Blockchain technology which is a permanent digital information footage system, is progressively being exposed as a valuable tool by Islamic money banks and institutions for multifaceted backing contracts and Shariah-compliant dealings, as well as to drive novelty in the business and recover traceability and transparency of monetary transactions.
The firstly Islamic bank preliminary to ease blockchain was Emirates Islamic, part of the UAE’s Emirates NBD banking group, which as early as in 2017 instigated mixing the technology into cheque-based payment procedures to reinforce their genuineness and minimalize potential deception.
Al Hilal Bank one of the UAE-based in November in 2018 became the world’s first Islamic bank to perform a sukuk deal through blockchain on the Abu Dhabi Global Market monetary center. The system, based on the Ethereum blockchain, was industrialized by Dubai-incubated fintech Jibrel syatem. “We are proud to be the first bank to launch a ‘smart blockchain Islamic sukuk’,” said Alex Coelho, CEO of Al Hilal Bank, listing the advantages of using the technology as “cost efficiency, robust Shariah-compliance and the unlocking of new opportunities. Bitcoin is regulated, albeit by consensus. Modifications to the code base must be accepted by the community. Likewise, a government or a private company is also a community of individuals, albeit with a different structure of government. If a decentralized network is not allowed in Islam, I have yet to see the proof from Quran or hadith.
In another move, the IDB’s Muslim analysis and coaching Institute entered co-operations with fintech companies Ateon from capital of Saudi Arabia and SettleMint from city to figure on blockchain-based sensible contracts so as to make Shariah-compliant money product and change the whole written agreement method for Muslim finance establishments.
There also are some Muslim crypto currency startups that deploy blockchain technology, among them Dubai-based OneGram and Malaysia’s HelloGold, yet as Muslim microfinance firm Blossom Finance from Dutch East Indies. of these firms are approved by Muslim students to supply Shariah-compliant money product.
Applications of blockchain in Muslim finance square measure manifold, however 3 core utilisations square measure of specific importance. One has been already mentioned as being sensible contracts for Muslim finance transactions, covering the management of portion agreements, agency arrangements and partnerships, reducing uncertainty for all stakeholders and reaching absolute best legal clarity.
Another application is cloud storage, that provides access to all or any the required info of Muslim finance transactions for banks and customers to avoid conflicts, maintain and foster consumer partnerships and increase transparency. Since blockchain combines the protection of cryptography and therefore the storage and transmission of information in coded kind with peer-to-peer networks to make a shared information of transactions, knowledge is keep digitally with ease, unalterable and overtly accessible, that makes Muslim finance transactions, investments and finance agreements overtly verifiable processes for all stakeholders.
Last however not least, blockchain in Muslim finance combined with mobile technology can even be used for Muslim communities in developing and poorer countries that lack basic infrastructure. As a inexpensive technology, it will create banking processes and transactions accessible through oversimplified smartphone applications whereas at constant time making certain traceability and transparency of banking deals for retail purchasers.