

Commonly called a 51% attack, if one actor controls over half of the block creation, they can take control of the currency itself.

As for ETC, newly created coins come into circulation every 15 seconds, with miner rewards per block also reducing over time. 

Unlike Bitcoin, which sees block rewards cut by half (50%) every 210,000 blocks, the Ethereum Classic protocol allows for a 20% reduction in block rewards every 5,000,000 blocks. During the last such reduction, the reward was reduced from 3.2 ETC to 2.56 ETC.

Distribution of Funds

Currently, the largest holder of Ethereum Classic (which is not a smart contract) has over 29 million coins (Grayscale Trust). This amounts to about 13.82% of the total supply. 


Similar to Bitcoin, a large criticism of Ethereum Classic is the large amount of energy required to maintain and run the network.


Ethereum Classic enables much more complicated financial structures which can potentially enable Muslims to circumvent the riba-based traditional financial system. 

Practical Islamic Finance concludes:

Ethereum Classic’s governance structure makes corruption and fraud difficult and provides a platform where we can build our own financial infrastructure that is accessible to Muslims everywhere. 

Overall we find Ethereum Classic’s benefits and potential for good to be substantial and the cost of these benefits, especially as it relates to the environment, to be decreasing with time in light of the increased use of renewables in crypto mining.

Comfort Rating

From Ethereum Classic’s utility, lack of any structural reliance on riba, and ESG impact, Practical Islamic rates Ethereum Classic as:

Comfortable to invest in from a Halal perspective.

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Ethereum Classic Whitepaper

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