Cryptocurrency has been infamous nowadays for its volatility. This does not look good for the industry when it comes to Muslim countries. The highly speculative nature of cryptocurrency lets it come off as unreal and with no backing. Sharia law frowns on speculative investments.
With all the bans going around, it is good news for crypto enthusiasts that cryptocurrencies are still accepted in Saudi Arabia and the United Arab Emirates. However, there are already warnings being issued to citizens so they may avoid bitcoin and other digital coins. This much alone already affects the investment choices of Muslim citizens and limits the exposure of cryptocurrencies to this large potential market. In fact, Muslim countries alone already make up of 1% of global GDP.
A wise man once said: “There is no such thing as bad publicity.”
This much is true with local startup company One Gram who is offering a cryptocurrency backed by one of the world’s most trusted assets - gold. With the newfound publicity of cryptocurrency that picked up last year, people are now more updated with crypto trends.
On a related note, Muslim nations have been known to be large trading centers for gold. This then makes the new crypto quite attractive as well as Sharia-approved. Its goal is to convince Muslims to invest in cryptocurrency as part of their faith. In linking one gram of gold to each unit of the cryptocurrency, the volatility is limited. Furthermore, this now makes it acceptable when applied with Islamic investment principles set by al-Maali Consulting.
According to Reuters, OneGram co-founder Ibrahim Mohammed expressed his confidence in the cryptocurrency when faced with rigid principles:
“We are trying to prove rules and regulations from Sharia are fully compatible with digital blockchain technology.”
As gold is quite stable (at $1,200 to $1,350 last year), injecting this to cryptocurrency adds the much needed flavor to enter the Muslim markets. Gold is also known to be the barometer that shows the global economy’s health. Also, unlike cryptocurrencies, it’s a physical asset and jives well with Sharia’s rules.
Although an innovative solution to resolve the aggression from different markets, this approach to cryptocurrency is not the first. Thailand based HelloGold employs a similar concept where gold is stored in a vault. Though founded in Malaysia, the gold is stored in Thailand and actively focuses on the Thai market. It has also been certified by Sharia as Muslim markets also play a big role in Southeast Asian countries.
This only proves OneGram’s potential as a new player. At best, experts are looking at the company to possibly develop a gold-standard cryptocurrency.