Peter Wänke, M. Kabir Hassan, Md. Abul Kalam Azad, Md. Azizur Rahman · 5 authors
Abstract The literature gap in microfinance paradox of double bottom line (financial performance vs. outreach) has always been an interesting area of research. This paper proposes a theoretical model most suitable for Islamic Microfinance Institutions (MFIs) which enables Islamic MFIs’ to operate together with the existing financial models compliant with Islamic Shariah Law. This model is based on a distributed verification/decision-making process that might be realized (but not necessary) through blockchain. Among the available distributed verification techniques, blockchain technology is an attractive emerging computing paradigm due to its decentralized, immutable, shared, and secure data structure characteristics. This model proposes three significant propositions. First, sharing information through blockchain will allow a transparent network in MFI operations, which will raise confidence for donors resulting in a causal effect of a relatively lower profit rate to be charged by the MFIs. Second, the consensus mechanism will enable risk-sharing, a character of Islamic finance; thus, the MFIs will operate without any collateral for low-risk firms. Third, the double bottom line of MFIs' long-lasting paradox would be solved. As for practical implication of this proposed model, the causal impact of lower cost investment by the lenders would increase social welfare because of no collateral and no initial wealth requirement. The proposed model proposes a credit rationing approach where profit can be negative. No collateral will be used when calculating the creditworthiness of a borrower.
Purpose Islamic scholars are not unanimous on the legality of cryptocurrency. Muslims are confused about the permissibility of cryptocurrency. Thus, this study aims to evaluate the cryptocurrency from Shariah’s perspective. Design/methodology/approach This study is qualitative and uses a deductive research approach. It drives conceptual and logical deduction from Qur'an and Hadith. Findings The cryptocurrency is an intangible currency without any precious metal or commodity backing. It does not possess any intrinsic value, and also its prices are highly volatile. On these grounds, cryptocurrency does not qualify as money in Islam. Social implications Cryptocurrency is not compatible with Islamic principles. It is not legal tender and is not backed by any government. Its prices are highly volatile, which opens the door for speculation. Muslims should avoid investing in it. Originality/value This study fulfills an identified need to evaluate cryptocurrency as money from Shariah’s perspective.
Roaida Yanti, Melinska Ayu Febrianti, Qurtubi Qurtubi, Joko Sulistio
Purpose – The main purpose of this study is to identify patterns and directions of halal blockchain research and find out the development of halal blockchain research trends.Methodology – This study used data from various articles in the Google Scholar database with the publication year limited from 2011 to 2022. Data collection used Harzing's Publish or Perish software. There were 353 articles that matched the keyword and they were processed by bibliometric analysis. Findings – This study found the basic pattern in halal blockchain research, trends in halal blockchain research, the relationship among research, research gaps, researchers who research a lot on halal Blockchain and the most published publications.Implications – This study contributes an overview of bibliometric studies in the halal blockchain literature, which can widen the previous literature and show more focused study topics by examining the abstracts and content of published articles. Findings related to evaluative and relational techniques can be helpful information for researchers, especially those new to this field of study. This bibliometric approach can be invaluable, especially for graduate students in supply chain management, logistics management, and industrial engineering.Originality – The originality offered by this research is to process research documents based on halal blockchain journals on Google Scholar. Thus, a lot of information and knowledge about halal Blockchain over the last 10th years can be useful for further research.
Wan Kamal Mujani, Azyati Azhani Mohamad Mazuki, Wan Mohd Hirwani Wan Hussain, Muhammad Nazir Alias · 7 authors
In the pursuit of modernness in the world today, various systems begin to have a place in society, especially involving the economic sector. Development of available technology gives the space and opportunity for a "smart" minority in society to invent techniques that provide convenience or amenity as well as returns for the public, such as the invention of digital currency. Cryptocurrency is no longer a strange medium of payment in current world technology. It is becoming more popular as society discovers its advantages if correctly used. Besides, its use is growing because the minority in society have begun to catch on with using Bitcoin in the world of investment. However, the rest of society outside this group are still hesitant about its 'permisibility' in sale and purchase transactions because no central authority or Central Bank has issued a statement that digital currency is legal tender, except for El Salvador. Therefore, this article discusses some views of Islamic scholars on the Shariah perspective of using Bitcoin in order to develop and advance the economy of the Muslim society. Researh results find that a minority of Islamic scholars consider Bitcoin as a permissible medium of exchange while some others consider it as prohibited. However, in Malaysia, a fatwa was issued by the Majlis Muzakarah Hal Ehwal Agama Islam and the Securities Exchange that its use is permissible but subject to certain conditions.
SITI KHALILAH BASARUD-DIN, Nik Safiah Nik Abdullah, Nur Syamilah Md Noor
Nowadays, the use of digital currency technology is recognised by a variety of industries, particularly those that use Bitcoin transactions. Bitcoin was created as a digital currency to facilitate online payment transactions between one party or individual and another without the use of a third party. However, Bitcoin is also used for money laundering, investment scheme fraud, and involvement in cybercrime, funding activities, and other illegal activities. Bitcoin is also unsuitable as a value storage tool because Bitcoin wallet virtual securities are frequently targeted by cyber criminals, and they can lose liquidity and become vulnerable to hyperinflation. This scenario compels experts and scientists from all over the world to pay close attention to hakam law and the risks of Bitcoin use. According to the Fatwa issued by the state of Perlis explains that any ownership of digital assets is subject to zakat if it is sufficient haul (storage period) and nisab (mandatory rate). This is because digital currency is property and currency that is mutaqawwim which is legal property according to sharia. The issue is whether zakat institutions are willing to accept zakat via Bitcoin transactions. How to make zakat payments with Bitcoin. This study's objective is to dismantle the method for calculating zakat on Bitcoin currency. This study collects data qualitatively through interviews with representatives of zakat institutions and Bitcoin practitioners. While data analysis is based on document analysis and data interpretation of information obtained through interviews. The findings of this study are calculation methods that can be applied to zakat Bitcoin currency. Thus, this study is able to provide new contributions to the academic development and management of zakat in the initial preparation and organise strategies for technological change and innovation that is growing rapidly in changing the way zakat collection today.
This study explains the Islamic economic perspective on cryptocurrency, in this case, in the light of maqashid shariah. This research was a literature study and qualitative in nature. The data analysis applied a descriptive-analytical technique with a normative juridical approach to Islamic law. The results of this study conclude that cryptocurrency has a much greater element of mafsadah than maslahah. It is an investment commodity rather than a currency with a very high level of risk and volatility that reflects the mafsadah. This is the attraction of a new investment model because it only follows the trend of global market developments that are far from the function and benefits of currency in the perspective of Islamic economics.
Muhammad Abdul Ghoni, Ade Wirman Syafei, Kemal Ariza
This practical analysis and investigated research of the performing cryptocurrency investment during the January 2019-September 2021 period. This study is evaluating five cryptocurrencies within global Cryptocurencies market. Treynor and Jensen Index are utilized to measure each cryptocurrencies operation in the crypto currencies market. Moreover, the analysis of Islamic Legal maxim of blocking evils is precedenced than taking benefits in Cryptocurrency Market is applied. The Treynor and Jensen Index analysis approach is used to evaluate performance among the five cryptocurrencies, namely; Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Tether (USDT) and Cardano (ADA . The results of Treynor index indicate cryptocurrencies, namely; Tether (USDT), Ethereum (ETH), Cardano (ADA) assets carried the has a positive value means the performance of cryptocurrency is good as compare other Cryptocurrencies. However, the results of Jensen index show the four crypto assets, namely; Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Cardano (ADA) have a negative Jensen value, these indicates the cryptocurrencies have low returns. The finding of the result from the analysis of the of Islamic Legal maxim of preventing evils is better than attracting benefits suggest to avoid cryptocurrency investment is priority rather than taking benefit from cryptocurrency investment
Abstract In the recent coronavirus pandemic, several researchers have focused on the drivers of cryptocurrency behavior. In particular, this study provides insights into what can drive Islamic cryptocurrency markets and how do they react during the COVID‐19 pandemic. We explore the cryptocurrency volatility and the connectedness between the Islamic, conventional, and COVID‐19 confirmed cases and deaths using the wavelet approaches. The preliminary results show that faith‐based cryptocurrencies have reduced risk exposure than their conventional counterparts, in the long run, making them more appealing for investment, particularly for investors seeking low‐risk and Shariah‐compliant assets. Furthermore, the empirical results indicate that both Islamic and conventional cryptocurrencies are more sensitive to the death toll than the newly confirmed cases. We also observe significant positive co‐movements between Bitcoin and Islamic cryptocurrencies. Besides, Bitcoin exhibits a substantial response during various time scales while compared with Islamic cryptocurrencies. This study contributes to the literature by investigating the sensitivity and the vulnerability of a new category of cryptocurrencies backed by tangible assets to pandemic shocks. To the extent of the author's knowledge, this study is the first attempt that examines the co‐movement between Islamic and conventional cryptocurrencies using the wavelet approach. A viable, ethical, and alternative investment route for faith‐based investors can be provided by the Shariah‐Compliant cryptocurrencies as they are risk‐reduced and less sensitive to the pandemic than conventional benchmarks. Besides, this study creates opportunities in portfolio diversification for investors.
Zaid Saidat, Maurício Silva, Derar Al-Daboubi, Ahmad A. Al‐Naimi · 5 authors
This article aims to explore blockchain, its applications, and its impact on banks in Jordan. The potential applications and improvements that blockchain might bring to the financial industry are astounding. Specifically, this study discussed the importance and possible areas of deploying blockchain technology in the banking sector of an emerging country with a fast-growing economy, namely Jordan, for different reasons. First, due to the shrinking interest-rate spread, Jordan's financial sector lacks long-term lending and unsecured loans. Second, many economic revolutions, such as the internet and banking innovations, have impacted the Jordanian banking sector. As a result, the banking sector must undergo significant transformation to increase performance and attain new levels of growth. Third, the underlying technology in clearing payment and credit bank information systems could be revolutionized by blockchains. Fourth, blockchain applications facilitate "obtain credit, unsecured loans" scenarios, improving banking efficiency. Finally, while blockchain has much appeal because it allows free and self-governing transfers, overall regulation and security for this decentralized system are still being created and agreed upon. We argue that for blockchain to change Jordan's financial system, legal frameworks must be in place to control banking transactions. This study explores the technology of blockchain, the emerging technology that powers Bitcoin and other cryptocurrencies. It highlights the features of the blockchain and shows why it could profoundly influence the entire banking sector in areas ranging from payments to settlements and identity services.
The cryptocurrency was a very popular issue in recent years. There was a debate among scientists regarding the prohibition of cryptocurrencies as a medium of exchange. Some Islamic institutions use cryptocurrencies and blockchain platforms in the financial transaction. This study analyzes the arguments of classical and modern Muslim scientists regarding the evolution of money to become modern Islamic digital money in the form of cryptocurrency. We used ARCH GARCH to predict the volatility of cryptocurrencies. Our samples are Bitcoin, Ethereum, IDR Token, and Tether USD Token. IDRT and USDT are stablecoins. Bitcoin and Ethereum are cryptocoin. We use daily data of cryptocurrency fluctuations from August 7, 2015, to May 21, 2021. The data were taken from the official website for cryptocurrency transactions, coinmarketcap.com and blockchain. com. This study proves that Bitcoin and Ethereum are types of cryptocurrencies which have very high volatility. Meanwhile, IDRT Rupiah Token and Tether USD Token are more stable types of cryptocurrencies. In terms of using digital money for modern Islamic financial transactions, we suggest using cryptocurrencies of the token type.
Klemens Katterbauer, Hassan Syed, Laurent Cleenewerck de Kiev
The digital economy has undergone significant transformations with blockchain becoming a household name in the fintech environment. Besides powering cryptocurrencies, blockchain technology enables power transactions in a variety of forms and enables decentralization which may reduce transaction costs. Islamic microfinance has become important with many new institutions arising in order to satisfy the demand for microfinance services while ensuring that these services comply with the Shariah Law. Cost of transactions and low degree of digitalization are the major obstacles with current solutions. We present an innovative blockchain artificial intelligence framework for the optimization of Islamic microfinance service provisioning as well as providing financial and transaction services in order to ease transactions and make them more secure and readily available. The framework was evaluated on a large dataset from the Central African Republic, and we could demonstrate strong performance of the AI-blockchain framework. The framework provides a viable solution for Islamic microfinancing to enhance transactions services and overcome some of the existing challenges with Islamic finance.
Saeed Hameed Aldulaimi, Marwan M. Abdeldayem, Ahmed Kh. Muttar, Fuaad Hameed Aldulaimi · 5 authors
The digital financial products applied and become legal and regulatory frameworks and some are trying to gain legal status to gain more comprehensive access to business and finance. Financial technology is invading all banking and financial aspects. Islamic Fin-Tech (i-Fin-Tech) is becoming a new trend in the recent industry studied due to the importance of Islamic finance and banking sector. This study aims to Introduce the Islamic fin-tech products that are offered to a market in the Kingdom of Bahrain. This review studies decentralized digital financial products in payment and financing, in addition to trading and investment, and reveals decentralized digital financial products in asset management and insurance. This study uses the qualitative research method, especially by reviewing the published research on previous studies that clarified the essential Islamic financial products used in banks. In addition, this study relies on secondary data, especially reports published by Islamic banks, which show the distinctive products they offer to customers, performing a systematic literature review, the guidelines are significant in encouraging researchers, which are characterized as simulating the technical development of Islamic finance in the era of digital technology. The results showed that Islamic banks are still seeking to benefit from modern technologies by adapting their financing instruments by industry and financial engineering to create products Islamic financial services are up to the challenges of the digital world. This study recommends focusing on information technologies and development and the trend towards digital preparation.
Corruption is one of the biggest evils in society. Most of the black money of the world is transacted through Nongovernment organisations and charities. Though, the intention of a few genuine people who want to help the society could be misused by others. In this context, this paper proposes a solution for the online charity system using blockchain technology. The donations made by any donor can be traced and maintained on the blockchain system. The system takes the real money and converts it to virtual tokens and all the transactions done on the systems are done in form of tokens. These tokens are donated by donors and when these tokens are distributed to receivers, there are various algorithms implemented to distribute the tokens. The comparison of proposed algorithms is evaluated and analyzed based on execution time and execution cost.
This paper discusses the money and financial system from both the conventional and Islamic points of view. To further elucidate this topic, some aspects of the conventional financial system are discussed on the applicability from an Islamic perspective. Firstly, the advancements of technology that had led to the invention of cryptocurrency and how the Islamic financial system can evaluate the determinants of the adoption of such cryptocurrencies were reviewed. Secondly, the use of digital wallet and how it is encouraged by the government to increase transparency in the financial system and finally, the applicability of a dual-currency model, which covers the idea of revitalizing the dinar and the dirham as well as the implementation of a dual-currency regime in a nation and how it benefits the economy and prevents the failures of the financial system are discussed along the way. The paper reviews scholarly work conducted by both contemporary conventional and Islamic economic scholars. In addition to that, this paper incorporates the views from the classical Islamic scholars such as al-Ghazali, as well as reviewing the money, banking, and financial systems that were conducted during the early Islamic reign, which would be deemed helpful in formulating an Islamic monetary system that could be pre-eminent in today’s world.
Muhammad Al Ikhwan Bintarto, Yudi Setiawan, Muhammad Uwais Alqarni, Faishal Hilmi
Cryptocurrency is a virtual currency based on blockchain. Yet, some countries forbid it as a means of payment in transactions. It can only be used as diversification in investment. In fact, cryptocurrency is a liquid asset even though it fluctuates. In Islam, there are different views whether cryptocurrency can be assets or can be zakah, infaq, sadaqah, and waqf. The object of this study is to answer whether the crypto can be al-amwal azzakawiyah or something that can be zakah and waqf which can be maslahah for the society. Another purpose of this research is to enlighten about zakah and waqf managers on what cryptocurrency for. The theory used is the theory of zakah and waqf in Islam. This is qualitative study with a conceptual approach and an Islamic law approach. The result of this research is that cryptocurrency can be said as wealth or al-maal that can be zakah, infaq, and waqf because it has fulfilled several requirements to be classified as wealth or al-maal in Islam. Zakah calculation of crypto currency must exceed the nisab 2,5% equivalent to 85 grams of gold, the owned can already be an object of zakah.
Purpose This paper examines the effect of the holy month of Ramadan on the returns and conditional volatility of cryptocurrency markets. Design/methodology/approach The closing prices of six cryptocurrencies have been considered. The study employs different classical tests for checking if the efficiency behaviour is similar during Ramadan celebration days and non-Ramadan days. Besides, dummy variable regression technique for assessing this anomaly on returns and volatilities has been applied. Findings Although no significant effect on returns and volatility for Litecoin has been found, the results provide evidence about the existence of the Ramadan effects in cryptocurrency markets. The results of the mean equations show the existence of Ramadan effect for Ethereum, Ripple, Stellar and BinanceCoin for all considered models. Significant effect on Bitcoin returns is found with an autoregressive model of order 1. The results of conditional volatility show Ramadan effect on volatility is not detected. Originality/value First, a new contribution in the incipient study of cryptocurrency analysis. Second, a comprehensive review of recently published empirical articles about Ramadan effect on traditional assets has been carried out. Third, unlike most of the papers focussed on the study of Bitcoin, this study has been extended to six cryptocurrencies. Ramadan effect have not been analysed in cryptomarkets yet. This study come to fill this gap and analyses Ramadan effect, previously documented for traditional assets, in particular, stock index from Muslim countries, but not yet analysed in the cryptocurrency markets.
The existence of cryptocurrencies that have emerged and developed since the last decade is still a debate, both in terms of function, regulation and compliance with Islamic economic principles. Different countries give different attitudes towards cryptocurrencies. Some countries accept its existence, while some other countries reject it. This is inseparable from the question that arises whether cryptocurrencies function as money or commodities. In addition, the absence of an official institution that is responsible for and regulates the circulation of cryptocurrencies and no underlying assets is also another problem. This article aims to see how cryptocurrencies are positioned based on their nature, characteristics and functions using an Islamic finance point of view. The results of the study indicate that cryptocurrencies currently carry out more functions as a store of value that are not in accordance with the Islamic financial system. In addition, the use of cryptocurrencies as money and means of payment carries a fairly large risk. This violates the principle of property protection in the maqasid al-shari'ah view.
Muhammad Dandy Alif Wildana, Tsumma Lazuardini Imamia
Waqf in its role as Islamic charitable institution has considerable role to sustainable economy, since the initiation of waqf itself started from Muslim for the benefit for all people. Despite its important roles and promising potential, the waqf institution is facing problems which will potentially deprive itself of its full potential. One of the main problems faced by waqf and other charitable institutions is the problem of proper administration of its assets, especially when the contribution to the charitable institution came from various sources. Considering the importance of technology to the life of the 21st century, the same technology may be applied to the enhancement of Islamic charitable institutions such as waqf, in the area of supervise and utilization of waqf assets. This paper employs qualitative methods through literature review to identify the possibility and suitability of technology implementation into waqf institutions. This approach is necessary to explore the potential suitability and the extent of Blockchain and Smart Contracts technology are capable of in improving and enhancing waqf institutions. The possibility of these technologies to be applied to become panacea to the problems that are commonly faced by waqf institutions such as asset administration, transparency, accountability, and governance. The implementation of such technology that offers complete transparency is considered effective against transaction costs and to create efficiency in charitable work of waqf institutions. It is expected that the technology implementation may provide ample room for waqf institutions to evolve into modern Islamic charitable institutions which can answer and adapt to the challenge of the 21st century. Keywords: Waqf, Blockchain, Smart Contracts, Waqf Institution, Governance
The aim of this study is to propose a new financial group lending system based on smart contracts, Under blockchain technology and Islamic jurisprudence point of view. The model proposes a new way that Islamic bank can finance projects and attract more investors who are looking for safe, profitable and Shariah compliant investment, this new model attempt to reduce antiquated and inefficient processes, settlement delays, fraud and concentration of risks by digitizing traditional lending paper contracts into a self-executed code line. We also propose an agent-based simulation using Netlogo as a multi-agent environment to experiment the new financial group lending system based on Smart contract.
From the womb of cyberspace bitcoin, the first decentralized digital currency, differed from the traditional currencies that we used to revolutionize the world of finance, and in light of its rapid spread, became a source of concern and question about the impact of this child on the economy of states and individuals, opinions differed around him between supporters and opponents, hence this study came in order to search and extrapolate this currency to know the positions of countries and major companies and what economists expected for their future, and the legitimate vision is not yet clear, and it became a duty Intensified efforts to diagnose and adapt this contemporary event and thereby indicate its judgment and controls.
Blockchain is the underlying technology upon which cryptocurrencies such as bitcoin are built. Cryptocurrencies have received significant attention in recent years. This focus has obscured the real technical innovation in data storage and retention – that of the so-called ‘blockchain’ digital architecture. Blockchain – also known as ‘distributed ledger technology’ (DLT) – has the potential to change much more than the realm of conventional financial services. The ability to transfer, store and record non-fungible bits of information is an important technical accomplishment that brings the economic dynamics of supply and demand to the digital sphere. This article examines how DLT is (and may in the future) influence the world of Islamic finance. We argue that blockchain has the ability to mediate and harmonise differing shariacompliance regimes thus opening up a single digital market for Islamic financial products and services. Fintech, Blockchain, Distributed Ledger Technology, Islamic Finance, Shariah-compliance, Cryptocurrency, Bitcoin, OneGram, Financial inclusion, Sustainable Development Goals (SDG).
Afifah Nur Millatina, Risanda Alirastra Budiantoro, Rahmad Hakim, Febrianur Ibnu Fitroh Sukono Putra
The research aims to analyze the potential of using blockchain to promote integrated financial inclusion through Indonesian potential zakat funds. We use a qualitative approach (the business model canvas) as the analysis tool. We generate the data using the literature study. The essence of the zakat funds management implies that zakat assets should not be left idle. Further, greater zakat funds collected, managed, and distributed will deliver more benefits to mauquf alayh, greater divine rewards to the wakif, and greater funds received by nazir. Our results indicate that the zakat blockchain programs offer various benefits because blockchain facilitates more decentralized and borderless transactions. The benefits include achieving targets more effectively; avoiding overlap; developing zakat more systematically; monitoring more effectively in planning, organizing, actuating, and evaluating nazhir zakat; and contributing to short, medium, and long-term national socioeconomic objectives. In sum, we conclude that more decentralized and borderless blockchain-facilitated transactions potentially enhance Indonesian zakat funds' potential collection and utilization.
The presence of bitcoin invites many uncertainties, such as concerning its legality and the statement that bitcoin is not an official currency in Indonesia. Objective: This research aims to analyze the bitcoins in the perspective of the Islamic Law. Method: This research uses the literature review method. The literary materials obtained are in the form of scientific papers, online media, books, etc. that concerns the analyzed object. Findings: The circulation of bitcoin in Indonesia as a medium of exchange cannot be regarded as a currency, as it does not fulfill the terms and conditions for something to be called money. The bitcoin’s function does not commensurate with the function of money in the concept of the Islamic economy, as it tends to be a traded commodity rather than a facility of transactional exchange. In the perspective of Islamic law, the speculative use of bitcoins may bring one to the risk of violating the law on gharar (uncertainty, hazard); dharar (a transaction that may bring loss to a party); and qimar (game of chance). No authority guarantees bitcoins, and this causes harm. In conclusion, bitcoins produce more harm than good. Thus, its usage is prohibited by Islamic law. Function: This research provides an explanation of the legality of bitcoins, that may aid the Indonesian society to decide whether or not they can use bitcoins according to the law and th sharia. Novelty: There has not been any researches that study the same topic as that discussed in this article.