Introducting The Daniq And Our Trade Strategy

Asif Shiraz | Round Rock, Texas | Jul 21, 2012

Dinar Wakala has launched its latest offering in the Islamic barter medallions lineup, the Daniq Dirham. The weight of a Daniq is 1/6 that of the Dirham which according to WIM standards comes to 0.496 grams. The Daniq has traditionally been the smallest currency denomination in Islamic societies, after which transactions of still lesser value were concluded in the copper Fulus.

In line with our mission to revive legal, tax-compliant bartering in the United States and Pakistan, we have carefully developed our Daniq offering to fulfill its role as a trading medium in the free market. This strategy is specifically poised to avoid some of the common hindrances to adoption which the Dinar movement has experienced in other places.

An Experimental Unminted Daniq

Medallion Product Costs

To understand this, let us recap a few facts. First, that minting costs money. The development of a medallion requires labor and capital investment, which results in a markup of its price beyond the spot price of its metal content.

Second, these costs vary with size. It is intuitively understandable that the labor required to make one 100-gram bar of silver is less than the labor required to make hundred 1-gram bars. This can be observed in every bullion market in the world. The 1oz American Eagle coin sells for less than the price of ten 1/10oz Eagles. The higher you go in the volume, the lower the price. The reason for this is equally obvious: Smaller coins in higher number require more labor and time, as compared to larger coins in smaller denominations.

Exchangeability of Different Denominations

For a trading medium to perform its function, it must be fully exchangeable between its higher denomination values and lower denomination values. It is difficult to achieve because the smaller the medallion, the higher its cost. But it is still artificially established by governments for their legal tenders. E.g. In 2011, the production cost of one hundred Pennies or twenty Nickels both exceeded their face value of a Dollar, and was significantly more than the production cost of four Quarters. Yet, their exchangeability is established at par by the government, by subsidizing the production of the high value item, the loss being made up by Tax payer money.

Solutions for Bartering Medium

In a barter medium of exchange, this exchangeability is equally important but more difficult to achieve because there is no endless supply of tax-payer money to subsidize it. The only approach workable here is for bartering mediums to be naturally valued in such a way that people agree to exchange them across different denominations, i.e. the perception of their value in the minds of people is such that they see a higher denomination Medallion as being equal to a larger number of the smaller denominations.

The leaders of the Gold Dinar movement have come up with many different and creative approaches to solve this.

WIM (World Islamic Mint) has gone with the approach to uniformly price all their Dinar and Dirham products according to their weight. So while a 1oz coin in traditional bullion market is priced less than ten 1/10oz coins, within the WIM structure an 8 Dinar is exactly eight times more expensive than the 1 Dinar. When people are buying them, they take this value perception with them, and subsequently use them accordingly in their trading and exchanges. This has proven to be an excellent solution and is deployed successfully in the Far East. However, it also hinders some people from buying the higher denomination coins at all, because of it being somewhat overpriced compared to other products in the traditional bullion marketplace.

Another approach by a different Dinar producer, is to drop the higher denominations altogether, and have only three types of Coins, the Dinar, the Dirham and the Daniq. The idea here is to force people to use eight 1-Dinar coins where they would have preferred to use a single 8-Dinar coin. This works excellently in creating this value perception, but has two problems. First transacting in them becomes a tad bit more cumbersome, and second, the problem persists with the Daniq and the Dirham.

A new Muslims4Liberty initiative, in partnership with ShireSilver, has adopted a still different approach of discarding minting altogether to decrease premiums, and going with raw metal packaged in plastic cards. The underlying pricing principle is the same as WIM, i.e. price six Daniq cards to the same value as one Dirham card.

There is no right or wrong solution between all of these, as everyone is experimenting and trying their best to spread adoption and facilitate trading.

Dinar Wakala, with the launch of its own Daniqs, is now further refining the above approaches, by experiment with a new kind of value equalization, as part of its multi-pronged strategy to spread adoption of Dinar and Dirham.

Adoption Strategy I: Pricing

The new Daniq being launched by Dinar Wakala stands in between raw metal and a minted medallion: It is a flat circular disc, resembling a coin, but without any stamping on its surface. It is enclosed in a company branded plastic cover, and incurs a lower manufacturing cost then a similar stamped coin of its size. But though its manufacturing cost is lower than a Dirham, it is still high enough that the sum of manufacturing costs of six such pieces will come to be the same as our minted Dirham. This way, we leave it upon the people to choose: Six difference pieces of a labor efficient product, or one single piece of a labor intensive one.

We are experimenting with three difference types of Daniqs, each of which will be produced on experimental basis and made available to our customers.

So the full line-up of silver bartering units will look like this:

  1. 10.4 Dirham: High Quality Proof-Finish Medallions with Commemorative Value. The medallions in honor of Shaykh Ibrahim Niasse are being considered for release under this category.
  2. 1 Dirham: Our regular Bullion-grade medallions, which offer an optimal mix of quality and price.
  3. 1 Daniq: Economical un-minted products.
With such a gradation in our product offerings, a natural price gradient will be created, where people will willingly exchange their Daniqs against the Dirhams, and vice versa.

Adoption Strategy III: Pricing Consistency and Independence

Our pricing consistency is perhaps the most unique and bold step that has been taken by any bullion seller.

We all know that international bullion markets are highly rigged, speculative, and volatile. They thrive in a patently usurious environment and are at the manipulative mercy of international high-finance.

The Dinar movement is aimed at restoring the freedom to own, use and value natural monetary instruments back to the common man. And in order to do this, we must shield our customer and instill a sense of indepdence from the global pricing of bullion in terms of fiat. Although it not possible to completely accomplish this, but one step Dinar Wakala is taking is to maintain constant pricing of our medallions irrespective of the daily changes in bullion market. This consistency and stability over a longer period of time allows our customers to both view a Dirham as an article of value in its own right, and facilitate easy pricing of their products in terms of the barter units.

Other people have taken innovative approaches to solve for daily price changes. One approach is to publish a daily price on a well-known URL and then linking to it from other websites, publications, and product QR Codes. However, this never allows people to value their items in terms of the bartering units itself. The approach of pricing in fiat and then converting to Dirham is always perpetuated through this method.

In our model, over the span of many months, our Dirham remained at $5.5, while Dirhams from other sellers fluctuated daily between $5.25 or $5.75. We believe that our pricing model positively instills a sense of independence from fiat in the customer's mind, and allows this thinking to develop that items can be priced in "Dirhams" directly. This price stability, even if artificially generated is really a precondition for any medium of exchange to be widely deployed. For example, the Dollar is viewed as a value in itself dollar, with everything else priced in it. This is true even though its price against the Euro changes every second. But the pricing of German imported items in US stores do not change because the dollar changed with respect to the Euro. Similary, the pricing of items in Dirhams and Dinars, must also be made independent of Dirham's exchange value every day and every second. We hope that the price consistency we introduce will contribute towards doing just that.

Adoption Strategy III: Bundle Packaging

In addition to the pricing, there is yet another factor that goes into facilitating trading which again we can learn from government legal tender experience. And this is the relative quantity of different denomination units required to the exchange needs of typical buying and selling patterns. Looking again at the Dollar, we can see that the total value of its different denominations is not uniform, but varies according to the market demand for that type of bill. So there are five times more $1 bills in circulation then there are $5 bills. And the total number of $10 bills is a little more than half that of $5 dollar bills. But in terms of value, all of them are almost equal. This changes dramatically as we go to higher denominations with $100 bills being a little over half that of $1 bills but having a total value more than any other denomination.

Since currency is used to clear the same transactions which can potentially be conducted in our barter trading model, we have decided to push the medallions out in the same ratios. So we will be making a bundle offering consisting of 1 Dirham and 6 Daniqs, allowing customers to easily buy the right mix of units which they can smoothly use in our upcoming barter trading platform, Dinar Bazaar.

Adoption Strategy IV: Buy-Back and Value-Back

As we try to transition people towards bartering, the bulk of our economic lives still depend heavily on fiat currency based products and services. Exchangeability back to fiat is thus necessary though undesirable as it takes us one step back.

We are taking two approaches to address issue:

a) Buy-Back at 5% spread
At a 5% buy-back, we will be offering our customers a better deal than some of the largest bullion sellers in the United States. For example, today on July 21, 2012 is advertising a selling price of the 1oz Maple for $30.68, and a buyback price of $28.33 making it a 7.6% spread, which is worse than our 5% one.

The buy-back will be subject to Dinar Wakala cash-flows, and preferentially offered to customers who have had the price movement gone against them, so that confidence and stability can be generated in the system. Such preferential treatment will prevent speculative investors from using the feature to cash out at a profit in fiat terms.

b) Value-Back at 0% spread
By making products and services available at Dinar Bazaar for the same prices as in traditional marketplace, customers will be able to barter their Dinars, Dirhams and Daniqs without any loss of value.


Our trading strategy is focused to provide an convenient and conducive environment to conduct barter trading, so that our dollars can be freed up for more critical economic uses. We strategy rests on four features through which we hope to achieve this:

  1. Natural price gradient among bartering units of different denominations
  2. Price consistency, shield from daily speculative fluctuations
  3. Availability of units in the right market mix to facilitate typical transaction patterns
  4. Maintenance of value when converting to bartering units through a competitively priced Dinar Bazaar marketplace.
We hope that the market will positively respond to our new offerings and use these features to expand the growth of a strong bartering economy.


View more pictures of the Gold Dinars