Unleashing the Power of Zakat Through the Bitcoin Lightning Network

April 30, 2023

This past Ramadan, Bitcoin Majlis was a part of a charity drive to help raise donations for a Muslim orphanage in Uganda. Alhamdulillah, we are delighted to announce that we have successfully raised about $6000 all in Bitcoin! Before proceeding further with this post, we want to thank each and every one of you that’s donated and helped in this drive. Due to your generosity and kindness, the orphanage was able to provide food, medicine, and shoes to 78 orphans.

You can check out what the donations were spent on here: https://www.orphans-of-uganda.org/2023/04/21/summary-of-ramadan-donations/

The orphanage that embraced Bitcoin

Orphans of Uganda is a Muslim orphanage in the Bugiri District in Eastern Uganda. They are a licensed orphanage and are very transparent in their operations. This orphanage is run by 3 volunteers and they oversee the care of 78 orphans, ranging from ages 5 to 15. They don’t get enough local support and are thus are very dependent on donations from outside the country. 

We were delighted to see that they accepted payments in Bitcoin through the lightning network. It is a second layer protocol built on top of the Bitcoin blockchain which enables fast and secure payments with negligible fees. The lightning network can be thought of as the payment layer on top of the Bitcoin protocol that allows tiny fractions of btc, or sats (there are 100 million sats in each btc) to be sent instantly anywhere in the world.

So we at Bitcoin Majlis donated some sats to the orphanage, and we were really impressed with how smooth and seamless the donation process was. This gave us an idea.

What if we could help raise funds for this orphanage using our Bitcoin Majlis platform? This orphanage in Uganda accepted bitcoin donations through the lightning network which meant that anyone in the world can donate – even in donations as little as a penny! And the transactions would be settled instantly with practically no fees. Too good to be true! Wait there’s more – There is also no need to use a bank, institution or “trusted” third party.

Conveniently, Ramadan was the perfect opportunity to put theory into practice. We were thrilled to showcase the power and convenience of using the lightning network to allow anyone to participate in this charity drive.

The lightning network in action

So once Ramadan started, we announced on a Twitter space and a Twitter thread that we’d help this orphanage raise funds.

Almost immediately, we saw many of our followers on Twitter, both Muslims and non-Muslim, post screenshots of donations that were made over the lightning network. We witnessed donations come from all over the world and from all kinds of people. We even had Tahini’s, a Mediterranean restaurant chain based in Canada, donate to the orphanage.

And we had many Bitcoiners on Twitter donate sats as well, and many provided screenshots of the receipts showing how much they donated. 

The amount of people participating in this campaign exceeded our expectations, and we helped raise a lot more money than what we originally planned. Isma Byarugaba, the head of the orphanage, DMed us on Twitter thanking us profusely for the initiative that we started. By the end of Ramadan, they had received over 20,000,000 sats, or around $6,000! The orphanage was able to purchase food, clothing, medical supplies and treatment, school costs, and other necessities. You can read more about it here on the orphanage website: https://www.orphans-of-uganda.org/2023/04/15/thanks-for-all-your-bitcoin-donations/

The power of the lightning network

Needless to say, this charity drive was wildly successful, and we think there are some important takeaways Muslims need to pay attention to. 

Money was sent directly to the orphanage with no middleman. There were no funds being held by a bank, zakat organization, or third party such as PayPal or Venmo.  Bitcoin Majlis never held any of the funds raised nor did we receive any portion for overhead, management, or promotion.  We were only responsible for promotion and awareness. 

All the people that donated did so in a permissionless manner – this is because there is no ID or banking registration requirement to use the Bitcoin network. Anyone in the world was able to participate in this donation drive. This is extremely advantageous as many of those in need of zakat do not have access to a bank account or any banking service. Also, transacting over the Bitcoin network is borderless, which eliminates the friction and fees in converting/sending fiat currencies between jurisdictions. For example, the only other options for sending donations to this Ugandan orphanage involves Western Union or remittance apps like Moneygram. However, in order to use these services, users must upload their personal and banking information. These services charge exorbitant fees to send money across different countries. In other words, permission is needed to use these fiat based services. In contrast, Bitcoin requires no personal information from its users, and users do not need permission to transact over the network. 

Lastly, through the use of the lightning network, donations were settled instantly at the speed of light with virtually zero fees. This is in stark contrast with using fiat payment processors like Visa, as it can take several days or even weeks for payments to clear for actual final settlement. With the lightning network, the donation recipients receive their funds instantaneously.

The lightning network unleashes zakat

It’s abundantly clear from the aforementioned takeaways that the wild success of this donation campaign came from the unique properties of the lightning network. People all over the world were able to donate in an instantaneous, permissionless, and peer-to-peer way, without any third-parties managing/disbursing the funds. 

This campaign showcases the power of the Bitcoin Lightning Network, and how it could radically transform the way in which Muslims give their zakat and sadaqah. Muslims, especially those working in the charity sector, can no longer ignore the Bitcoin revolution and handwave it away as being just “speculative” and “gambling”. Bitcoin has an undeniable use case for Muslims in that it can unleash zakat and sadaqah and help lift millions of people out of poverty all over the world. Charity organizations like Launchgood and Islamic Relief need to look into utilizing this highly effective technology. 

One may argue that this campaign raised some funds for an obscure orphanage in Uganda, and it doesn’t have much of an impact in the grand scheme of things. But imagine if international zakat organizations (or any charity organization regardless of faith) like Launchgood or Islamic Relief utilized the lightning network. How much time and money could be saved in using an open, instant, permissionless, and practically feeless way to send zakat/sadaqah all over the world? We contend that most zakat organizations are sleeping on or simply unaware of this revolutionary technology. We at Bitcoin Majlis see a powerful and unstoppable future where Muslims use the Bitcoin lightning network as the most effective way to fulfill their 3rd pillar of Islam, zakat.

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