Bitcoin Forum

Interest is forbidden according to Shariah law. I'm sure they'd love its deflationary nature. Any expert in Islamic Finance?

Would love to hear preliminary comments.

Maybe who is rich should support poor? I am sure you can read this in Bible same as in Koran. But those who are rich will just interpret it different.

Technically ,in Islam the rich is mandatorily required(zakat,one of the five pillars of Islam)   to use some of their wealth( 2.5% of them) to help the needy(the poor, the orphans etc) , not doing so is considered sinful.Charity is also heavily emphasis and promoted in Christianity (or any other religion).Perhaps these    religious rich people that don't see reason to do so are just not in tune with their religion as they like to profess.

Speaking of that, there were users on here with the "Islamic Bank of Bitcoin," and they were offering no-interest loans in the lending section. https://bitcointalk.org/index.php?topic=358172.0

Why would btc be against koran? I doubt it is.

Koran and Old Testament have so-called usury laws, any interest is illegal.

The reason.

Say your community has 100 people and each person has 1 dollar. As soon as 'interest' enters into the equation, the system breaks.

If a 'bank' got say 20% of the currency and loaned it out, that's 20 bucks at what interest?

If it's 10% that's 22 bucks have to be paid back, so now the community needs 102 dollars and only 100 exist.

That's the basic reason for usury laws, the concept was you can't created something from nothing, it spurs 'inflation'.

Modern economics just creates more and more fiat, to cover the 'interest deficits' any usury system creates.

It's why milk was 50 cents a gallon in early 1970's and now it's 5 bucks.

Usury economies create inflation and that's why you had Biblical and Koranic laws against it.

If anything btc is anti-inflation, since the total bitcoins allowed is capped at 20M or so.

So goods and services become less in value of the btc it takes to buy it, that's why the value of btc goes up as more users join the btc system.

BTC is deflationary as to price of goods/services and usury fiat promotes inflation, I would think Imma's and Rabbi's would be pro-btc.

That's not why those religion bans usury.Usury means giving high interest rates for debt and is seen as unfairly taken advantage of the needy.When you seek to borrow money it usually means that you're in dire need of those.Belief system that promotes selflessness frowns upon this practice thus some of them(Islam e.g) seek to stop this by banning interest on debt altogether( although the loanee is encouraged to pay more than what he borrows about of his own accord and not because the loaner demands it,as a token of gratitude ).

The thing ,is none of those religion bans paying dividend on investment and that is how Islamic bonds and loans(yes, those does exist in Islamic Finance) work.There are  multiple mechanism used (that are still debated by Muslim scholars) but the underlining theme is you can't charge  fixed interest, any dividend given must bes based on the performance of the investment(the rate is usually determine at the end of financial year) and must be fair a not burden the loanee/business owner.

That reasoning is flawed because it implicitly assumes that either all assets are backed by money or that there is no production. If the borrowed money is used to produce something of value, then that value can used to pay off the interest. The bucks are just the medium of exchange.

In your example, why couldn't a person borrow 20 bucks to produce 22 bucks worth of food, for example, and then sell the food to pay back the loan.

Well I didn't see people stepping out when buying gold in low rates and selling them... So BTC is just the same I guess.... So I don't see any problem... But if there is one.... Plz let me know...

So true.