Blockchain Law in Islam: Is it Halal or Haram?

Bittime - Blockchain technology has become a hot topic of conversation in various sectors, including in the Islamic economy. So, what is the Blockchain law in Islam? Check out the complete review in this article.

Please note, in Islam, the halal aspect of a financial system is very important. This is to avoid usury, gharar (uncertainty), and transactions that are contrary to Islamic teachings. 

This article will discuss blockchain law in Islam in more depth. Starting from whether blockchain is halal or haram, to its potential in the sharia economy. Stay tuned to find out more.

What is Blockchain?

Source: Chainalysis

Blockchain is a decentralized digital ledger technology. Where, every transaction is recorded in a block that is interconnected and cannot be changed. 

This technology was initially used in cryptocurrencies such as Bitcoin and Ethereum, but has now spread to various other sectors, including finance, logistics and halal certification.

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Key Features in Blockchain

Blockchain has several key features that make it unique and potential in the Islamic financial system. The following is the explanation:

1. Decentralization: No one entity controls the data, reducing the risk of manipulation.

2. Immutability: Data that has been entered into the blockchain cannot be deleted or changed, ensuring transparency and trust.

3. Transparency: All transactions are accessible to network participants, which strengthens fairness in the financial system.

4. Security: With cryptographic technology, transactions on the blockchain are difficult to fake.

5. Smart Contracts: Automatic contracts that execute agreements without third party intervention.

Blockchain Law in Islam

Source: Mudrex

After knowing the meaning and main features of blockchain, it's time for us to discuss blockchain law in Islam. In Islam, financial transactions must follow sharia principles. 

This principle prohibits usury (interest), gharar (excessive uncertainty), and maysir (gambling). As a technology, blockchain is essentially neutral. What determines whether blockchain is halal or haram is how and for what purpose this technology is used.

Is Blockchain Halal or Haram?

Blockchain can be considered halal if it is used in transactions that are transparent, fair, and in accordance with sharia principles. 

However, if it is used for transactions that violate Islamic law, such as excessive speculation or investment in non-halal businesses, then the law becomes haram.

For example:

Halal: Use of blockchain for zakat, waqf, or sharia financial systems.

Haram: Use of blockchain for gambling, usurious transactions, or investment in illicit industries.

Islamic scholars and financial experts state that blockchain can be used in sharia economics as long as its use follows Islamic rules.

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Potential Use of Blockchain in Islamic Finance

Blockchain offers various benefits to the Islamic economy. Anything? Here are examples that you should know:

1. Digital Zakat and Waqf: With blockchain, distribution of zakat and waqf can be done more transparently and efficiently.

2. Blockchain Based Sukuk: Blockchain can increase transparency and efficiency in the issuance of sukuk (sharia bonds).

3. Halal Supply Chain Management: Ensure the authenticity of halal products through a recording system that cannot be manipulated.

Challenges and Solutions for Implementing Sharia Blockchain

Despite having a lot of potential, there are several challenges in implementing blockchain in Islamic finance. The following is the explanation:

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Conclusion

Blockchain is a revolutionary technology that has great potential in supporting the Islamic economy. However, its halal law depends on how it is used. 

If implemented in accordance with sharia principles, blockchain can be a very useful tool. This is to increase transparency, efficiency and security in Islamic finance. 

Therefore, further studies and clear regulations are needed so that this technology can be used optimally in the Islamic financial ecosystem. So, are you interested in the technology behind this cryptocurrency?

FAQ

1. Is cryptocurrency illegal in Islam? 

Not all cryptocurrencies are haram. If a cryptocurrency has an underlying asset and complies with sharia principles, it can be considered halal.

2. How can blockchain be used in zakat? 

Blockchain allows transparent recording and distribution of zakat, thus ensuring funds reach those entitled to them without misuse.

3. Are there any cryptocurrencies that are sharia compliant? 

Some cryptocurrencies such as OneGram and Islamic Coin were developed with sharia principles, making them more suitable for use by Muslims.

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Reference 

Online Law, Cryptocurrency, Halal or Haram?, accessed March 6, 2025.

ITB, Blockchain and the Metaverse: How Does Islam View It?, accessed March 6, 2025.

Qardus Is blockchain Sharia-compliant?, accessed March 6, 2025.

Author: Y