Innovation in Islamic finance: Integrating blockchain with Maqāṣid al Sharī῾ah & Ḥifẓ al Māl

Abstract

Innovation in Islamic finance has a close linkage with the new technology. The blockchain technology carries unlimited opportunities for Islamic finance to enable it to meet the Maqāṣid al Sharī῾ah. However, this aspect is not visible in the literature due to the tendency to connect blockchain with the cryptocurrencies. This study combined an insightful review of Maqāṣid al Sharī῾ah and ḥifẓ al māl along with technical analysis of blockchain to cater to the Islamic finance ethical innovation. This was a qualitative analytical research paper. It addressed the questions related to integrating the theories of Maqāṣid Al Sharī῾ah and Ḥifẓ al māl with the blockchain. The result was a futuristic vision for innovation in Islamic finance with the theme of preserving wealth using a combination of the salient features of blockchain technology and characteristics of Ibn ‘Ashur’s theory of ḥifẓ al māl for wealth and money. The study found that it is possible to create a matrix with the collaboration between the ḥifẓ al māl objectives, namely wealth circulation, justice, ownership protection, creating easiness, robustness and transparency, and the technical characteristics of blockchain, namely decentralization, immutability, transparency, and cryptographic hashing. Together, this approach has the potential for producing ethical, secure, and innovative Islamic finance solutions. This study falls under the contemporary literature that discusses Maqāṣid al Sharī῾ah and Ibn ‘Ashur’s theory of ḥifẓ al māl beyond its theoretical nature in combination with blockchain technology to cater to the growing requirements of innovation in Islamic finance as a part of Maqāṣid al Sharī῾ah’s sustainable ecosystem.