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Developing a Digital Currency from an Islamic Perspective: Case of Blockchain Technology

Author

Listed:
  • Ibrahim Bassam Zubaidi
  • Adam Abdullah

Abstract

Numerous studies ranging from concept papers and reviews were conducted on the matter of blockchain and digital currencies. However, those two areas are not well researched due to its being a new area of research. Furthermore, the research on blockchain applications in the Islamic financial system precisely the potential of digital currency in providing a better alternative to current fiat money system which will be the scope of this article. The aim of revolves around exploring the potential and capability of introducing a digital currency that fulfills the Islamic law (Shari’ah) functions of money and provides a more stable currency than fiat money. The method used for analyzing this object includes a library research on related topics that helps understanding the functions of money and digital currencies and study of several cases that can assist in fulfilling the objectives of this paper in introducing an Islamic digital currency through detailed research of Islamic theory of money and civilization as well as the developments of blockchain, our findings point towards the ability of introducing a Shari’ah-compliant digital currency if all the issues on validity are addressed and resolved. However, the area of digital currencies and blockchain requires further research from a Shari’ah perspective to facilitate a better understanding on the topic.

Suggested Citation

  • Ibrahim Bassam Zubaidi & Adam Abdullah, 2017. "Developing a Digital Currency from an Islamic Perspective: Case of Blockchain Technology," International Business Research, Canadian Center of Science and Education, vol. 10(11), pages 79-87, November.
  • Handle: RePEc:ibn:ibrjnl:v:10:y:2017:i:11:p:79-87
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    References listed on IDEAS

    as
    1. Ahamed Kameel Mydin Meera & Moussa Larbani, 2006. "Part I: Seigniorage of fiat money and the maqasid al-Shari’ah: the unattainableness of the maqasid," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 22(1), pages 17-33, February.
    2. Ewe-Ghee Lim & Subramanian S Sriram, 2003. "Factors Underlying the Definition of Broad Money; An Examination of Recent U.S. Monetary Statistics and Practices of Other Countries," IMF Working Papers 03/62, International Monetary Fund.
    3. Dyhrberg, Anne Haubo, 2016. "Hedging capabilities of bitcoin. Is it the virtual gold?," Finance Research Letters, Elsevier, vol. 16(C), pages 139-144.
    4. Mainelli, Michael & Smith, Mike, 2015. "Sharing ledgers for sharing economies: an exploration of mutual distributed ledgers (aka blockchain technology)," Journal of Financial Perspectives, EY Global FS Institute, vol. 3(3), pages 38-58.
    5. Ali, Robleh & Barrdear, John & Clews, Roger & Southgate, James, 2014. "Innovations in payment technologies and the emergence of digital currencies," Bank of England Quarterly Bulletin, Bank of England, vol. 54(3), pages 262-275.
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    More about this item

    Keywords

    digital currencies; Islamic finance; functions of money; Islam; blockchain;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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