Blockchain and Cryptocurrency for Islamic Finance: A Perspective of Scholars

Abstract

The creation of financial models using cutting-edge technology, such as Blockchain, is essential for success in the financial industry. Blockchain technology can be utilized to create secure apps of this nature. Every banking institution customer's top priority is security. Smart contracts are the code running on a Blockchain which carries the terms and conditions of the transaction. These secure contracts provides and cost-effective and easy solution to the financial institutions. With the use of technology Islamic banks can provide services to the people of far-off areas with a cheap cost. So, in this way financial inclusion will increase as unbanked people will also be able to avail financial services. This will have positive impact on the performance of Islamic financial institutions. Therefore, Government and regulatory authorities should make such policies which support adoption of Blockchain and related technologies like AI (Artificial Intelligence) in the financial sector. Cryptocurrency is another important element of new financial technology. A Cryptocurrency is built of Blockchain platform. There are different opinions of Shariah scholars about its validity. We need to do search in this field. If certain conditions are met, Cryptocurrency may be allowed, as per views of Shariah scholars. An important condition is that the currency should be backed by the Government and regulated by the central bank. If Cryptocurrency is adopted by the Islamic financial sector with due considerations, it will make the transactions easier, transparent and cost-effective.