Looking for qualified leads? Connect with 1,000+ potential clients on Distinguished.io.

Apr 18, 22  |  Ashar Ali

Is Staking Crypto Haram: A Complete Overview

This is a question that has been on my mind a lot recently, and it has been brought up by a few of our users. Proof of Stake is similar to riba in that it entails creating money out of money without having to do much of anything other than have money to begin with. Of course, in this context, it is necessary to consider the Islamic meaning of Is Staking Crypto Haram. Although Staking Crypto is often translated as interest, it is really a far larger concept than interest. Based on the academic definition of riba, it is unclear that Proof of Stake may be considered to come within the category of Staking Crypto.

>>> Hire The Best Blockchain Developers


What Exactly Is Staking?

The addition of a 'block' to an existing blockchain may be accomplished in one of two methods.

1) Proof of Work (PoW)

2) Proof of Stake (PoS)

Bitcoin is the most well-known example of a proof of work system. Add a new chain link by solving increasingly complex mathematical problems with the help of computational power. By accomplishing this you are awarded with a coin.

The difficulty with this is the inefficiency and the expense of energy necessary to mine additional blocks due to needing to answer ever complex arithmetic problems using increasingly powerful computers.

Proof of stake is a more efficient solution to this.

In a proof of stake mechanism, customers who possess part of the cryptocurrency ‘lock’ or store their assets in a wallet. Instead of needing to complete arithmetic challenges to add bricks to the chain, users are picked at random depending on how much cash they have locked up.

Those users who are selected at random are given a coin. If you have a large stake, your chances of getting picked to create the next block and receiving coins are directly proportional to the value of your investment. This way you will be able to solve all of the questions about Is Staking Crypto Haram.

Locking up your money in order to earn more coins is known as staking.

Develop Enterprise-Grade Software Solutions

Create results-driven products for entrepreneurs, startups, and enterprises with the leading software development company.

Get in Touch

>>> How Walmart Uses Blockchain To Solve Supply-Chain Challenges