Dynamism and mechanism of digital currency (cryptocurrency) towards Islamic finance
Abstract
Technology advanced has brought rapid changes in all human activities along with financial activities and tools. Digital currency one of the technological innovations which have taken significant focuses from consumers, investors, researchers, entrepreneurs and policy makers around the world. with the trend of changing patterns, Islamic finance is rapidly developing all over the world by serving Muslims and non-Muslims, as a result, it is mandatory for Islamic finance to adapt with modern technology systems in terms of providing innovative products and services to the consumers in line with shariah perspectives. As a result, cryptocurrency (digital currency) has taken the focus on Islamic scholars in regards of its permissibility. There are many arguments over the permissibility issues. Therefore, this study aims to explore those issues and mechanisms of cryptocurrency in order to evaluate with Islamic perspective. This study gathered secondary sources from past literatures, books, news and websites with qualitative approach. The findings inclined that there are still lacking in mechanisms of digital currency to comply with Islamic perspective such as real asset backed and legal authorization. The findings of this study will benefit the Islamic scholars and policy makers along with Muslim consumers and investors in regards of permissibility and developing existing cryptocurrency to widely use in the Islamic finance and banking sector.
References
Abdullah, A. (2016). The Islamic Currency. International Council of Islamic Finance Educators.
Abubakar, Y. S., Ogunbado, A. F., & Saidi, M. A. (2018). Bitcoin and its Legality from Shariah Point of View. Journal of Management, 1(4), 13–21.
Adam, M. F. (2017). Bitcoin : Shariah Compliant ? Amanah Finance Consultancy Ltd.
Ahmed, Z. (1989). Currency Notes and Loan Indexation. Islamic Studies, 28(1), 39–53.
AlJazeera. (2018, April 9). Islam and cryptocurrency, halal or not halal? Aljazeera News. Retrieved from https://www.aljazeera.com/news/2018/04/islam-cryptocurrency-halal-halal-180408145004684.html
Anwar, M. (1993). Strategies to Settle Existing Debts under an Islamised Banking System. The Pakistan Development Review, 32(4), 961–971.
Arsov, A. (2017). Bitcoin as an Innovative Payment Currency in Germany : Development of the e-Gold Standard. Journal of International Business Research and Marketing Volume, 2(2), 33–42. https://doi.org/10.18775/jibrm.1849-8558.2015.22.3005
Bakar, N. A., Rosbi, S., & Uzaki, K. (2017). Cryptocurrency Framework Diagnostics from Islamic Finance Perspective : A New Insight of Bitcoin System Transaction. International Journal of Management Science and Business Administration, 4(1), 19–28. https://doi.org/10.18775/ijmsba.1849-5664-5419.2014.41.1003
Biancone, P. Pietro, & Radwan, M. (2018). Social Finance And Unconventional Financing Alternatives : An Overview. European Journal of Islamic Finance, 10, 1–6.
Biancone, P. Pietro, Secinaro, S., & Kamal, M. (2019). Crowdfunding and Fintech : Business Model Sharia Compliant. European Journal of Islamic Finance, 12, 1–10.
BNC. (2018). Sharia Law And Bitcoins Fatwa.
Canard, S., & Gouget, A. (2007). Divisible E-cash Systems can be Truly Anonymous. In Annual International Conference on the Theory and Applications of Cryptographic Techniques (pp. 482–497). Berlin: EUROCRYPT 2007.
Chapra, M. U. (1996). Monetary Policy in an Islamic Economy. In Z. Ahmed, M. Iqbal, & M. F. Khan (Eds.), Money and Banking in Islam (pp. 27–46). Islamabad, Pakistan: Institute of Policy Studies.
Depietro, A. (2018). Blockchain And Islamic Banking Are Working Together, And Everyone Stands To Benefit. The Forbes. Retrieved from https://www.forbes.com/sites/andrewdepietro/2018/07/11/blockchain-islamic-banking-benefits/
Echchabi, A. (2018). E-Banking Acceptance in Thailand : An Emphasis on Islamic Banks ’ Customers. European Journal of Islamic Finance Privacy, 9, 1–5.
Feng, W., Wang, Y., & Zhang, Z. (2018). Informed trading in the Bitcoin market. Finance Research Letters, 26, 63–70. https://doi.org/10.1016/j.frl.2017.11.009
Gabriel, B. (2019). Ethereum deemed halal by Muslim scholars, may stimulate ETH demand. Retrieved September 15, 2019, from https://cryptoslate.com/ethereum-halal-muslim-scholars-eth-demand/
Harris Irfan. (2019). Cryptocurrency and the Future of the Islamic Economy.
Irwin, A. S. M., & Milad, G. (2016). The use of crypto-currencies in funding violent jihad. Journal of Money Laundering Control, 19(4), 407–425. https://doi.org/10.1108/JMLC-01-2016-0003
Islam, A. Y. M. A. (2011). Viability of the extended technology acceptance model: An empirical study. Journal of Information and Communication Technology, 10(January 2011), 85–98.
Javed, D. (2018). Sharia Law And Bitcoins Fatwa.
Jung, Kyung-Jin; Park, Jung-Boem; Phan, Nhu Quynh; Bo, Chen; Gim, G. (2019). An International Comparative Study on the Intension to Using Crypto-Currency. Springer Nature Switzerland AG 2019 (Vol. SCI 788). Springer International Publishing. https://doi.org/10.1007/978-3-319-05717-0
Meera, A. K. M. (2018). Cryptocurrencies from islamic perspectives : The case of bitcoin. Bulletin of Monetary Economics and Banking, 20(4), 475–492.
Muedini, F. (2018). The Compatibility of Cryptocurrencies and Islamic Finance. European Journal of Islamic Finance, 10(August), 1–11.
Mukhibad, H. (2019). The Role Of Sharia Supervisory Boards in Meeting Maqasid Syariah – Study on Islamic Banks in Indonesia. European Journal of Islamic Finance, 13(August), 1–10.
Naqvi, S. M. I. H., Shafique, B., & Khan, A. A. (2019). Shariah Compliant Model of Currency Management – Expanding Landscape of Islamic Finance from Micro to Macro Level. European Journal of Islamic Finance, 12, 1–14.
Oziev, G., & Yandiev, M. (2018). Cryptocurrency from Shari’ah Perspective. Ssrn, 1–18. https://doi.org/10.2139/ssrn.3101981
Peters, G. W., Chapelle, A., & Panayi, E. (2016). Opening discussion on banking sector risk exposures and vulnerabilities from Virtual currencies: An Operational Risk perspective. Journal of Banking Regulation, 17(4), 239–272. https://doi.org/10.1057/jbr.2015.10
Pikri, E. (2018). Is Cryptocurrency Haram? The Chairmain Of BNM’s Shariah Advisory Council Says No. Retrieved September 16, 2019, from https://vulcanpost.com/632153/haram-cryptocurrency-syariah-advisory-council/
Seele, P. (2018). Let Us Not Forget : Crypto Means Secret . Cryptocurrencies as Enabler of Unethical and Illegal Business and the Question of Regulation. Humanist Manag J, 13, 1–7.
Siegfried, N. A. (2001). Concepts of Paper Money in Islamic Legal Thought. Arab Law Quarterly, 16(4), 319–332.
Whitehead, R. (2019). Malaysia’s leading Shariah scholars support halal cryptocurrency but say Islamic finance ecosystem needs to catch up. Retrieved September 16, 2019, from https://www.salaamgateway.com/en/story/malaysias_leading_shariah_scholars_support_halal_cryptocurrency_but_say_islamic_finance_ecosystem_needs_to_catch_up-SALAAM08052019011545/
Zubaidi, I. B., & Abdullah, A. (2017). Developing a Digital Currency from an Islamic Perspective: Case of Blockchain Technology. International Business Research, 10(11), 79. https://doi.org/10.5539/ibr.v10n11p79
Copyright (c) 2019 Mohammad Abdul Matin Chowdhury, Dzuljastri Bin Abdul Razak
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
EJIF content is licensed under a Creative Commons Attribution 4.0 International License.
Authors keep the copyrights for their work and give the journal the work's first publication copyright, which is at the same time licensed under a Creative Commons License – Attribution, which in turn allows other parties to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
EJIF has been approved for inclusion in 
EJIF has been approved for inclusion in 
EJIF is member of 
EJIF is indexed by 
EJIF is listed in the ANVUR (Italian National Agency for the Evaluation of Universities and Research Institutes) as a scientific journal in both 
