A new non-fungible token marketplace to list and sell Shariah-compliant digital assets plans to launch towards the end of this year, helping to diversify Islamic portfolios amid the increasing awareness of NFTs.
UK-based Funoon will be an NFT marketplace for Islamic art, culture and sports digital assets in different formats including image and video files, Shah Sheikh, the company’s CEO and co-founder told Salaam Gateway.
The assets on the platform will include artwork, memorabilia, audio and video NFTs, with a potential to even host feature-length films (crowdfunded/invested by the audience) longer term.
Funoon will hold limited edition audio content files, that either may be very exclusive--for example only 100 ever made and the content is not available anywhere else--or could confer the owner other associated rights. The same applies to the video medium.
WHAT IS A NON-FUNGIBLE TOKEN (NFT)?
- An NFT is a unique digital asset on the blockchain that can be bought, sold and held but cannot be replicated.
- An NFT is a transactional record that is noted for posterity and is immutable. Its immutability is its power, and can allow for a number of use cases, especially when the NFTs are transacted on a blockchain that is smart-contract enabled. This means that conditional clauses can be tied into the sale of a particular NFT, which can confer the owner certain rights with respect to future access to products and services, as well as royalty revenues in some cases.
- The digital asset could be an image, a sound file, a video, or a photograph. Any digital variety of Islamic Art could be an NFT, as long as it is cryptographically secured by a blockchain.
“We want to inspire a younger generation who may have hitherto been excluded from traditional arts, through helping them embrace more digital artforms, such as generative art,” said Sheikh. “We want to work with artists, and digital asset collectors/creators that create halal content.”
Funoon co-founder Mohammed Imran said the platform is trying to create a faith-sensitive ecosystem and community for artists, content creators and collectors.
A beta launch around early October is in the works, followed by a full release by the end of this year.
HOW DOES FUNOON WORK?
The platform will allow buying, selling and trading of different NFT artworks using BNB (Binance) tokens.
Funoon will mint the asset and list the NFTs, and users can bid for artwork via an auction, or purchase instantly.
Artists can sell something for the equivalent of $100 (in BNB tokens) and if the price increases, they will receive royalties from that for each and every subsequent resale of the NFT.
Funoon is finalising its revenue stream but will likely charge a percentage on sale of the NFT.
The company aims to charge an industry standard of 2.5% on every NFT sale on the platform, according to the co-founders.
Funoon hopes to attract a diverse audience.
“Our core users will likely be crypto-enthusiasts initially, however this will be followed by a growing audience that are drawn primarily to NFTs and digital Islamic collectibles/art,” explained Mohammed Imran.
At the same time, it hopes to attract sophisticated investors who are looking at new asset classes like NFTs.
“An increasing number of family offices are diversifying their investments and investing in crypto assets,” said Mohammed Imran. “Whilst the majority are doing so by investing in coins and fungible tokens, a growing number are looking into the opportunities presented by non-fungible digital assets.”
He believes that despite the past price volatility in cryptocurrencies, NFTs are maturing.
“The crypto dip of April/May 2021 didn’t materially impact the NFT market,” he said. “This in part is due to the fact that the Bitcoin/altcoin market is being decoupled from NFTs. This also shows the maturity of the NFT market.”
HOW COULD NFTs DISRUPT THE MUSIC/AUDIO INDUSTRY?
- Decentralise the processes and funding mechanisms through which music/audio content is created
- Offer audio content creators new ways of seeking user engagement (e.g. exclusive content), and
- Use the NFT as a proxy for other 'rights' that are fulfilled in the future (e.g. access to conferences, concerts etc).
To ensure security, Funoon will have specific safeguards in place to protect NFT items, artists and users.
All transactions are conducted via a smart contract and are not disputable as they are stored on the Binance Smart Chain (bscan.com) transaction log.
“Whilst we are initially only supporting the Binance Smart Chain, longer term we will integrate multiple blockchains into the Funoon platform,” said Mohammed Imran.
“There are also safeguards we are putting into place to ensure that plagiarised works are not sold on the Funoon platform.”
NASCENT BUT GROWING
NFT activity is starting to slowly gain traction in the Islamic art and cultural space.
The world’s first NFT marketplace is OpenSea, which opened in 2017, and offers Islamic art NFTs from time to time.
Earlier this year, Dubai-based Behnoode Foundation said it plans to launch an NFT Islamic art agency, Behnoode Art.
“Initially, We will promote Islamic art and artists,” Behnood Javaherpour, CEO of Behnoode and Behnoode Foundation, told Salaam Gateway.
“NFT Art is constantly evolving and I want to ensure that Islamic art and artists have a global platform to impact the art scene … We will observe how the digital art space progresses and adapt accordingly. Once we launch we will definitely have a much stronger understanding of the marketplace,” he added.
Scanning the landscape, Funoon wants to fill a gap.
“There are other agencies creating Islamic Art NFTs, but not an NFT marketplace,” said Sheikh. “There are few generic NFT marketplaces like OpenSea and Nifty Gateway. However, within the Islamic space there are little to no options.”
Whilst the industry is nascent, the NFT community is vibrant and growing, according to Sheikh. “In places like the UK and UAE there are multiple conferences and events on NFTs,” he said.
Funoon is currently bootstrapped but the co-founders are keen to launch with a minimum viable product.
“Currently, the development of the platform is self-funded with a strategy to bring onboard an advisory team that have experiences in different realms,” said Sheikh. “Once our platform is live and the business model is proven we will aim to go through a series of fundraising activities.”
The UK-based company also plans to establish an office in Dubai.
“Dubai and the UAE will play an important role in building the platform,” said Sheikh. “We are in discussions to develop strategic partnerships with artists and museums.”
At this stage of the NFT industry, there are Shariah concerns particularly around tangibility and volatility.
“We are having discussions with our advisors as well as with Shariah scholars on the Fiqh aspects of the platform,” said Sheikh.
“I think there is still a learning process among some Shariah scholars on this new asset class and their understanding of digital ownership.”
A Dubai-based global Shariah advisor told Salaam Gateway that at this early stage of the NFT industry, the Shariah concerns are to do with ownership and tangibility of the underlying assets, as well as whether these tokens are creating digital scarcity. Fiqh al muamalat has different aspects and definitions of what assets are.
Similarly, the value of NFTs are hard to understand. Unlike physical objects like gold coins such as those found during the Roman era, NFTs have no intrinsic value, according to the Shariah advisor.
Intangible items such as airtime, goodwill and software have certain uses in Shariah-compliant transactions. However, the NFT industry is nascent and there is currently insufficient understanding of it from a Shariah perspective.
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