Islamic Bank of Bitcoin{}بنك بتكوين الاسلامي

[elk-tamer]

I still don't have a full grasp of how bitcoins work, but it seems to me like integrating some of its "contract" functionality would work here. If you created bitcoin transactions (similar to the ones described in the betcoin thread) that were tied to the accounting of the lender, then payment back to rabb-ul-mal could become more automatic.
So lend the money at 0%, but have the loans bitcoins tracked through software and conditional transactions that paid back the appropriate amounts to both the investor and mudarib.

Just lending out money over the internet at 0% interest with nothing but faith in your fellow man as collateral seems like a bad idea to me and my atheist sensibilities.

[1713581905]

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[1713581905]

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[1713581905]

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[TiagoTiago]

Interesting idea, i'll keep an eye on this

[elk-tamer]

I think we would approve loans by, asking you for your forum name and check post number/reputation. In future this might be dropped and loan application be automated as you suggested.

Imagine though if you didn't have to trust, or even know the person you lent the money to, and didn't care about their reputation at all. You could achieve that by creating bitcoin transactions that paid the correct amount back to the investor, based on something like this:
http://forum.bitcoin.org/index.php?topic=6900.0
Possibly with the "referee" being a piece of software instead of a person.

[unemployed]

Okay, let's say I get a loan from IBB.
Am I free to buy myself a beer?

[senbonzakura]

"Okay, let's say I get a loan from IBB. Am I free to buy myself a beer?"

No , you can only buy pepsi.

 

Just joking, yes you can buy what ever you want, its your money.

[Grant]

I think we would approve loans by, asking you for your forum name and check post number/reputation. In future this might be dropped and loan application be automated as you suggested.

It all depends on the support and investment this project receives.

an idea (you receive loan, you payback, you get higher loans?)

If i may jump in with an idea on the "reputation/risk" side... from the JAK Bank http://en.wikipedia.org/wiki/JAK_members_bank

They have a wonderful "self-rating" system:

JAK banking is made possible by saving points system: members accumulate saving points during saving periods, they use saving points asking for a loan. The main idea is that one is allowed to take a loan for himself in the same measure he allows other people to have loans, saving into his account. For this reason (asking for a loan), earned saving points must be equal to spent saving points to ensure sustainability. If a member is borrowing more saving points than he has, he is obliged to continue accumulating so-called "aftersavings" during repayment period. "Aftersavings" are a fixed quota of money that one must save after his loan was given, so they can continue earning saving points. This way, at the end of the repayment period, earned saving points will be equal to spent saving points, and at that time he will be able to have back all his aftersavings.

I think this model could work excellently for your project as well, members who have deposits for a longer time generate more points than someone who has deposited only little or for only a short time. And can therefore be more trustworthy because they had put trust in the system in the past and can borrow more. Also interesting is the "Aftersavings" concept.

For the record, i'm interested in investing in this project, once there is a clear model/infrastructure to operate it.

[trentzb]

Grant

Excellent, thanks for that link ! 

"JAK Members Bank does not charge or pay interest on its loans, a principle it shares with Islamic banking......."

Investors , what you think of JAK savings/loan concept?

I have not reviewed the entire Jak concept but a cursory glance at it makes sense. The longer a member has had a savings deposit with the bank the more available loan credits they are entitled to. Is this the general premise? I will review the entire concept a little later but it looks promising.

I have been thinking of another way to encourage loan repayment and community/bank participation and subsequent trust reward but I have to think it through a bit more before I post it here.

@senbonzakura I can send 3 BTC now of my conditional 10 BTC pledge if you would like. I would just consider it lending you 3 BTC for the moment at 0% interest until you get the shares/etc worked out and convert it into shares. You can use it for expenditures as needed and if the project dies I will accept a shared loss. If you have another proposal I am open to it.

If you want me to send 3 BTC now please post an address I should send to publicly here on this thread to make such transaction transparent.

[speeder]

I loved the concept.

Too bad I dislike the name.

I think it would be nicer something like Yahwehists bank.

Or Abraham sons bank.


Since the rules actually apply to Jews, Islamists and Christians too. (at least, it should apply... but :/)

[elk-tamer]

elk-tamer


"could achieve that by creating bitcoin transactions that paid the correct amount back to the investor, based on something like this:
http://forum.bitcoin.org/index.php?topic=6900.0"

hmm, had a look at the above, good idea to implement, if we could find someone to code/implement it. Depends on investors, and if they willing to put btc to implement it.

Were you thinking on investing/buying shares in this project? You're welcome to join us  

Not if someone can spend their loan on beer.  Maybe I'll start a competitor. "Heathens Bitcoin Bank", where the focus is less on the hereafter and more on the accumulation of wealth.

[bitcoinTrader]

1 BTC sent to OP.

Total : 2 BTC

[TheAlchemist]

I pledge 5 BTC (10 if more folks don't come by and pledge) in the upcoming days/weeks.

[Grant]

I have not reviewed the entire Jak concept but a cursory glance at it makes sense. The longer a member has had a savings deposit with the bank the more available loan credits they are entitled to. Is this the general premise? I will review the entire concept a little later but it looks promising.

I have been thinking of another way to encourage loan repayment and community/bank participation and subsequent trust reward but I have to think it through a bit more before I post it here.

@senbonzakura I can send 3 BTC now of my conditional 10 BTC pledge if you would like. I would just consider it lending you 3 BTC for the moment at 0% interest until you get the shares/etc worked out and convert it into shares. You can use it for expenditures as needed and if the project dies I will accept a shared loss. If you have another proposal I am open to it.

If you want me to send 3 BTC now please post an address I should send to publicly here on this thread to make such transaction transparent.

Yes that's the general premise, points for amount of saved coins + points for term saved. it's explained in this video: http://www.youtube.com/watch?v=ktzRsH9qLiw&NR=1 It also points out the problem with inflationary currencys and interest free loans (maybe JAK would be better off using bitcoin ?)

Few differences between the JAK model, and the model proposed here that i can see:

JAK is a non-profit bank, its members (or shareholders) receive no dividends.
JAK's fees are just there to cover administrative costs and are equivalent to Swedens rate of inflation (2.5% inflation is roughly the official rate over there and that happens to be the fees it generates too on loans)
JAK doesn't engage in speculation/investment, it merely serves as a intermediary.
JAK is local, it can therefore enforce/use legal methods to deal with defaults.

In conclusion, JAK's only income stream are fixed fees on transactions.

And cut and paste from earlier post here about financing IBB, plus my own opinion (my primary concern here is sustainability):

Income streams:
    1) Donations paid when repaying loans
    2) Adverts on website
    3) Dividends from stock/sharers (which IBB owns)
    4) Fees from escrow service
    5) Joint venture service, providing funds/capital for new business (profit as dividends)

1)
As opposed to JAK model, fees are voluntary (donations). But there is no legal way to "make sure" loans are repaid, for a potential loan "theif" it would be quiet easy to buildup points regardless of system of points to then use those points to take out a larger loan and never return. (same systematic abuse could be done on bitcoin-OTC, make tons of small trades to gain points then make one large trade and run).
Possible solution: offer only business loans, specifically projects that require specific development. For example, someone needs to develop a website that costs 200 BTC, the bank would then together with the client find the best offer out there to get the job done, and the final website (copy) would be sent to the bank, this could help to serve as "collateral" for the creditor in case the debtor defaults. Still requires some due-dilligence, a potential thief-debtor could endup being the programmer but the pattern should be very easy to spot if done right, i imagine the bank could also generate extra fees for the consultancy (providing advice, finding reputable developer etc).

2 and 4) is obviously ok
5) could be combined with my last point in (1) ?
3) Risky idea, propably not worth it. I've been involved in speculating in unregulated securities at all the exchanges in secondlife since late 2007, the only surviving one today is www.slcapex.com (if you invested in the secondlife stocks during late 2007 when the first exchange was born, and continued to invest throughout 2008 today your investment would have lost as much as 95% of it's value)
I don't know the volume nor much details about GBLSE (because i have not figured out how to use the client), but only way i could find this reasonable is if there is enough volume to engage in shortterm trading, get in and get out. Unregulated one man shows are risky on multiple levels, apart from business risks there's also the risk of the CEO cease to exist (this can be anything from illness, to death, or even outright fraud), there is no procedure to transfer assets to a new management and there is no real corporate governance (can't replace a bad CEO). I'd much rather see those funds utilized on projects that relate to- or increase the banks primary-activities, or in worst case if passive income is "needed" rent some mining contracts (when/if that is a profitable venture right now probably isn't).


@senbonzakura I can send you 2 BTC right-away, just provide an address. More to come when i better understand how this idea could work sustainably.

[senbonzakura]

@alchemist

Thanks for your support and pledge  

@ grant

Thanks for your investment/support  



"But there is no legal way to "make sure" loans are repaid, for a potential loan "theif" it would be quiet easy to buildup points regardless of system of points to then use those points to take out a larger loan and never return."

for minimum, to get website up and running and offering 0% fee 0% interest loans, maximum amount of 10 btc at 2btc to each customer (5 customers) would be given away. once paid back, those same amount is then available to others. Who gets the loan? established forum members with say >100 post, on white list etc...

There is still risk customer wont pay back, thats why i propose the above, as a start basic loan service. If customers payback, then many other customers can get the loan, and so the btc goes around the community. Maximum 10 or 20 btc to get things started (alpha test) , which means maximum 10 or 20 is lost.

If during testing , we are confident, then we can increase the amount, if investors agree.

"Possible solution: offer only business loans, specifically projects that require specific development."

yes thats number 5 -> Joint venture service, customer wants some btc to start company in GLBSE, customer releases shares, IBB buys them.


"3) Risky idea, propably not worth it."

only buy shares/assets in GLBSE, for instance I would be transferring SIN share and DISHWARA share to IBB in GLBSE, the dividends would be source of revenue for IBB , which will then be used to further develop the site. At least say 50 shares of SIN would give you around 1 BTC everyweek. So that 1 BTC could profit/dividend or used to further develop the site.

"there's also the risk of the CEO cease to exist (this can be anything from illness, to death, or even outright fraud)"

good to have at least 2 or 3 working on a project, all 3 project managing, if something happens, then the other 2 can take over. A ceo/project manager should invest in the project and not just offer to manage it for say some btc salary. That way, there is incentive to not mess about and be serious.

"there is no procedure to transfer assets to a new management and there is no real corporate governance"

maybe share instawallet account, have 3 major shareholders run the project sharing account/keys?(if internet down/other problems..other manager can take over)

I dont think we will have deposit accounts/savings accounts for customers, unless we can have good host/server, good responsible manager, good code security etc..

so to reiterate basic minimum bank website should do:-

1. loans maximum of 20btc given by IBB
2. buy assets in GLBSE (for profits from dividends)
3. adverts

so 3 basic sources of revenue. once above is done, we can implement further features (e.g:- deposit account, escrow)

[trentzb]

Here is the address to send the payment

13rush3j2PLKquQcTvpFs97B5277UnTHKj (btc goes to instawallet account)

Quoting above for reference...

You may want to create additional addresses for each investor so you can reference each in instawallet/other and not have to look back on the forum or match up amounts to investor.

3 BTC sent to above address. View TX

[cbeast]

I suggested this idea in #bitcoin-otc a couple of weeks ago, IIRC. I'm glad someone is taking the initiative of creating a Sharia compliant bitcoin banking system. It will take great efforts like this to educate the marketplace of ideas about the versatility of bitcoins. Goon on ya for jumping into this.

[senbonzakura]

"Please let us know how long it will be before you make investments available on GLBSE. If you do list it"

will do, thanks for your support/interest in buying shares.

"how soon after that would you expect revenue to be generated?"

as you can see in the thread, we came up with some basic sources of revenue. the more services we provide (escrow / deposit account) the more revenue is generated.
basic sources would be 1. ads 2. gratuity / donations from loans 3. IBB buying shares in other companies/projects. So probably would take some time before some revenue is generated, i would donate 1 SIN share (when glbse listed), so every-week IBB should get 0.02 btc

Also it depends on what we agree on as investors, what ideas/models are on the table, and how much btc we have to implement it. I am willing to invest , we just need to find someone committed to take this forward (implement security/coding/responsible manager keeping customer btc safe etc... (if deposit account implemented)  )

So far , I am currently doing logo (paid for it), soon doing website. So there might be no revenue / might not work out (after website/logo/hosting done)

I suggested with btc invested, IBB should buy shares like SIN shares, and then use the dividends for further development of website. If it doesnt work out, then you IBB still gets profits from SIN shares and use those as dividends to shareholders, or even sell SIN shares and pay back shareholders.

"I suggested this idea in #bitcoin-otc a couple of weeks ago, IIRC. I'm glad someone is taking the initiative of creating a Sharia compliant bitcoin banking system."

I wanted to invest in bitcoin bank, or any company on GLBSE, but the profits may not be 'permissible' for me (due to shariah). There was 2 bitcoin credit union i think, but couldnt invest. So thought I put out this idea/project and see who's interested. I was thinking in small terms, create website , put ads, put info on bitcoin in arabic and just enjoy the revenue generated from ads.

More people supported/invested = more ideas and suggestions, so we'll see where this goes. @cbeast are you willing to invest or buy shares later ?

[cbeast]

(stuff snipped)

More people supported/invested = more ideas and suggestions, so we'll see where this goes. @cbeast are you willing to invest or buy shares later ?

Bitcoin shows its versatility. I am looking for 'fringe' venues where bitcoin might fulfill unmet needs. Sharia compliant loans are just one. I like the idea of appealing to all believers and anyone else interested in sharing wealth for the prosperity of all. I will one day invest what I can whether in currency or sweat equity.

[TiagoTiago]

ableorange , tiagotiago

Thank you for your interest in this project

Would you be willing to invest/buy shares in this project in the future?

I currently don't got enough money of my own to be comfortable spending what i have; and i would rather not promise any money i don't know yet when i'll be able to pay. When the time come when have the money avaiable, i'll look into investing some in this project among other things.

[senbonzakura]

Update

Sent pm to investors. Look at the logos and see which ones you like + domain.

-----------------------

Shares - GLBSE

1000 shares @  0.10 btc  or @ 0.05 btc?

--------------------------

BTC received

bitcoinTrader    2 BTC
trentzb             3 BTC
senbonzakura   2.70 BTC
Grant               2 BTC
alchemist         5.04 BTC


---------------------------

BTC used

LOGO Design               2.20 BTC

GLBSE fee                    0.50 BTC

---------------------------

Total BTC investment = 28.20 btc , Total received 14.74 btc,  in wallet now 12.04 btc

*fixed - total amount of investment/pledges

PLEDGE / INVESTMENT so far:-

1. 2.20 BTC , 2x DISHWARA shares
2. 2 BTC
3. 10 BTC (some conditions)
4. 5 BTC (5 BTC more on condition)
5  2 BTC (more soon)

Total 21.70 BTC ( 28.70 BTC if dishwara sold + conditions)

[speeder]

I have several DISHWARA shares...

If I ever manage to sell them back, I pledge them to here.