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Mo-

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  1. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
    Ok so I asked Sh. al Judai about a wide range of topics and their Islamic perspective. He told me some things to hold into generality:
     
    The four major madhabs do not have significant differences on what they consider halal and haram when it comes to modern financial transactions, as they did not deal with the same things we dealt with today. There are however minor differences on some points  Modern scholars, irrespective of madhab, take from a variety of sources (i.e., other madhabs and opinions, including those of non-traditional sources such as some trustworthy Shia sources (e.g. Sh. Muhammad Baqir al Sadr's book on banking has been cited by many) when it comes to Islamic finance. There is a lot of Ikhtilaf between scholars on numerous points, coming from both a lack of specialization and a large requirement for Ijtihad.   These things are important because, people often ask what a specific madhab says about a certain transaction, but due to the nuances of Islamic jurisprudence today and the rapid rate of innovation in fian
     
    Firstly, some definitions I learned (or improved upon):
    Qimar (gambling): Gambling occurs when two parties enter into an agreement that based on an outcome related to probability or chance, one party will win and the other will lose (e.g. a coin toss with a winner and a loser).  Gharar (risk, in finance, risk arising from speculation, synonymous with uncertainty): Is in Islamic business terms, when the outcome of a transaction bears some level of uncertainty. Investments with extreme Gharar are generally considered haram, for example, investing in something that is priced irrationally like a bubble with abnormal returns. Mudaraba (speculation): When an investor/market participant holds a certain view of the future and enacts a transaction based on this view (e.g. buying stock in a company deemed profitable). [Note: the common definition people use for this is the idea of the Mudaraba contract, which is a very narrow element of the actual theory]. Mudaraba al Sila' (speculation on a good/service/commodity): When a market participant purchases something for a holding period in the hope its price will change in the direction they favor by the end of this holding period (e.g. buying a barrel of oil and keeping it for sale at a later date for a higher price). Mudaraba al Si'ir (speculation on price): Where a market participant invests purely speculating on the price of something, and not on the thing itself (e.g., a contract for difference). This is haram as it is a form of gambling. Bay' (sale): the exchange of goods or services. Bay' al Salam (deferred sale): when a sale takes place, with the payment upfront and the good/service delivered at a later date. In this sense, this type of sale can take place in two manners in modern terms: Cash paid today for the provision of a good or service later; A good or service is provided today for the provision of cash later. Bay' al Inah (cash buyback): when a deferred sale takes place, but the good is sold back immediately at a lower price. This has major ikhtilaf, the Shafi'i's say it is permissible, but the other madhabs say it is generally not. All madhabs however agree that if the intention of the person is to essentially create an interest bearing loan in all but name (i.e. a heela [a work around]), it is haram. Cryptocurrencies:
     
    On Bitcoin, he informed me that the UK Fatwa Committee (which consists of himself, Sh. Suhaib Hasan and several other prominent UK based scholars) had decided putting money into Bitcoin (and cryptocurrencies in general) were not halal at the current time for multiple reasons:
    It is not currently recognized as legal tender in its current form, and several governments have instituted bans on it. This is contrary to the idea that Muslims should obey the laws of the countries they live in. It acts as a source of extreme Gharar. Whilst the idea itself does not go against Islamic principles (i.e., crypto in of itself isn't haram), the fact that it is primarily used for money laundering (whether by Chinese people going against capital controls or people who have illicit income through black market places), means it is currently unsuitable for use. Online trading:
     
    The Sh. corrected me on the point that speculation is not gambling Islamically, unless two parties are involved. I explained to him that, other than traditional retail brokerages which only generally sell vanilla stocks and bonds, most retail investors only have access to websites that provide CFD's (contract's for difference). He informed that this is equivalent to gambling if the speculation is being made in this case purely for the hope of an increase in price and contains two contracted parties.
     
    However in the case of actually owning the commodity/bond/stock, without a contract for difference, there is no problem with speculation as long as it does not carry extremely high risk.
     
    Insurance:
     
    Most scholars today say insurance is haram, but Sh. al Judai said it is halal generally speaking and there have been modern scholars from all backgrounds who hold the same view. He says this because, Bay' al Salam can be considered a primitive form of insurance and has generally been allowed. The issue with insurance comes down to contract specifics and the type of insurance (naturally for example, life insurance would be particularly troublesome Islamically).
     
    Insurance in itself can be sold in the form of an investment (e.g. an insurance company invests the money you give them for a particular policy in liquid assets, and grows a large enough balance sheet to pay off any claims) or it could be in the form of relying on the collective yearly payments from clients outweighing the collective yearly claims. The contracts themselves ultimately vary too and it really depends on a case by case basis.
     
     
    I asked him a bunch of other things in my time and went of plenty of examples for my own project. I can share those too but I felt what I included here were things related to the questions in this thread in particular. 
  2. Like
    Mo- got a reaction from superman in Cryptocurrencies: THE FUTURE IS HERE   
     
    1) but the loss is not proportional and is deemed an externality. In a bet, the loss is explicit and contracted between two parties, therefore it is gambling Islamically. When Walmart decides to open a new store, it isn't betting against the local stores, in fact due to agglomeration it is expected some local stores could even see an increase in customers. 
     
    2) speculation in Islam is halal. 
  3. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
    Ok so I asked Sh. al Judai about a wide range of topics and their Islamic perspective. He told me some things to hold into generality:
     
    The four major madhabs do not have significant differences on what they consider halal and haram when it comes to modern financial transactions, as they did not deal with the same things we dealt with today. There are however minor differences on some points  Modern scholars, irrespective of madhab, take from a variety of sources (i.e., other madhabs and opinions, including those of non-traditional sources such as some trustworthy Shia sources (e.g. Sh. Muhammad Baqir al Sadr's book on banking has been cited by many) when it comes to Islamic finance. There is a lot of Ikhtilaf between scholars on numerous points, coming from both a lack of specialization and a large requirement for Ijtihad.   These things are important because, people often ask what a specific madhab says about a certain transaction, but due to the nuances of Islamic jurisprudence today and the rapid rate of innovation in fian
     
    Firstly, some definitions I learned (or improved upon):
    Qimar (gambling): Gambling occurs when two parties enter into an agreement that based on an outcome related to probability or chance, one party will win and the other will lose (e.g. a coin toss with a winner and a loser).  Gharar (risk, in finance, risk arising from speculation, synonymous with uncertainty): Is in Islamic business terms, when the outcome of a transaction bears some level of uncertainty. Investments with extreme Gharar are generally considered haram, for example, investing in something that is priced irrationally like a bubble with abnormal returns. Mudaraba (speculation): When an investor/market participant holds a certain view of the future and enacts a transaction based on this view (e.g. buying stock in a company deemed profitable). [Note: the common definition people use for this is the idea of the Mudaraba contract, which is a very narrow element of the actual theory]. Mudaraba al Sila' (speculation on a good/service/commodity): When a market participant purchases something for a holding period in the hope its price will change in the direction they favor by the end of this holding period (e.g. buying a barrel of oil and keeping it for sale at a later date for a higher price). Mudaraba al Si'ir (speculation on price): Where a market participant invests purely speculating on the price of something, and not on the thing itself (e.g., a contract for difference). This is haram as it is a form of gambling. Bay' (sale): the exchange of goods or services. Bay' al Salam (deferred sale): when a sale takes place, with the payment upfront and the good/service delivered at a later date. In this sense, this type of sale can take place in two manners in modern terms: Cash paid today for the provision of a good or service later; A good or service is provided today for the provision of cash later. Bay' al Inah (cash buyback): when a deferred sale takes place, but the good is sold back immediately at a lower price. This has major ikhtilaf, the Shafi'i's say it is permissible, but the other madhabs say it is generally not. All madhabs however agree that if the intention of the person is to essentially create an interest bearing loan in all but name (i.e. a heela [a work around]), it is haram. Cryptocurrencies:
     
    On Bitcoin, he informed me that the UK Fatwa Committee (which consists of himself, Sh. Suhaib Hasan and several other prominent UK based scholars) had decided putting money into Bitcoin (and cryptocurrencies in general) were not halal at the current time for multiple reasons:
    It is not currently recognized as legal tender in its current form, and several governments have instituted bans on it. This is contrary to the idea that Muslims should obey the laws of the countries they live in. It acts as a source of extreme Gharar. Whilst the idea itself does not go against Islamic principles (i.e., crypto in of itself isn't haram), the fact that it is primarily used for money laundering (whether by Chinese people going against capital controls or people who have illicit income through black market places), means it is currently unsuitable for use. Online trading:
     
    The Sh. corrected me on the point that speculation is not gambling Islamically, unless two parties are involved. I explained to him that, other than traditional retail brokerages which only generally sell vanilla stocks and bonds, most retail investors only have access to websites that provide CFD's (contract's for difference). He informed that this is equivalent to gambling if the speculation is being made in this case purely for the hope of an increase in price and contains two contracted parties.
     
    However in the case of actually owning the commodity/bond/stock, without a contract for difference, there is no problem with speculation as long as it does not carry extremely high risk.
     
    Insurance:
     
    Most scholars today say insurance is haram, but Sh. al Judai said it is halal generally speaking and there have been modern scholars from all backgrounds who hold the same view. He says this because, Bay' al Salam can be considered a primitive form of insurance and has generally been allowed. The issue with insurance comes down to contract specifics and the type of insurance (naturally for example, life insurance would be particularly troublesome Islamically).
     
    Insurance in itself can be sold in the form of an investment (e.g. an insurance company invests the money you give them for a particular policy in liquid assets, and grows a large enough balance sheet to pay off any claims) or it could be in the form of relying on the collective yearly payments from clients outweighing the collective yearly claims. The contracts themselves ultimately vary too and it really depends on a case by case basis.
     
     
    I asked him a bunch of other things in my time and went of plenty of examples for my own project. I can share those too but I felt what I included here were things related to the questions in this thread in particular. 
  4. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
    I have a nice write-up I'll do tonight inshallah
  5. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
     
    On the first question:
     
    It is a generally accepted definition yes. It is based on chance because in essence, if you are speculating purely on price movements, then you're completely ignoring the underlying value of the asset itself. This is because of the reality of the random walk, whereby the future price of any given asset cannot be predicted. When it comes to investing in a company, the random walk in a stock price generally has a trend upwards or downwards based on its prospects as a company. By analyzing the prospects of a company you can assess the risks and based on your preferences and expectations of the performance of those prospects, you can speculate on the general motion of the trend of the random walk (e.g. with the Exxon example, say they won a new oil contract in Peru and Peru is assumed to have x amount of recoverable oil assets that Exxon will now be in charge of marketing to the world). 
     
    If you're speculating purely on the random walk itself, and not the trend which is defined by underlying value, then it is the exact same as a Martingale. You might respond to this with "Well Bitcoin has a trend! That trend is up!", which in itself is a fallacy because it still conforms to the Martingale property of a random walk even if it appears to have a trend. Why do I say this? Because the underlying value of Bitcoin is in its value as a means of exchange, but because it is not a functioning means of exchange (proof of this is in the volatility of currency itself, for something to be a viable means of exchange it has to have stability relative to the prices of goods), it has as a result even lost its underlying value as a currency. 
     
    On the second question:
     
    Ripple is different because the value of the currency is driven by the Ripple Network. But buying XRP doesn't mean that you own part of the network or are creating value, because unless you're an institutional investor it'll be impossible for you to have a stake large enough to be considered in granting rewards for proof of stake when the consensus of any ledger is applied. If you want to invest in the future of the technology, then your best bet is to buy Ripple shares when the company itself goes public or invest in banks adopting the tech. The banks themselves aren't buying or transacting in XRP, but they're using the code and technology developed by the company to simplify transaction costs.
     
    On the third question:
     
    As far as I know, unless you offer currency exchange services then simply investing in currency is gambling too. It makes 0 sense to buy USD on the notion that you believe the USD will increase in value (same goes with most commodities that are simply stored, e.g. gold, oil, palladium, etc.). 

    I haven't read the article but tomorrow I am going to have a long session with Sh. Abdullah al Judai where I will spend around 5 to 6 hours one to one breaking down financial concepts in their simplest terms and seeking answers on whether they are haram or halal. 
  6. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
    I would like to add, blockchain itself and the concepts around it are generally very innovative and could lead to some major changes in the way we handle transactions by enhancing speed, security and allowing for a return to decentralization (similar to the free banking era of the past). The main issue with this of course is how it will affect government finances who are dependent on measures like quantitative easing/tightening where they can effectively print money or burn money. We've had central banks for the good part of the past century and they are essential for the existence of big governments. 
  7. Like
    Mo- got a reaction from Mufasa in Cryptocurrencies: THE FUTURE IS HERE   
    We have to define the differences between the two primary sorts of speculation:
     
    1. Speculative investing (halal),
    2. Gambling (haram).
     
    An example of speculative investment, for example, would be purchasing Exxon Mobil stock because you believe that they will outperform their peers and the market. This means that you inherently believe that the company is going to generate value for you over time and that is why you want to own its stock.

    An example of gambling, would be purchasing Exxon Mobil stock because you think the price will go up. Not because you inherently believe the company will generate value in the future, but simply because you are of the belief that the price of the stock itself will go up as a result of market momentum or another market force unrelated to underlying value. Now you're probably asking "didn't both examples contain the same action?". Of course, but the intentions were different. 
     
    How do you then apply this rule to Bitcoin? In the case of Bitcoin, or cryptocurrency in general, it isn't generating any value. Any movements it makes are driven by market momentum in one direction or another and are unrelated to any sort of underlying value. Why? Because Bitcoin isn't a value generating asset (like a house that can be rented, a company that produces goods or services, a cow that produces milk, etc.) in the traditional sense, in that you as an owner can't do anything with it that would generate value. The only way to generate value with cryptocurrencies is through the ones that operate a proof-of-stake model, but very few people would be able to acquire the amount of necessary cryptocurrency in a reputable PoS network.
     
    tl;dr unless you have enough for PoS on a reputable network, crypto is effectively gambling. 
  8. Like
    Mo- reacted to ICEX in Listening to...   
     
    What a dumb question. 
  9. Like
    Mo- reacted to superman in A Nightly Exhilaration   
    Lol I misread slow for sleep. My point is that I don't think you understand your sources and sometimes it seems you stretch at straws to link religion to science. Ok ok it's one thing to say I read this cool paper that might suggest x, but why quote papers with terms you don't understand. And if you do know these terms then you should explain them, as the audience on mm aren't neuroscientists.

    Finally googling something doesn't mean you can understand it. True scientific comprehension starts with months of study through a text book and then solving problems.I only bring this up because you always post something here about Quran and science and quote one article that seems like it agrees, but that you may not understand.
  10. Like
    Mo- reacted to superman in Magical Dreams   
     
    so it was basically door to door sales? 
    Regardless - they weren't offering you a stake in the company so it's not a venture as far as you're concerned (which is also what your definition states)
  11. Like
    Mo- reacted to cubster in Is insurance a scam?   
    When you live in a high crime country, insurance is a lifesaver. We had our burgled so many times and if it wasn't for insurance we wouldn't have been able to keep replacing stuphph lol. Premiums do go up as a result but it has been worth it. Also, in terms of fixing the house when we've had bad weather, that is also a plus. One time the damage was extremely bad and would have cost thousands of rands, but the insurance covered it and we were able to give the house a facelift too.
  12. Like
    Mo- got a reaction from cubster in Is insurance a scam?   
     
    Insurance is a zero sum game. Insurance policies will always be tilted in favour of the insurer because they look to make a profit, which is only natural because they are offering the service of assuming your risk and then paying out based on that risk.
     
    It’s pretty much a commercialized of hedging. Big financial services companies actually sell each other insurance all the time in the form of interest rate swaps so that their risk positions end up neutral. 
  13. Like
    Mo- got a reaction from Breeze in What are you reading?   
    I'm still reading Leviathan by Hobbes. Haven't had much time for leisure reading if I am being honest. 
  14. Like
    Mo- got a reaction from Breeze in Listening to...   
    Hurt - Nine Inch Nails
     
    the drums in that song are fantastic against the industrial noise 
  15. Like
    Mo- got a reaction from Breeze in What are you reading?   
    I'm still reading Leviathan by Hobbes. Haven't had much time for leisure reading if I am being honest. 
  16. Like
    Mo- got a reaction from Breeze in Economics as Religion   
     
    Economist (in academia or at a central bank or even any corporation) Journalist Banker Hedge fund analyst Portfolio manager Teacher in maths, history, stats, etc., Management consulting Manager in a corporation Politician Policy advisor  Researcher (like at a think tank or an economic institution) Etc. Pretty useful degree. For employability, the best sequence is probably STEM undergrad and then a masters in economics. 
  17. Haha
    Mo- got a reaction from Breeze in Listening to...   
     
  18. Like
    Mo- reacted to Haku in Random Islamic Questions   
    there are valid arguments for female imams, although in very minority. Did you read that book (misquoting Muhammed (SAW)), it's in there.
    But in the end of the day, the issue is that of a jurisprudence. These rules are derived methodically in a scholarly manner. Unfortunately, layman inject their own one liners. What makes sense for a morroccan man may seem silly to you. that's not heresy. Heresy would be to deny some well known thing in Islam. So it would be always prudent to hold your personal judgement before learning more about the subject.
  19. Like
    Mo- reacted to superman in Economics as Religion   
    As I mentioned I've been listening to Thomas Sowell Basic Economics and this is the impression that book gives me (attached in image)
     
     
    As far as economics being a religion - I dunno, a lot of the stuff he says actually makes a lot of sense. There is a lot of logical thinking involved and it doesn't sound like pseudoscience. 
     
    (Black circle should be renamed "Useful Goods". One thing Sowell says is that a lot of resources can be wasted in producing unneeded items. In capitalism this unnecessary production of goods results in losses.

  20. Like
    Mo- reacted to Haku in Illustration of why socialism doesn't work   
    treason! communist!!
  21. Like
    Mo- got a reaction from superman in Illustration of why socialism doesn't work   
     
    This is true, yet the government can provide a greater incentive for people to take these subjects. Say for example in British culture people didn't like maths, further financial incentive would tilt more people towards maths. There are ways the government can harness the free market because in the real world there isn't perfect information which is generally a requirement for a free market to exist. Students could be told "studying art history is a great career!" by teachers when in reality not that many people with art history degrees get the chance to work in anything meaningful. Has this information been available to them before they'd likely have made different life choices. 
     
     
    University has several other benefits even professional qualifications like the CPA or CFA or CS can't fill (even though they can provide credibility). Firstly, they show an extended determination and interest in the subject,  3-4 years isn't a short commitment. Secondly, they show the student can interact with people from different backgrounds. Thirdly, they show, for the most part, some sense of independence. Fourthly, most students will complete a research project or dissertation in their final year, which in many degrees (e.g. Engineering or medicine) can require the use of complex practical equipment that costs thousands of pounds. 
  22. Like
    Mo- reacted to superman in Illustration of why socialism doesn't work   
     
    At the end of the day I feel as if there are far fewer uni places then students so they can all afford to charge 9k. They all charge 9k because everyone can afford 9k thanks to the SLC. The SLC is basically a 0 risk loan for the student meaning that they can do any subject they wish. Obviously, this leads to price inflation, Unis realise that even when charging the maximum (9k) they will ALWAYS find students.
     
    However imagine if there was no SLC, then no one would be able to afford the massive fees except rich students. By charging rich students extortionate prices perhaps unis would be able to eventually increase the supply of education, lowering prices? Not only that but perhaps prices would come down naturally as Unis don't want to miss out on the massive customer base (poor/middle class students)
     
    Furthermore, resources won't be wasted on degrees with zero ROI (mickey mouse degrees) and instead those resources will go into funding STEM subjects (again increasing the supply of these subjects). As a result of a free market system, less people will have degrees but the value of a degree will go up.
     
    Infact, MSc degrees (in Physics anyway) can be as low as 5.5k. This is lower than the 9k charged per annum for undergraduate degrees. Furthermore the MSc runs from September to September, whereas the 9k in a undergrad degree only takes you from September to June. MSc degrees do seem to face some kind of pricing regulation but I don't think it is to the same degree experienced by BSc degrees.
     
     
  23. Like
    Mo- got a reaction from Breeze in Last film you watched?   
     
    make nachos at home by getting some tortilla wraps from the shops, brushing them on both sides with oil, chopping them into little triangles and putting them on a baking tray in the oven at 200c for about 3 minutes. You then want to take them out, flip them, and smother them in grated cheese and pop them back in for another 3 minutes. 
     
    Before this you can either prep some guacamole or salsa for tasty dips. 
  24. Confused
    Mo- got a reaction from Breeze in Illustration of why socialism doesn't work   
     
    It is in employers self interest to pay employees a livable wage. Wages for unskilled labour have lots and lots of price pressures in both directions, but the most distinctive upward pressure on wages is providing a livable wage with the most downward pressure being competition. 
     
    In the case of South Asian workers in the Gulf: millions of these individuals viewed the opportunity to work in the Gulf as far better to working at home. They aren't expected to pay rent, transport or food costs. The bulk of them are men going as contracted workers in order to receive a far more competitive salary than they would back in South Asia, with nearly all of their salary being sent back in remittances to their family members. 
     
    In Pakistan for example the minimum wage is 15,000 rupees a month, which is roughly $1700 a year. In contrast, the average monthly remittance from the UAE to Pakistan is $320 million a month, which translates to approximately $3200 a year per Pakistani in the UAE, a roughly 88% higher wage. Bear in mind, these are remittances, so it is separate from whatever money they might spend in the UAE. Is this a slave wage? In the context that their family lives in Pakistan and their cost of living is that of a family living in Pakistan, it is the opposite. An unskilled worker in the UK on the other hand has to support the cost of living in the UK, so naturally employers will pay a higher wage. 
  25. Like
    Mo- got a reaction from Breeze in Illustration of why socialism doesn't work   
     
    worker productivity is far higher when your workers are happier and healthier, which means you can create a better service and product than your competitors and thus profit more. Take this theory in reverse and the same thing happens, which means the minimum an employer has to pay an employee is a livable wage or else they'll find very few people willing to work for them.
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