Permissibility of blockchain-crypto currencies-crypto tokens-metaverse and digital assets.pdf

Permissibility of blockchain, crypto currencies, crypto
tokens, metaverse and digital assets
By Sayyid Mansoob Hasan
FCMA, ACIS, Accredited Mediator & Arbitrator, Certified Lead Assessor
Certified Blockchain Solutions Architect-CBSA
Certified Blockchain Developer Ethereum-CBDE
Email: mansoob.hasan@yahoo.com
Contents
1.0 Background.................................................................................................................................2
1.1 The great confusion................................................................................................................2
1.2 About the author....................................................................................................................4
2.0 Definitions ..................................................................................................................................5
3.0 Parameters for determining permissible (Halal) and impermissible (Haram).........................6
4.0 Blockchain technology ...............................................................................................................6
5.0 Blockchain projects ....................................................................................................................7
5.1 Blockchains.............................................................................................................................7
5.2 Crypto exchanges ...................................................................................................................7
5.3 DeFi – Decentralized finance .................................................................................................7
5.4 Gaming....................................................................................................................................8
5.5 Gambling and speculation .....................................................................................................8
6.0 Currency/crypto currency..........................................................................................................9
7.0 Trading of fiat currencies .........................................................................................................10
7.1 Trading of crypto currencies ................................................................................................10
8.0 Blockchain tokens.....................................................................................................................10
8.1 Crypto tokens/currencies.....................................................................................................10
8.2 Stablecoins............................................................................................................................10
8.3 Tokens backed by assets/projects.......................................................................................11
8.4 Tokens backed by nothing ...................................................................................................11
8.5 Security tokens.....................................................................................................................11
8.6 Utility tokens ........................................................................................................................12
8.7 NFTs non-fungible tokens ....................................................................................................12
8.8 Governance tokens ..............................................................................................................13
9.0 Mining of crypto currencies .....................................................................................................14
10.0 Metaverse.................................................................................................................................15
11.0 Digital assets.............................................................................................................................15

Permissibility of blockchain, crypto currencies, crypto tokens and digital assets
V-1.0 Dated: 14-Aug-2023 Page 2 of 16
1.0 Background
1.1 The great confusion
Blockchain technology is often likened to, and sometimes even interchangeably associated
with, cryptocurrencies, particularly Bitcoin. The fluctuations in the value of Bitcoin, coupled
with substantial financial losses incurred through investments in cryptocurrencies, have
triggered significant debates and uncertainties about the legitimacy and permissibility of both
blockchain technology and cryptocurrencies. Nonetheless, it's important to recognize that
blockchain stands as a groundbreaking innovation with substantial potential for practical
application across diverse sectors such as finance, supply chain management, healthcare, and
education. Despite the promising real-world applications, the ongoing controversies have
imposed obstacles on the widespread acceptance and adoption of blockchain technology.
Throughout history, religious leaders have grappled with the integration of evolving
technology into their beliefs and practices. From the advent of hot air balloons to the
recognition of the Earth's rotation, from the invention of the printing press to the utilization
of loudspeakers and television, the world has witnessed a transformative journey of religious
ideologies transitioning from initial resistance to eventual wholehearted acceptance. A
notable shift has occurred as religious leaders, who initially rejected innovations like the
printing press, have since embraced these advancements by publishing their own literature.
Even those who once shunned television have now established dedicated television channels,
YouTube platforms, and social media pages.
Religious scholars have also engaged in discussions concerning the compatibility of Bitcoin,
cryptocurrencies, and blockchain technology with religious principles. Despite these
discussions, their opinions often lack practicality and universal acceptance due to several
reasons:
a. Disconnection Between Religious Education and Academia: A significant disconnect
exists between religious educational institutions and academia, as well as other
professional institutions. This disconnection hampers the comprehensive
understanding and evaluation of technological innovations like cryptocurrencies and
blockchain within the context of religious teachings.
b. Misalignment of Religious Education and Real-World Applications: There's also a
general lack of alignment between religious education and the practical dynamics of
modern business and society. This discrepancy makes it challenging to form well-
rounded opinions on the practical implications of using cryptocurrencies or blockchain
for financial transactions.
c. Insufficient Understanding of Business, Economics, and Finance: Religious scholars
often lack practical knowledge of business, economics, and finance, which are critical
aspects for comprehending the intricacies of cryptocurrencies and their potential
impact on financial systems. This knowledge gap can hinder the formulation of
informed opinions.
d. Application of Outdated Business Practices: There is a tendency to misapply primitive
business practices to the complexities of contemporary business, economics, and
finance. This misapplication may lead to inadequate assessments of the potential
benefits and risks associated with cryptocurrencies and blockchain technology.
It's important to note that these challenges have led to divergent viewpoints among religious
scholars, with some embracing the idea that cryptocurrencies align with certain principles of

delayed gratification and alternative financial systems, while others emphasize the elements
of uncertainty and gambling-like behavior due to their price fluctuations.
The realm of Islamic banking and finance serves as a prominent example highlighting the
challenge religious scholars face in their endeavor to reshape conventional banking into an
interest-free framework. The process of redefining financial terminology has found
acceptance primarily among those who lack familiarity with the intricate workings of
conventional interest-based banking. Conversely, individuals with financial literacy are
inclined to dispute the assertion that practices within Islamic Banking truly embody the
concept of being "interest-free".
In conclusion, the challenges posed by the lack of practicality and consensus among religious
scholars stem from the disconnection between educational institutions, the disconnect from
real-world applications, inadequate financial knowledge, and the application of outdated
practices. These challenges are reflected in differing opinions about the compatibility of
cryptocurrencies with religious principles and the potential benefits they could offer within
the Islamic financial landscape.
In the face of contemporary challenges, the call for contemporary solutions becomes
imperative. Even the divine invitation of Allah Almighty encourages humanity to engage in
thoughtful contemplation and proactive endeavors that align with the demands of the present
era.
As of today, the need to address modern complexities necessitates an approach that
resonates with the dynamic nature of our times. Allah's message prompts us to adapt,
innovate, and seek solutions that are relevant and effective within the context of today's
world. This alignment between divine teachings and contemporary problem-solving
underscores the timeless wisdom that guides us towards finding meaningful resolutions for
the challenges we encounter.
To address the contemporary challenges before us I have provided guidelines below
encompassing two crucial components:
a. The foundational principles upon which the determination of permissibility (Halal) and
impermissibility (Haram) can be established. These principles are not limited to the
specific matter at hand, but are also applicable to other business practices, as well as
personal and business finances.
b. A conclusive statement appended to each section, definitively indicating whether the
matter is deemed permissible (Halal) or impermissible (Haram) according to these
principles.

1.2 About the author
I, Sayyid Mansoob Hasan, am a Fellow Member of Institute of Cost & Management
Accountants of Pakistan, Associate Member of the Institute of Corporate Secretaries of
Pakistan, an Accredited Mediators, Certified Lead Assessor and Blockchain Certified
Professional (Solutions Architect and Ethereum Development).
I have over 32 years of professional experience as a Practicing Accountant and at Senior
Management Positions including member of the Board of Directors (Mutual Fund and
Investment Advisory Company), Head of Internal Audit and CFO of Modarabas, Modaraba
Management Companies (Islamic Financial Institutions) and a Corporate Brokerage House. I
have provided consultancy and other services to all sizes of public and private sector
organizations.
I have been involved in the lawmaking process of Pakistan and have contributed in the
development of Companies Act, 2017 at various stages, as well as in the development and
updating of various other regulations.
I am engaged and regularly contribute in the regulatory processes of the Capital Market of
Pakistan i.e. Pakistan Stock Exchange (since 2015) as the Member of Permanent Panel of
Arbitrators. I have conducted many arbitrations as the Sole Arbitrator, Member of Sub Panel
and Chairman of Sub Panel of Arbitrators, and Appellate Panels.
I have been notified by the Sindh Revenue Board, Government of Sindh as a member of the
panel of persons for the formation of Alternative Dispute Resolution Committees under the
Sindh Sales Tax Act, 2011.
I have chaired the Dispute Resolution Committee established under the Insurance Ordinance,
2000 for Southern Region comprising of Sindh and Baluchistan provinces from 2015 to 2021.
I have also served as the Chairman of SAFA Task Force to develop a strategy to combat
corruption in SAARC Region (2014) and worked on “Corruption in Financial Institutions of
South Asia”. SAFA is the South Asian Federation of Accountants.
Besides this I have also been blessed with the knowledge of religious scriptures.

2.0 Definitions
Definitions of some important terms are given hereunder:
a. Blockchain – Blockchain is a decentralized and distributed digital ledger technology that
allows multiple parties to record transactions in a secure and transparent manner.
b. Commodity – A commodity refers to a raw material or primary agricultural product that can
be bought and sold, typically without significant qualitative differentiation across different
suppliers. In other words, commodities are basic goods that are considered nearly identical,
regardless of the source or origin. These goods are usually traded on commodity markets and
serve as essential building blocks for various industries and economic activities. Commodities
include agricultural commodities, energy commodities, metal commodities, soft commodities
and financial commodities.
c. Currency – Currency refers to the system of money that is used as a medium of exchange in a
particular country or region. It is a generally accepted form of money that facilitates
transactions, trade, and economic activities. Currencies come in various forms, including
physical banknotes and coins, as well as digital representations stored in electronic systems
like bank accounts and digital wallets.
d. Investment – Investment refers to the allocation of resources, typically money or capital, with
the intention of generating income, appreciation, or some form of future benefit. In financial
terms, an investment involves committing funds to an asset, such as stocks, bonds, real estate,
mutual funds, or other financial instruments, with the expectation that the asset will increase
in value over time, generate income, or achieve a specific financial goal.
e. Interest – In finance, interest typically refers to the cost of borrowing money or the return on
investment. When you borrow money (e.g., take out a loan), you often have to pay interest
on top of the borrowed amount. Conversely, when you invest money, you might earn interest
on your investment over time.
f. Metaverse – The term "metaverse" refers to a collective virtual shared space, merging
physical and virtual reality, where users can interact with each other and digital environments
in real-time. It's often described as a fully immersive, interconnected digital universe,
encompassing various virtual worlds, augmented reality, and other digital experiences.
g. Speculation – Speculation refers to the act of engaging in financial transactions or investments
with a higher degree of risk, often involving the purchase or sale of assets (such as stocks,
commodities, real estate, or currencies) in the hope of making a profit through price
fluctuations. Speculators typically base their decisions on anticipated future market
movements rather than intrinsic value or fundamental factors of the asset.
h. Trade – Trade refers to the exchange of goods, services, or financial instruments between
individuals, businesses, or nations. It is a fundamental economic activity that facilitates the
distribution of resources and allows for specialization, efficiency, and economic growth. Trade
can occur within a local or domestic context, as well as on an international scale. It can involve
the buying and selling of physical products, such as commodities, consumer goods, and
industrial equipment, as well as intangible services like consulting, banking, and tourism.
Trade can take place through various channels, including markets, online platforms, direct
negotiations, and more formal arrangements like trade agreements. It plays a crucial role in
driving economic development, promoting competition, and enabling access to a wide range
of products and services that might not otherwise be readily available.

3.0 Parameters for determining permissible (Halal) and
impermissible (Haram)
Before answering any question there is a need to establish and understand the parameters
for determining the permissible and impermissible. With reference to wealth, economics,
business and finance following principles serve as the guidelines:
a. Haram/impermissible or Illicit wealth encompasses gains acquired through criminal
activities, cruelty, deception, and coercion.
b. Halal or permissible wealth encompasses earnings derived from labor, trade, industry,
agriculture, or services.
c. Sharing profits is permissible, whereas taking interest is prohibited.
d. Engaging in gambling is considered Haram, or impermissible.
Now let us examine blockchain, blockchain projects, crypto currency, crypto tokens, NFTs and
Metaverse, and investment and trading in crypto in the light of the principles mentioned
above.
4.0 Blockchain technology
Allah Almighty, the Creator of the Universe, has invited His fellowmen to ponder on His
creations, the Universe, the skies, the world, whatever He has created between them and in
them. This includes the systems and mechanisms. Those who ponder and do research find
new things and are called innovators. This formula works for everyone not just for Muslims.
Blockchain technology as we all know has been created by using the earlier technologies which
were already in use and were benefitting the people of the world.
Key characteristics of blockchain include:
a. Decentralization: Instead of a single central authority controlling the ledger, a
blockchain is maintained by a network of participants, often referred to as nodes or
miners. This decentralized structure enhances security and resilience.
b. Transparency: Every participant in the network has access to the entire blockchain's
transaction history. Transactions are recorded in a way that is transparent and visible
to all participants, making it difficult to falsify information without consensus from the
majority.
c. Security: Cryptography is used to secure transactions and data on the blockchain.
Transactions are bundled into blocks and verified by participants in the network
through a consensus mechanism (e.g., Proof of Work or Proof of Stake) before being
added to the blockchain.
d. Immutability: Once data is added to a block and confirmed by the network, it
becomes extremely difficult to alter or delete. This immutability is achieved through
the cryptographic linking of blocks and the distributed nature of the network.
e. Smart Contracts: Blockchain platforms like Ethereum introduced the concept of smart
contracts, which are self-executing contracts with the terms of the agreement directly
written into code. These contracts automatically execute when predefined conditions
are met.
Blockchain technology has applications in various industries beyond cryptocurrency, such as
supply chain management, healthcare, finance, voting systems, real estate, and more. It offers
a way to achieve trust and transparency in environments where intermediaries or central

authorities might traditionally be required. However, it's important to note that while
blockchain has many advantages, it also has limitations, including scalability issues and high
energy consumption in certain consensus mechanisms.
It is always the use not the technology that determines the nature of its being good or bad.
Internet or blockchain is like a knife neither good nor bad inherently. The use makes the action
and the user a good one or a bad one.
Conclusion
Inherently blockchain itself is not Haram/impermissible rather it is a blessing as it paves way
for various solutions to the problems of humanity which were earlier difficult to solve or were
impossible.
5.0 Blockchain projects
These projects use blockchain as an enabling technology for their use cases, these include:
▪ Blockchains
▪ Crypto exchanges
▪ DeFi – Decentralized finance
▪ Gaming
▪ Gambling
▪ Many others
Each platform is used for specific purpose and has a specific user base no general
permissible/impermissible categorization of all the blockchain platforms is possible.
To determine whether a blockchain platform is permissible (Halal) or impermissible (Haram)
we need to look at the objectives and modus operandi of the platform in the light of the
principles note above.
5.1 Blockchains
Blockchains are computer programs that run on various machines and create network
platforms. These platforms facilitate various other programs to run on them.
Conclusion
Inherently no network platform / blockchain is illegitimate or impermissible. It depends on
the use cases.
5.2 Crypto exchanges
Crypto exchanges enable listing of various crypto tokens and facilitate their trade and
settlement.
Conclusion
Since, they too are platforms built on the blockchains to perform business activities they are
also not inherently impermissible (Haram), thus permissible (Halal).
5.3 DeFi – Decentralized finance
Presently all financial systems are based on renting of money and the rent is known as interest
charged at a fixed rate over a period of time. DeFi or decentralized finance is no different. It is

also based on interest and primarily operate on blockchains using crypto tokens as assets and
liabilities.
Conclusion
DeFi (Decentralized Finance) protocols, as well as investments and trading in DeFi products
that are based on interest, are impermissible or Haram.
5.4 Gaming
Gaming software whether based on blockchain or otherwise are developed with human
efforts, knowledge and skills. They provide learning, entertainment and in many cases develop
they various skills also. Some games are violent and have graphic content.
Various items as collectibles and game utilities are offered by gaming Apps as In-App
purchases. These items can also be gifted to other players. These items enhance the gaming
experience of the user. As playing games itself is not impermissible (Haram), in-App purchases
of game items or their transfer is also not impermissible (Haram).
It's important for individuals to exercise discretion and judgment when engaging in gaming
activities, ensuring that they align with religious values and principles. Ultimately, the
permissibility of playing games rests on the intentions behind engaging in such activities and
their potential impact on one's behavior and beliefs.
Conclusion
Games and playing games are not inherently impermissible (Haram). Games having violence
cannot be treated as impermissible (Haram), however playing such games should be avoided.
Games with graphic content may fall in the category of impermissible (Haram) as they might
incite sins.
5.5 Gambling and speculation
Gambling, by its very nature, is deemed impermissible (Haram). Speculation, another form of
risk-taking, also falls under the category of gambling, making it likewise impermissible
(Haram).
While opinions may vary regarding activities like raffles or certain games, the core principle
remains unwavering: reliance on luck or chance to gain material benefits contradicts the
religious value of earning through honest labor, effort, and knowledge. Such practices, which
disproportionately impact vulnerable individuals, are not only deceptive but also contrary to
the teachings of Islam.
In summary, the consensus within religious teachings is that gambling, including speculative
activities, is incompatible with the principles of the faith. Both gambling and speculation are
condemned due to their potential for harmful consequences and the undermining of honest,
hard-earned livelihoods.
Conclusion
All forms of applications, methods, and platforms that involve gambling, including speculation,
are impermissible (Haram).

6.0 Currency/crypto currency
Currency is a medium of exchange established over a period of time to facilitate exchange of
values when the barter of commodities became impossible and unviable. Further necessitated
by the shortage of precious metals as compared to value and volume of global trade and
investments.
To understand this a very basic international trade example can be looked at that Country A
needs 5 million barrels of crude oil from Country B and can provide one hundred thousand
sheep and/or some more goods.
Two basic questions arise here whether Country B needs any sheep and what is the value of
those sheep.
We have a valuation method available today and we know that 5 million barrel of oil is worth
USD 505 million @ $ 101 per barrel and one hundred thousand sheep are worth just USD 80
million @ 800 for a good sheep. To fill in the gap Country A may offer more of its products
which may also not be needed by Country B, so this barter is never going to happen unless a
third country which could accept sheep and other goods from Country A and provide the
goods needed by Country B. But the chances are too remote.
If this trade is tried to be done in the form of anything backed by any precious metals then
having precious metals of this value and physically moving that with security would be even
more challenging. International trade would come to a halt.
Let us take another example. The GDP of the USA for the year 2022 was USD 25.46 trillion, of
China it was USD 18 trillion and of Pakistan it was USD 376.53 billion. GDP is broadly the value
of goods and services produced and made available for sale in the country. You need some
mechanism to pay for the price of good and services.
Keeping the multiplier of 3.5 for Pakistan in mind, it would require USD 107.58 billion worth
of precious metal in reserves to create a precious metal backed currency just to facilitate the
economic activities of Pakistan. The same way you can calculate the requirements for China
and the USA and the rest of the world.
So, a difference mechanism is needed, and the paper-based currency (whether backed by any
precious metal or not) is currently the solution in practice.
The power to issue currency lies with the government. No other institution or organization
can issue currency legally in order to maintain the integrity and trust worthiness of the
currency.
CBDC – Central Bank Digital Currency would be just digital representation of the same
government backed paper currency.
Crypto currency is a wrong term that has come in use, all crypto currencies are crypto tokens,
which we will discuss in the crypto tokens section.
Conclusion
Currencies are medium of exchange issued and guaranteed by the governments to facilitate
economic activities and are legitimate.

7.0 Trading of fiat currencies
Although there is a worldwide market of foreign currencies and about USD 6 trillion worth of
trade in currencies happen every day. The pricing mechanism of the foreign currencies
although is stated to be based on demand and supply but practically it is deceptive and is
governed by the policies and decisions of the leading powers.
Further, currencies are not commodities and they represent wealth of sovereign countries.
Their value cannot be determined by mere demand and supply.
Conclusion
Both of these factors make the trading or engaging in speculation of fiat currencies
impermissible (Haram). Exchanging currencies for value transfer or trade is permissible (Halal).
7.1 Trading of crypto currencies
The principle applicable to trading of fiat currencies apply equally to the trading of crypto
currencies too.
8.0 Blockchain tokens
There are various types of blockchain tokens in use:
▪ Crypto tokens/currencies
▪ Stablecoins
▪ Tokens backed by assets/projects
▪ Tokens backed by nothing
▪ Security tokens
▪ Utility tokens
▪ NFTs
▪ Governance tokens
8.1 Crypto tokens/currencies
All crypto currencies are crypto tokens designated for various use cases. Crypto currencies are
native tokens of the blockchain and are used for value exchange, etc. Bitcoin and Ether are
two examples of native tokens denominated as currencies. However, there is a huge
difference in the primary purposes of both the tokens. Bitcoin is primarily used for value
transfer and store of value, whereas Ether is primarily used to purchase gas to run smart
contracts on the Ethereum network. Ether is also used for value transfer and store of value
but this is not it’s primary purpose.
Other tokens have different purposes e.g. ERC20 tokens and ERC721 NFT non-fungible token.
Conclusion
Crypto tokens are not inherently impermissible (Haram). Impermissibility of Bitcoin has been
discussed in more details in point 8.4.
8.2 Stablecoins
Stablecoins are tokens pegged with some real-world assets or some fiat currencies and are
programmed to maintain stable values. They are primarily used for value transfer and can also
be used as a store of value.

Conclusion
Stablecoins are not inherently impermissible (Haram). Their use for value exchange and store
of value is permissible (Halal), however, engaging in trading or speculation in stablecoins are
impermissible (Haram) like other fiat or crypto currencies.
8.3 Tokens backed by assets/projects
Many projects use tokens for raising money to run the platform and its organization. The
tokens gain value over a period of time based on the effectiveness and popularity of the
platform. Supporters of these platform make investments in their tokens to provide financial
resources. Increase in the price of their tokens is a reward for the efforts and solutions they
provide. Ether (of Ethereum) and MATIC (of Polygon) are good examples of asset/project
backed tokens.
Tokenization of real-world assets like gold and oil is becoming common. These tokens allow
investors to make smaller amounts of investments in tokenized assets or a pool of assets. As
the investment in real-world assets is not impermissible (Haram) so is investment in their
tokens.
Conclusion
Investment in tokens which are backed by assets are permissible (Halal), however trading or
engaging in speculation in these tokens is impermissible (Haram).
8.4 Tokens backed by nothing
There are many projects which use tokens not backed by any assets. They are neither utility
tokens nor security tokens. They don’t represent anything. They are just used for getting
money. Many of such projects are also deceptive in nature and cause losses to investors.
Investments in such projects have high probability of being lost forever as there are no assets
for recovery of the investments.
Neither Bitcoin nor Bitcoin Protocol also has any assets at the back, and investment in Bitcoin
is totally speculative in nature. Strangely Bitcoin is not considered while imposing any
restrictions on crypto currencies and related projects. It is protected by the invisible hands on
one pretext or the other.
Conclusion
Investment in any token which is not backed by any asset comes under the definition of
speculation and thus impermissible (Haram).
8.5 Security tokens
These tokens are digital representation of debt or equity instruments their equivalent version
in the form of “Book Entry Securities” is already in fashion since long ago. They are governed
by the corporate laws of the countries of the issuing entities. They are very useful and effective
use case of blockchain tokens.
Conclusion
Security tokens being digital representation of debt or equity instruments are not
impermissible (Haram), thus permissible (Halal).

8.6 Utility tokens
Utility tokens are a type of digital or crypto tokens that are issued by blockchain-based
projects or platforms and are primarily used to access specific products, services, or features
within that ecosystem.
These tokens derive their value from their functionality or utility within a particular application
or network.
Conclusion
Utility tokens being digital representation of membership, usage rights or usage units are not
impermissible (Haram), thus permissible (Halal).
8.7 NFTs non-fungible tokens
NFTs, or non-fungible tokens, are distinctive digital representations that hold the potential to
embody a variety of concepts, from art to memberships. The permissibility of NFTs is
contingent upon their intended use, rather than being inherently impermissible (Haram). For
instance, if an NFT represents membership to a wine club, it would be deemed impermissible
(Haram).
The realm of NFTs intersects with interpretation and choice, especially in the context of art.
Art, in and of itself, is not considered impermissible (Haram), while idolatry remains
unequivocally prohibited (Haram). Furthermore, mediums like photography and videography
have evolved into indispensable educational tools. Modern education heavily relies on visual
aids such as sketches, photographs, and videos to convey foundational scientific principles.
The value attributed to art is intrinsically subjective, residing in the eye of the beholder.
Monalisa's painting, currently valued at $860 million, serves as a prime example of this
subjective valuation. The appreciation and willingness to pay such a significant sum stem from
the ardor of art connoisseurs. Yet, in a mundane marketplace, the same painting might not
even fetch $86 thousand.
Digital art, much like traditional art, embodies human effort, knowledge, and skill, thereby
possessing value. It can be marketed as a unique NFT or duplicated multiple times as a digital
asset on various marketplaces.
It's important to note that NFTs are not uniform; they manifest diverse applications and carry
distinct attributes. An NFT represents a unique digital or physical asset, enabled by the
amalgamation of blockchain's decentralization and the distinctiveness of non-fungible assets.
These tokens can breathe life into assets that were previously challenging to monetize or
establish ownership over.
NFTs can extend beyond the boundaries of art into realms such as gaming, where they
facilitate the trading of digital gaming assets. The educational and collectibles sectors also find
value in NFTs. Moreover, they have permeated decentralized finance (DeFi), offering
themselves as collateral for loans.
NFTs can be considered permissible if they don't represent anything that ridicules or disfigures
religious personalities, violates modesty, or contradicts religious principles.

NFTs embody a complex landscape with potential applications across art, gaming, education,
and finance. Their value is both subjective and multifaceted, subject to the perspectives of
individuals and communities.
Conclusion
NFTs are not inherently impermissible (Haram), their permissibility remains rooted in their
purpose and content, reflecting the broader consideration of ethical and legal contexts.
However, engaging in their speculation is impermissible (Haram).
8.8 Governance tokens
Governance tokens serve as digital representations of ownership or equity within a platform,
primarily utilized within Decentralized Autonomous Organizations (DAOs). These tokens play
a pivotal role in facilitating decision-making processes related to platform operations and
services. Much like a general meeting of shareholders in a traditional company, governance
tokens enable a democratic mechanism for decision-making. Unlike traditional companies,
however, DAOs leverage these tokens to achieve decisions collectively and more frequently,
as proposals are routinely put forth and voted upon using governance tokens.
DAOs represent a shift from conventional corporate structures by relinquishing centralized
control in favor of participant-driven decision-making. These organizations often oversee
decentralized finance (DeFi) protocols, where participants influence actions such as profit
allocation. The transparent nature of DAOs ensures that all decisions and votes are public,
enhancing transparency.
However, DAOs can face challenges when disagreements stall decision-making, and token
distribution may lead to concentrated influence, akin to a plutocracy. Despite these
challenges, governance tokens provide a unique approach to addressing the coordination and
decision-making challenges inherent to decentralized communities.
The issuance of governance tokens is underpinned by smart contracts, which codify the rules
governing the DAO. Capital is raised by selling these tokens, which then serve as a means of
making decisions. The rights and value attached to these tokens can vary based on the
project's context. For instance, Uniswap and Compound token holders can use their tokens to
vote on issues such as fee distribution or protocol upgrades.
The regulatory landscape for DAOs and governance tokens is evolving. While DAOs introduce
novel challenges, such as legal and tax implications, they also offer innovative solutions for
decentralized ownership and decision-making. Policymakers and regulators are grappling with
how to classify and oversee DAOs, with considerations around legal protections, liability, and
security regulations.
Looking ahead, DAOs are expected to continue playing a significant role in the crypto
ecosystem, with the potential to reshape organizational structures. Their growth has been
remarkable, with millions of token holders collectively managing billions of dollars. Despite
uncertainties, DAOs are poised to shape the future of organizations, offering a dynamic and
participatory model of decision-making.
Conclusion
In conclusion, governance tokens are digital assets that empower decentralized autonomous
organizations (DAOs) by enabling token holders to actively participate in decision-making

processes. These tokens represent a pivotal evolution in the realm of blockchain technology
and decentralized governance.
Governance tokens are not inherently impermissible (Haram), however, engaging in their
trade or speculation is impermissible (Haram).
9.0 Mining of crypto currencies
Blockchains that utilize the proof-of-work consensus mechanism require participant nodes to
engage in solving intricate puzzles to validate and add "transactions" to the network. The node
that successfully solves the puzzle first gains the privilege of appending transactions to the
blockchain, and as a reward, receives freshly minted cryptocurrency. This reward is granted
for upholding the records and preserving the integrity of the blockchain. This process
inherently involves the utilization of factors of production, thus rendering the reward
legitimate.
It's important to emphasize that the process of mining cryptocurrency doesn't involve the
creation of currencies out of thin air. Instead, the process of mining is embedded in the
platform's code as a reward for participating nodes that actively maintain the blocks of
transaction records and uphold the blockchain's integrity. This process requires substantial
resources.
The significance of mining within blockchains employing the proof-of-work consensus
mechanism cannot be understated. It serves as a fundamental mechanism through which
transactions are verified and added to the blockchain.
However, the proof-of-work mechanism is associated with a notable drawback – its extensive
energy consumption has a negative impact on the environment. As a response to this concern,
many blockchains are transitioning towards alternative consensus mechanisms, such as proof-
of-stake, which offer a more energy-efficient approach to maintaining the blockchain's
integrity and processing transactions.
In summary, proof-of-work is a pivotal consensus mechanism in blockchain technology,
requiring computational efforts to validate transactions and secure the network. Mining
rewards participants for their contributions, maintaining the legitimacy of the system. Yet, the
energy-intensive nature of proof-of-work has prompted the adoption of more sustainable
alternatives like proof-of-stake.
Conclusion
The permissibility of cryptocurrency mining within the religious principles is contingent upon
specific factors. Cryptocurrency mining, which involves deploying factors of production to
uphold the blockchain's functionality, is permissible (Halal) as it serves an integral role in
maintaining the integrity and security of the network.
However, it's essential to differentiate between various types of cryptocurrencies.
Cryptocurrencies that lack substantial backing or are primarily speculative in nature, such as
Bitcoin, are regarded as impermissible (Haram). This perspective aligns with the stance that
investing in assets with no inherent value or tangible backing goes against the religious
principles.

The permissibility of cryptocurrency mining hinges on its alignment with principles of value
creation and tangible backing. Cryptocurrencies lacking these attributes, particularly those
that are speculative in nature, fall under the impermissible category.
10.0 Metaverse
The concept of the metaverse has its roots in science fiction and has been popularized by
books, movies, and video games over the years. It envisions a digital realm where people can
interact, socialize, work, play, create, and conduct various activities in ways that extend
beyond traditional online experiences.
Key characteristics of the metaverse include:
a. Interconnectedness: The metaverse is characterized by its vast network of
interconnected virtual spaces and environments. Users can seamlessly move between
these spaces without limitations.
b. User-Generated Content: In the metaverse, users can create and contribute to the
content of the virtual world. This could involve building structures, designing objects,
creating art, programming interactive experiences, and more.
c. Persistent Existence: Unlike traditional online experiences that end when you log off,
the metaverse is persistent. It continues to exist and evolve even when individual
users are not present.
d. Digital Economy: A metaverse can have its own economy, with virtual goods, services,
and even currencies that hold value within the virtual realm. This has implications for
online commerce, entertainment, and work.
e. Social Interaction: Central to the metaverse is social interaction. Users can interact
with each other in various ways, from simple chat to more immersive forms of
communication.
f. Immersive Experiences: The metaverse aims to provide immersive experiences
through virtual reality (VR) and augmented reality (AR) technologies, allowing users
to engage with the environment in a more lifelike way.
Several technology companies and organizations are actively working on building elements of
the metaverse, including virtual reality platforms, augmented reality applications, and
interconnected online experiences. While the metaverse concept is still evolving and not fully
realized, it represents a vision of the future where digital experiences are deeply integrated
into our lives, reshaping how we interact, communicate, work, and play in the online world.
Conclusion
Metaverse is an enabling technology and is inherently not impermissible (Haram). Use of
digital representation in the form of Avatars, Photos or Videos does not make it impermissible
(Haram). If any Metaverse platform is used for negative or criminal purposes only then that
specific platform can be declared impermissible (Haram).
11.0 Digital assets
Digital assets refer to any form of information, data, or content that has value and exists in a
digital format. These assets can include a wide range of items, from files and documents to
media such as images, videos, music, and beyond. Digital assets can be stored, managed, and
transferred electronically, making them an integral part of the digital economy and modern
information-sharing processes.

There are several categories of digital assets:
a. Media Assets: These include images, videos, audio files, and other forms of
multimedia content. They are often used for entertainment, marketing, and
communication purposes.
b. Textual Assets: These are documents, ebooks, articles, and any other written content
that exists in a digital format. Blogs, reports, and digital publications fall into this
category.
c. Data Files: Data sets, spreadsheets, databases, and other structured data formats are
also considered digital assets. They are crucial for analytics, research, and decision-
making.
d. Software and Applications: Digital applications, software programs, and mobile apps
are valuable digital assets that provide functionality and services to users.
e. Cryptocurrencies and Tokens: In the realm of blockchain and cryptocurrencies, digital
assets can include various tokens, coins, and digital currencies that are used as
mediums of exchange or representation of value.
f. Intellectual Property: Digital assets can also encompass intellectual property such as
patents, copyrights, trademarks, and other forms of digital rights.
g. Social Media Profiles and Content: Profiles on social media platforms and the content
shared through them, including posts, images, and videos, are considered digital
assets.
h. Domain Names: Domain names used for websites and online branding are digital
assets that hold value.
i. Online Accounts and Credentials: Digital assets can also include usernames,
passwords, and access credentials for various online platforms.
j. Virtual Goods and Collectibles: In virtual worlds and online gaming, virtual goods,
skins, and collectibles are digital assets that players can buy, sell, and trade.
k. Digital Certificates: Certificates, such as SSL certificates for securing websites, are
digital assets used for authentication and security purposes.
l. E-books and Courses: Digital educational materials, e-books, and online courses are
also considered digital assets.
Creation of digital assets is the result of human efforts, knowledge and skills and thus have a
value. The value of digital assets can be both financial and functional.
As our reliance on digital technology increases, the management and protection of digital
assets have become important considerations for individuals, businesses, and organizations.
Proper management includes strategies for storage, backup, security, and potentially even
monetization or transfer of ownership.
Conclusion
Digital assets are not inherently impermissible (Haram). However, their usage and nature
determine their permissibility.

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