Assalamu 'alaikum so initially when people asked
me about my opinion of POS i thought they were asking me about Arabic dictators and this is not
a political youtube channel so I passed but then it turned out that they were asking me about proof
of stake and specifically they're asking me about whether cryptocurrency staking is halal or haram
so in this video i'm going to try to answer exactly this question now whenever i do one of
these halal haram videos i'll inevitably get a few comments that basically say hey brother i didn't
understand anything you were saying can you just tell me plain english is that halal or and to that
i would say if you don't understand my reasoning what is really the value that you're going to get
from me saying if it's halal or haram i mean if i say it's halal are you going to follow it and
if i say it's haram you're going to follow it regardless of the reasoning without understanding
how i got to that conclusion what if i'm totally wrong with my reasoning your role is to consider
the arguments that i lay before you and consider the merits of these arguments and compare them
with arguments that you may hear elsewhere and choose that which you find has the most strength
that which is the closest to righteousness i try to do my best when i'm answering these questions
but i may get them wrong so keep that in mind now having said all of this bismillah let's
get started is cryptocurrency staking halal naturally a good place to start with our
answer to this question is understanding what is cryptocurrency staking now in my answer
to this question i'm going to try and avoid any technical details as much as possible and try to
relay things in as simple terms as possible even though when you're talking about cryptocurrency
and blockchain this is often quite difficult but here it goes cryptocurrency staking is when
you lock up your cryptocurrency for a period of time in return for rewards that are typically paid
to you in the cryptocurrency itself so for example let's say you have tanra canny coins you commit
these rakani coins to a wallet for staking and after seven days you're rewarded with one candy
coin as a reward so now in your wallet you have a total of 11 rakani coins the amount of reward you
get for cryptocurrency staking is a function of how much cryptocurrency you commit to staking and
also how long you commit that cryptocurrency for the reason why cryptocurrency softwares
are often designed to incentivize people to stake their cryptocurrency is because these coins
that are staked help improve the security and integrity of that cryptocurrencies blockchain
again i'm going to avoid going into any technical details here but just know cryptocurrency staking
involves basically locking up your cryptocurrency for a period of time and this process helps
improve the security of the blockchain for this cryptocurrency that you are staking so now the
question is does this staking of cryptocurrency involve reba from what i described staking
involves committing money basically cryptocurrency with the expectation of getting your money back
and a return on top of it now while this may sound like reba to many this is actually not sufficient
to make a claim of reba after all committing money and hoping for your money to return to
you with a return is basically at the heart of every financial investment that you can think
of reba is present in a loan of money wherein the lender expects to benefit from their loan so loans
in islam can only be done as an act of charity so a requirement for the suspicion of reba to
be valid is that there has to be a loan of money either explicitly like in riba and messiah or
implicitly like with riba al fato so in the case of staking is there a loan of money so a loan of
money involves a lender a borrower and an amount of principal that has to be returned eventually
to the lender are these elements present in crypto staking from what i can see the answer is no there
is no borrower for example as is evidenced by the fact that you can do crypto staking on your
own you don't need a human counterparty to do crypto staking assuming you have the technical
knowledge and you have enough tokens because some proof of stake will require a minimum
number of tokens assuming you have this available you can do the proof of stake yourself without the
involvement of any other human in this interaction with crypto staking you're transacting with the
software not with someone else now granted most people will use an intermediary like coinbase
or binance when they do their crypto staking because either they don't have the technical
knowledge to do it on their own or they don't have enough coins to do it on their own so they pool
it with coins from other people who want to do staking or they just don't want to spend the time
and effort to do it on their own but just because you use an intermediary in a certain transaction
doesn't mean that the nature of this transaction has changed at all now you may be asking yourself
well where are these rewards coming from if not from someone else where are these extra coins
coming from are they coming out of thin air and the answer to that is basically yes that's exactly
where they're coming from cryptocurrencies are governed by software and the software dictates
when new currency is created and when new rewards are distributed when you earn your cryptocurrency
staking rewards no other person's balance of cryptocurrency is being decreased it's not
coming from someone else's balance the algorithms for that particular cryptocurrencies software
is what is creating these rewards so there is no reba in cryptocurrency staking because there
is no loan of money there's no borrower who is being granted the ability to spend the
cryptocurrency that the staker is lending to them this is just not happening the fact of the matter
is cryptocurrency staking can be done by a single person and that single person is interacting
with the software of the cryptocurrency not with a human counterparty so again i think
we can safely say that there is no reba involved here another objection that may occur to someone
is that well isn't this cryptocurrency staking risking your money in a valueless activity and
therefore it's a form of gambling and to that i would say no actually cryptocurrency staking
is performing a valuable function in that the coins that are staked are helping secure the
blockchain for that particular cryptocurrency so this activity does in fact hold value another
objection that may occur to someone is that isn't this cryptocurrency staking just enabling the
rich to become richer i mean basically all they have to do is commit some of their cryptocurrency
and they get rewards for that to that i would say i don't think islam necessarily objects to the
rich getting richer i think what islam objects to is the rich getting richer at the expense of
someone else who is being treated unfairly so for example with the case of lending with
interest if the lender lends money to the borrower and the borrower's obligations are fixed and the
borrower falls on hard times and they can't make their payments on time the lender then has the
right to seize the borrower's assets in some cases further impoverishing the borrower while enriching
themselves so these are the types of arrangements that islam objects to but i don't think islam
has any objection to people becoming richer when this is happening while creating value and not at
the expense of someone else who is being treated unfairly and in the case of cryptocurrency staking
i don't see it as treating anyone unfairly in fact when cryptocurrency staking happens as we
mentioned the blockchain becomes more secure and therefore everyone who holds cryptocurrency
that is associated with this blockchain these people's holdings their cryptocurrency becomes
more valuable because the blockchain that they're associated with is more secure and more
reliable so in conclusion generally speaking here with the acknowledgment that there are
thousands of cryptocurrencies out there and staking may not work the same for all of them but
in general here i don't see any real objections with merit to cryptocurrency staking in
islam i think the relevant hadees here is basically you should not be harming yourself
nor should you be causing harm to others and i think that this applies in the case of
cryptocurrency staking you're neither harming yourself nor are you harming others and therefore
it seems like a perfectly permissible thing to do so those were my thoughts on cryptocurrency
staking let me know your thoughts in the comments if you liked anything in this video make sure
to leave a like and subscribe until next time make sure to take care of yourself
assalamu alaikum and peace be upon you all
