A fintech start-up based in Indonesia called Blossom Finance released a report concluding that Blockchain technology is consistent with the Sharia goal of reducing excessive uncertainty, according to a press release published Thursday, April 12.
“Blockchain gives you mathematical proof of ownership and that’s overall much more in line with the spirit of Islamic finance than any digital fiat money.”
President & CEO Matthew J. Martin
Blossom’s report “Is Bitcoin Halal or Haram: A Sharia Analysis” was written by the Head of Sharia Compliance at Blossom Finance, Mufti Muhammad Abu Bakar, a certified Muslim legal expert, who successfully memorized the complete Qu’ran in 2002. The report not only focuses on how digital assets are permissible under the Sharia law but also on the benefits that Blockchain presents.
In the report, Abu Bakar summarises all of the various definitions in Islam for both mal (property) and currency as a method of deciding whether or not digital assets fall under the halal (permissible) or the haram (prohibited) sections. Besides that, it also lists all the Islamic organisations globally that have issued official statements about Bitcoin’s role in Islam. He uses these two definitions to refute the reasons why some organizations, governments, and people (including the Grand Mufti of Egypt, the Turkish Government, the Fatwa Center of Palestine, and scholar Shaykh Haitam) have said that digital assets are haram.
Abu Bakar surmises that if people were able to transact freely between themselves through a peer-to-peer network, this would allow society itself to determine the value of their digital assets. This would require a database that is able to record individual transactions with levels of encryption that make it impossible to manipulate, alter or steal. This has given rise to the use of Blockchain technology that achieves all these goals and provides a platform for legitimacy of an instrument that can be recorded and recognized as a digital medium of exchange.
Abu Bakar goes on to list the facts about Blockchain technology, outlining the ways in which the technology operates. A shared distributed ledger is described as “a linked set of mirrored transaction records, like double ledger entries on steroids.” He writes that the technology can be more secure than the current systems in place due to the removal of intermediaries.
To wrap it all up, the report highlights certain points, including:
- Blockchain is not only a platform for cryptocurrencies like Bitcoin.
- Blockchain is considered a blessing to the Sharia requirements of transparency and disclosure.
- Blockchain can serve to enhance the notion of trust in exchange transactions and transfers.
Finterra is the only Blockchain platform that is fully aligned and compliant with all of the Sharia principles, saying that Finterra was not designed to specifically target Muslims since its principles can benefit organizations and people from every background.
To read the full report: