The World's First Cryptocurrency System-Islamic Hawala

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There has long been a virtual currency system like this in the Islamic world, and it is still widely used as an online system for banks.

This article is about Hawala, a system that exists only in the Islamic world.

Islamic Remittance System - Hawala

It means "trust" in Arabic, which means a traditional Islamic remittance system that distributes funds without going through banks using a global organizational network.

Its original name is Hundi.

Hawala was originally designed to protect the property of Islamic targets trading on the Silk Road from thieves in the desert, and remittances can be made anywhere in the world at a small fee.

remittance procedures using hawala

1. A remittance client living in country A will stop by a nearby Hawala office to pay the remittance amount and a certain fee, and then notify the remittance recipient living in country B of the password.

2. Recipient shall stop by a nearby Hawala office to provide the password given by the client and receive the promised amount.

3. The Hawala broker of country A shall contact the broker of country B, who has been in a business relationship, to pay the money to the recipient first, and then settle the settlement every certain period.

There is always a hawala broker in Muslim areas, so remittances can be made not only in remote areas without financial institutions, but also on holidays.

Most Hawala intermediaries earn lower fees than banks and other formal financial institutions because they earn more from exchange rate gains or high-value remittance customers.

It is customary for all parties to the transaction to engage in credit transactions with a sense of community called "Islamic Brothers" and to follow strong retaliation such as murder if the transaction is not executed, so there is more coercion than documents.

It does not set up collateral or create any documents, and as soon as the transaction is completed, all remittance-related information, including passwords, is destroyed.

It is widely used as a means for illegal Muslim residents overseas to remit money to their families as the advantage of increased manpower movement between countries and easy concealment of their status is highlighted.

It is becoming organized and large-scale by linking with international exchange and terrorist organizations, breaking the international foreign exchange transaction order, as well as being abused as a money laundering or criminal financing route by international criminal organizations.

It is estimated that more than 30,000 workers from the Middle East live in Korea, and they also remit money using dozens of domestic hawala organizations.