In this article we do a complete Shariah screening of Tezos to determine if XTZ is a halal or haram cryptocurrency. The short answer is yes, Muslims may trade and invest in XTZ, but have a read and see how you feel about it first.
What is Tezos?
Tezos is an open platform that it aims to take key steps toward blockchain adoption for assets and applications based on a trusted community of validators, researchers, and builders. Tezos’s focus lies on its long-term upgradability, participation, collaboration, and safe smart contract transactions.
The Tezos initial coin offering (ICO) was released in July 2017, and managed to raise $232 million in Bitcoin (BTC) and Ethereum (ETH). It was the largest ICO at the time. This sort of money doesnt come without any trouble as some of you may remember a long list of lawsuits from investors, founders and the foundation that went on for months delaying things. Anyhow, thats all history now so lets move on as crypto markets dont even care about last month, let alone what happened 5 years ago.
Further details on Tezos website
Who Invests In Tezos?
Cypher Capital LLC
Limitless Crypto Investments
Modern Assets Group
Tenzor Capital LLC
Winklevoss Capital Management, LLC
Is Tezos Halal: Is XTZ Crypto Coin Halal? We’d Love to Hear Your Thoughts
Sharing the collective wisdom of thousands of Muslim crypto traders and investors.
The developer made a unique decision to use OCaml as the programming language on the grounds that it provides greater security. Its interface is also better than others like C++ or OCaml, which leaves exploits in its code.
Transaction and consensus protocols operate under different rules and plug into a shared standard network interface. This interface does not access the blockchain, nor does it use that information to perform internal checks on the protocols. Proposed protocol alterations can be voted for by anyone, and are determined by the number of votes.
Legitimacy Screening of Tezos
Arthur Breitman introduced Tezos in a 2014 position paper, and he also published a white paper later that year providing more detail about this project. Breitman used the alias L. M. Goodman to publish both papers, which were similar to Satoshi Nakamoto’s pseudonym for Bitcoin.
Arthur and his wife Kathleen Breitman knew that Bitcoin’s internal governance process lacked sufficient support for the creation of new coins. Therefore, Tezos was designed as a token issuance and smart contract platform with a governance model based on onchain voting, where token holders could vote on protocol upgrades that would prevent the forking of the network.
This gives us the confidence to confirm that Tezos has an underlying fundamental value, that can be considered as “Mal” under Islamic rulings. Therefore, as a project it has legitimacy in terms of Shariah.
Is Tezos project aligned with Islamic values?
Yes, Tezos: XTZ crypto project does align with Islamic values. Tezos features a platform to create smart contracts and develop decentralized applications that can not be locked or blocked, which is clearly not against Islamic rulings.
Financial Screening of Tezos:
Financial screening ensures that the crypto asset meets the financial criteria for Shariah compliance, if it is an equity based token. Tezos is not backed by any equity, so there is no financial screening required on this coin/ token. Here we would typically look at things like debt to income ratio to ensure borrowing is limited to a tolerable level.
XTZ Token Screening for Shariah Compliance
Token Type: Native
Token Uses: Vote
Tezos uses a version of Proof-of-Stake (PoS) in which block producers are not chosen by token holders and anyone can participate as a baker (validator) if they have a certain number of tokens.
Tezos users can pay for Tezos transaction fees with use of their native token, XTZ. However, this rare income is not a significant portion of the earnings of Tezos bakers. Tezos bakers commonly write off transaction fees as they are negligible.
Based on this Tezos or XTZ token itself is considered halal.
Is Staking Tezos: XTZ Crypto Halal?
Users can stake XTZ tokens directly on the network to participate in transaction and block validation. All tokens staked onto the network receive a reward in the form of newly distributed XTZ tokens, relative to the amount staked.
Tezos stakers can delegate their voting power to bakers, who have enough influence to stake on the platform without having the ability to stake directly. This system allows any token holder to take part in Tezos’ on-chain governance system.
The mechanism used by this protocol is in agreement with Shariah rulings so staking Tezos is Halal.
What Does The Muslim Crypto Community Think of XTZ?
Marhaba DiFi‘s Shariah governance board also beleives Tezos: XTZ is halal.
Sharlife considers Tezos: XTZ crypto coin as a halal cryptocurrency based on the five areas assessed for Shariah complaince screening.
Crypto Halal Office for Monitoring and Sharia auditing on cryptocurrency markets thinks XTZ crypto coin is a Halal digital asset based on its Shariah complaince screening.
Islamic Finance Guru (IFG) believes Tezos is a halal cryptocurrency based on its method of Shariah complaince screening.
If you know of other academic or scholarly views on this, please add in comments and we will update accordingly. Alternatively, you may want to join our community of Muslims crypto investors and traders, to share, learn and profit from halal digital assets.
Is Tezos Halal: Is XTZ Crypto Coin Halal?
Yes, Tezos: XTZ crypto coin is Halal as it is like other digital currencies that allows users to participate in decentralized finance (DeFi), decentralized applications, and NFT projects and more. However, unlike many others it doesnt allow forks or splits. None of this is against Shariah guidelines so Muslims may invest, trade and stake XTZ crypto coin.
We hope you found this useful. Please view our Halal Crypto List to find suitable digital asset investments, without compromising your Islamic faith.