Crypto has touted free and fair forever and it’s no where near reducing the cost of capital for anyone. It’s now leaning on tokenized treasury bonds and stablecoins to lead the way. We have become the very monster we went out to slay. I’ve put together a perspective on another well-meaning industry that tried and ended up with the same fate… bet you wouldn’t have guessed but it’s Islamic Finance!

We do actually have low cost of capital for halal mortgages. Islamic Banks in Malaysia and MENA Gulf States offer their population some pretty good rates. Guidance Residential in the US is able to pull it off too!

How? They’re all government-backed. Guidance sells to Freddie Mac and Fannie Mae - which in turn is funded by the Fed selling Treasury bonds. The Muslim-majority nations offer sukuks backed by commodity futures to keep things halal - usually palm and crude oil.

The Fed issues Treasury bonds on the expectation of future cashflows from the mortgage. There is 10-16x more paper oil on the markets than actual crude produced in a year. You’re paying or earning a “profit rate” on funds that are printed based on the expectation of your own future cashflows.

This is an oversimplification of course, and the essence is captured. Do with this information as you wish. If you need a house, get one, I ain’t judging - and just acknowledge that this is a problem. Why do Muslim Bitcoiners rant against InshaAllah finance? Their staking efforts directly contribute towards the printing of assets.

One thing is to print, and on top of that, you’re charged to use printed assets? Consider, where would home prices and cost of living be if we didn’t have so much credit creation? Have you stopped to ask why food in a developed nation should cost more than in developing nations? Do you wonder what nations not rich in natural resources do and whom they are beholden to in order to secure a low cost of capital?

Bitcoin breaks this gridlock. You don’t need oil fields, or gold mines or dependence on US treasury guarantees. Sunlight is enough to mine it. Value accrues on a decentralized, peer-to-peer basis, and the excesses of fiat gets squeezed out of inflated assets back into sound money. It doesn’t happen automatically though, it’s just a tool. It happens when we stop thinking in zero-sum, fiat-minded ways. Speculate, create and think different! Make Hijra to sound money.

If Bitcoin replaces only all the paper used in Islamic Finance futures, you will see a 2X on the value of Bitcoin. But remember the 16x multiples of paper commodities that are issued? That’s a great heuristic for the true potential of Bitcoin at a global scale.