Ethical finance must guide crypto’s evolution

Opinion by: Daniel Ahmed, co-founder of Fasset and founding member of the Own Foundation

Crypto was born from a vision to decentralize power, democratize finance and build systems where equity prevails over exploitation. Somewhere along the way, however, the movement lost its moral compass. As speculation surged, purpose dwindled.

We must return crypto to its decentralized roots, a technological revolution built on long-term value, inclusivity and ethics rather than cyclical, speculative gains. The industry should take inspiration from emerging regions and how ethical financial investing can help to repair some of the ways our industry has often fallen short. 

The rise of layer 2

When Vitalik wrote a blog post on layer 2s as a cultural extension of Ethereum, he brought up a critical point not only in business and technology but humanity — what we build in this life should be more significant than ourselves. Citing blockchains, he described how layer 2s, which he framed as subcultures of Ethereum, don’t merely differ in their technical benefits but how their positioning and intricacies trickle down into the culture of their communities. 

In a space where new layer 2s are emerging rapidly, Vitalik’s insights are accurate and inspiring. When we build in a vacuum of echo chambers and monocultures, we miss out on the actual value of community in Web3. 

What really brings communities together? Too often in crypto, that answer has been making people rich. What it should be is shared ideals that solve real issues. If done with purpose and conviction, this can still make people money. 

While the rapid rise of layer 2 and layer 3 solutions promises scalability and efficiency, they are too often motivated by speculative gains rather than lasting value creation. If there’s any doubt, the numbers speak for themselves. 

Layer-2 fatigue aside, the sheer scope of this data raises the question: Is our industry innovating just because it can, or is it creating a real-world utility that improves the lives of fellow humans? There’s nothing wrong with building something to make money, but if that’s the only reason we’re building something, that’s a problem.

Recent: Islamic finance and Web3 take stage at Istanbul Blockchain Week

We need to shift the narrative and look at how Web3 is solving actual, fundamental issues in emerging markets — particularly in regions like the Middle East, Southeast Asia and Africa — as a north star for how to ethically build the future of our space. 

What does innovation indeed mean?

If crypto projects think innovation in Web3 is only about VC-led fundraising rounds, comparing transactions per second, or building the next great decentralized application to trade cat coins, they have probably never existed in a place where even the simplest of financial transactions is cumbersome.

In emerging markets, where people grapple with inflation, high remittance fees and limited access to financial services, we’ve witnessed how meaningful effects can transform the daily lives of millions. These are not abstract issues. They affect business owners, families, students, creators and more. 

From stablecoins to secure and user-friendly payment applications, Web3 offers a unique opportunity to address these problems by creating decentralized financial systems that bypass the inefficiencies and inequities of traditional banking. For Web3 to truly make a difference in these regions, it must be designed with a focus on ethics, accessibility and long-term utility. We must lead by example. 

In these markets, if innovation doesn’t create a meaningful disruption that improves people’s lives and addresses real-world problems, it’s nothing more than a buzzword. The most powerful solutions in technology are those that solve the world’s greatest problems.

Ethical finance — Web3’s future?

If you want inspiration, pay attention to those doing something different. If you want to inspire others, lead by example. 

Ethical finance, particularly Islamic finance, offers valuable lessons for Web3. Dating back to the 1960s and 70s in the Middle East and North Africa (and even further to around 620 AD), this sector is built on risk-sharing, ethical investment and a focus on tangible assets.

Islamic finance has endured for centuries because it rejects speculation in favor of real, meaningful value. For example, we’ve seen the rise of ethical finance institutions like Al Rajhi Bank, one of the most prominent Islamic banks globally, known for its investments in tangible assets and community-oriented financial products. 

This model, which strives to build based on morals, substance and necessity versus mere financial opportunity, can guide Web3 as it moves beyond hype-driven growth.

Build by example 

As we look toward the next few years with the wind and a bull market beneath our wings, the time has come for Web3 to take a hard look in the mirror and redefine what success and innovation genuinely look like. The answer to this won’t be the same for everyone — that would be pretty boring if it were. 

We must find a common ground of shared values that extends beyond technical achievements, market capitalization, total value locked or X followers but strives to innovate something more significant than any layer 2 or token. 

When gearing up to launch something new, our industry must ask itself something that lives at the heart of Islamic finance: How will this product improve people’s lives? Is it true to the ethos of creating decentralized systems that are transparent, fair and built for the benefit of all?

If we can’t answer that, perhaps we should step back and ask why. Then, get back to work.

Opinion by: Daniel Ahmed, co-founder of Fasset and founding member of the Own Foundation.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.