For about a year and a half, there has been a growing trend among Muslims in the West to make charitable donations in Bitcoin.
Bitcoin can be used for Sadaqa
A friend of mine collects monthly donations from a group of Muslims and sends them to an orphanage in Uganda, which is not under the auspices of any aid organization and thus relies on direct donations from individuals. In the beginning, this group consisted of three people. Today, there are now about two dozen, and together they raise about 500 to 1,000€ a month.
After about a year, this friend received a message from Western Union, which he used regularly to send donations. They informed him that he now had a monthly limit of 650€, and beyond that he could no longer transfer money to Uganda. Just like that, without giving any reason.
On certain occasions, such as when a well is to be built, he sometimes uses PayPal. Every time he does so, he cautions all potential donors not to add Islamic-sounding comments like “Inshallah it helps” or “Mashallah, great project!” to it. “PayPal sometimes just freezes accounts when they see something Islamic,” he says when asked why.
How to connect projects to Bitcoin
A year earlier, this orphanage was set up with a Bitcoin wallet and a Lightning address. At first, no one really understood what it was for. But when the first donations in Bitcoin were made in seconds and they converted it to their local currency in Uganda, meaning they sold it again, the potential became clear.
Then in Ramadan a bigger campaign on Twitter (today 𝕏) was started. Bitcoin Majlis called people to make a small donation in Sats, the smallest Bitcoin unit (1 Bitcoin = 100,000,000 Satoshis or Sats for short), every day.
A motto established by a Muslim in the process was “Stack Sats and stack hasanats” (stack Sats and stack rewards). “Stack Sats” had long been a common saying among Bitcoiners, basically saying “Scrape together every penny and buy Sats with it if you can.” And Muslims just added “… stack hasanats” this Ramadan.
In the last ten days of Ramadan, Bitcoin donations intensified in hopes of meeting the Laylat ul Qadr with every donation. Not only Muslims donated directly to the orphanage in Uganda, many non-Muslims also joined because it was so easy to donate sats.
At the end of Ramadan the numbers came in: Bitcoiners had donated a total of 21,672,663 Sats (0.21672663 Bitcoin) in this Ramadan campaign, which at the time represented a donation total of around $5,920. (First report at 𝕏, Report at Orphans Of Uganda’s website)
What are the advantages?
First of all, a little theory, without getting too technical. The Bitcoin protocol itself has a scalability problem. The Bitcoin scalability problem refers to the limited ability of the Bitcoin network to process large amounts of transaction data on its platform in a short period of time, which is related to the fact that the records (known as blocks) in the Bitcoin blockchain vary in size and frequency are limited. Therefore, some transactions can take up to several hours.
This is where the Lightning Network comes into play. The Lightning Network (LN) is a protocol that improves Bitcoin’s scalability and speed without compromising trustless operations.
The Lightning Network requires a funding transaction on the blockchain to open a payment channel. Once a channel is open, connected participants can make quick payments within the channel or forward payments to intermediate nodes by “hopping” between channels for little or no fees.
What this looks like in practice is that if you send a few sats to a Lightning address (which, by the way, has the same structure as an email address), they reach the recipient in 1-2 seconds. No matter where in the world.
The transaction takes place peer-to-peer (P2P), without any middlemen or institutions. It is therefore “permissionless”. Nobody can interfere, nobody can prevent it or hack it, nobody can reverse it (unless the recipient voluntarily sends the amount back). Fast, person-to-person, permissionless, cross-border and secure. This is the appeal and innovation of the Lightning Network.
In practice, such a transaction is much easier than a transfer with a credit card or Western Union. Initially you download a Lightning app like Wallet of Satoshi and you already have a Lightning address. Because this app assigns a randomly generated, easy-to-remember Lightning address when installed, like flyingracoon38@walletofsatoshi.com (don’t use this address for anything, it’s made up).
From then on you can in principle receive Sats, the other side only needs the receiver’s lighting address. If you want to load a few Sats onto your own Lighting address, you can use the integrated Bitcoin purchase option. Or if you already own Bitcoin somewhere else, you can send some Sats to your own Lightning address and spend them from there.
The Lightning network, which is a technical layer above the actual Bitcoin network, is also a basis for new possible applications. For example, the social media network Nostr, where in addition to likes and shares you can also “zap” other people’s posts. This means that if you like a post, you can send the author a few sats with one click. Direct content economy without middlemen.
There are Lightning and Nostr-based marketplaces under construction, similar to Ebay, but decentralized, P2P and permissionless. There you can then put your old rocking chair online as a listing and the first person who buys it for Sats gets it.
Where can you donate in Bitcoin?
The Orphans of Uganda have now switched completely to Bitcoin and, according to their own statements, mainly use it to stay afloat. Other local organizations such as Bitcoin Kampala, which are committed to spreading and establishing a circular Bitcoin economy, have jumped on the bandwagon. Institutions and projects in other parts of the Muslim world are also starting to accept Bitcoin as donations.
The Geyser Fund platform allows any organization to receive donations in Bitcoin. So-called crowdfunding projects can also be financed through this.
Bitcoin donations even reach people who don’t own a smartphone. Machankura makes it possible to receive Lightning transactions via SMS.
With all the technical advantages, one must not forget that Bitcoin is a means of payment that does not contain the element of Riba (interest) in its creation, but is the first sound and deflationary means of payment since the depegging of paper money from gold and silver.
More and more Muslims around the world therefore see it as the only alternative with which they can clean their money from the dust of Ribaa without having to forego technological advances such as e-commerce.
This article appeared first at Islamische Zeitung in German language.
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