The growing popularity of digital currencies and technology such as blockchain in various industries has sparked a revolution in terms of how people pay and transfer goods and services.
Blockchain has the advantage of reducing the risks and costs usually associated with transaction, therefore vastly increasing the speed of transactions and business efficiencies, ultimately improving the customer experience.
Financial technology, or fintech, has enjoyed a boom in the Islamic finance sector with banks like Kuwait Finance House pioneering digital platforms and mobile payment systems. The addition of blockchain to the existing fintech could provide further advantages to the industry.
HelloGold in Malaysia has launched an online platform using blockchain, which results in more direct transactions and lower costs. Blossom Finance in Indonesia has used Bitcoin to offer microfinance services to entrepreneurs and small businesses.
Challenges remain for Islamic scholars to deem whether digital currencies and blockchain are Sharia compliant, but the examples above prove that Islamic finance and the booming fintech industry can and will successfully compete.
In fact, some Islamic scholars have opined that bitcoin and other digital currencies are more halal than paper money because of the lack of debt. Similarly, the blockchain transactions represent the risk or profit loss sharing principle of Islamic finance in a superior fashion when compared to paper money transactions.
As more Islamic financial institutions adopt digital currencies and financial technologies, the industry will continue to perform well despite market fluctuations.
Read more at Gulf Times.