Blockchain And Islamic Banking Are Working Together, And Everyone Stands To Benefit
More and more banks in the Muslim world — a community of nearly 2 billion people worldwide- are adopting blockchain technology and cryptocurrencies. In early 2016, major Islamic banks such as ICICI Bank and Emirates NBD began looking for blockchain capabilities to reduce transaction costs, according to (Coindesk, 2017). The UAE Islamic Emirates became the first Islamic bank to use blockchain technology in order to prevent fraud. In April, an Islamic researcher announced that Bitcoins were permitted under Islamic law after a study conducted by Blossom Finance, an Indonesian investment company, investigated bitcoin and similar cryptocurrencies and found that they complied to Islamic money definitions.
Different Islamic scholars can have differing judgments on what is compatible with Islamic law, with some schools rejecting cryptocurrency while many others have approved. In fact, blockchain and cryptocurrency can bring many benefits to Islamic banking, and vice versa. Their recent collaboration has led to the creation of new markets and new jobs. Investors of all kinds can benefit, through the right approach (Coindesk, 2017).
Blockchain and Islamic Finance
Islamic finance and its digital economy provide opportunities for Muslims and non-Muslims as both communities are now seeking a close solution to their pressing issues.
Rebuilding confidence in the financial system that has lost it. Some technicians imagine this world without intermediaries, while others imagine You want a faster and more efficient way of transactions. (Biancone, 2018)
“Either way, the challenge come from accountability, and entrench that sense of accountability at home New systems being built, based on risk and profit sharing that lays down the nature of our economies, including the participatory economy under-utilised assets”
-Mohammed and Ali, 2018
Qintar Use Case
Blockchain technology is gaining the attention of Islamic Cooperation Organizations. Recently, authorities in Dubai have unveiled their plan to harness the benefits of blockchain in the public and private sectors. It is expected that more governments in the Middle East will integrate blockchain widely into the public sector (Petratos, 2020).
The Dubai Blockchain Strategy, is a result of a collaboration between the Smart Dubai Office and the Dubai Future Foundation to continually explore and evaluate the latest technology innovations that demonstrate an opportunity to deliver more seamless, safe, efficient, and impactful city experiences. The strategy will help Dubai achieve the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, to create the future of Dubai, and make Dubai the happiest city on earth.
Biancone, P., Maha Radwan. (2018). An Islamic Finance Perspective. Social Finance and Financing Social Enterprises.
Coindesk. (2017). Do Islamic banks contribute to growth of the economy?.
Mohammed and Ali. ( 2018). Journal of Performance accountability and combating corruption.
Petratos, P. (2020). A Literature Review and the Case of Dubai and UAE. Blockchain Technology, Sustainability and Business.