Blockchain Technology and Islamic Finance: A Decade of Growth Trends

1. Introduction

In the heartlands of finance, a digital revolution marries ancient principles with cutting-edge technology, shaping a new era of economic transactions. The confluence of Blockchain Technology and Islamic Finance gives scope to potent collaboration, promising unprecedented growth and reshaping the financial landscape, Al-Tamimi, A. M., & Yasin, N. M. (2020). As the world rapidly adopts blockchain solutions, a pivotal question arises: how has this powerful tool impacted Islamic finance over the last decade? Ali, M. M. S., & Haneef, M. A. (2018). The intersection of Blockchain technology and Islamic finance is a compelling and relevant research topic, encompassing the fusion of modern technological advancements with traditional financial principles rooted in Islamic ethics. Blockchain technology offers transparency and immutability in financial transactions, aligning with the Islamic finance principle of transparency and fair dealing. The decentralized and distributed ledger system ensures trust among participants, promoting ethical practices within the Islamic financial framework, Hamid, S., & Omar, S. S. (2019). Through smart contracts and automated processes, Blockchain enhances operational efficiency. It reduces transaction costs, a crucial factor in Islamic finance, which encourages efficiency and discourages excessive fees and unnecessary complexity in financial transactions, Hassan, M. K., & Abubakar, B. (2018). Blockchain facilitates the tokenization of assets, including Sukuk (Islamic bonds), enabling fractional ownership and increased liquidity. This aligns with the Islamic finance concept of asset-backed securities and risk-sharing agreements, Yahaya, N. Z., & Alias, N. (2020). This study is an attempt to provide a comprehensive exploration of the intersection between blockchain technology and Islamic finance over the past decade. There is a need for comprehensive and standardized integration frameworks and guidelines for effectively incorporating blockchain into existing Islamic finance practices, Lacity, M., & Hirschheim, R. (2018). This research outlines the gaps and difficulties that must be addressed to successfully merge Blockchain and Islamic Finance. There is Limited research focused on developing precise and uniform regulatory frameworks that align both with Islamic finance guidelines and blockchain technology requirements. More research should address blockchain's sustainability implications in Islamic finance, considering energy consumption and environmental impact concerns. Likewise, there is a need for comprehensive and standardized integration frameworks and guidelines for effectively incorporating blockchain into existing Islamic finance practices, Zohar, A. (2015). Intensive research questions have been developed to address the primary objective of advancing knowledge in the rapidly evolving connection of blockchain technology and Islamic finance. These research questions aim to provide transparency and structure to the systematic review, assisting a comprehensive examination of the current state of the field and its implications. These questions were developed after a systematic literature review and in-depth analysis. The research was to answer the following research questions. The unique contribution of the study was addressed through the following questions.

• RQ1: What are the essential theoretical and practical contributions of prominent research articles on blockchain Technology and Islamic finance, and how have these findings influenced the industry?

• RQ2: “How has the integration of blockchain technology in Islamic finance evolved, and what are the prominent trends and challenges highlighted in research articles?”

• RQ3: “What specific applications of blockchain technology within Islamic finance have been extensively researched, and what are the implications of these applications on the financial ecosystem?”