The development and application of the zakat collection blockchain system

Abstract

Zakat in Islam has historically been a vital institution in fulfilling religious needs and social welfare. Its effectiveness in medieval and modern Islam is evident. However, this institution is seemingly not without inefficiencies. Ineffectiveness distribution process and lack of transparency in the zakat management are commonly cited as key impediments (bin Khatiman et al., 2021). Blockchain is expected to solve these issues due to its ability to record and trace every transaction, allowing administrators to discharge their accountability to zakat stakeholders. Thus, this study intended to develop a zakat collection blockchain system with the aim to provide economical and integrated continuous real-time zakat transactions, transparency and traceability by developing smart contracts in zakat management. The study employed four stages of process based on waterfall model starting from the interview session and analyse of the standard operating procedure (SOP) on zakat collection in the Zakat Collection Centre or Pusat Pungutan Zakat-Majlis Agama Islam Wilayah Persekutuan (PPZ-MAIWP). Then, design requirement specification (DRS) is employed after being reviewed and approved by PPZ-MAIWP. The results show that the development of blockchain in the zakat collection system could be eradicating extreme poverty and boost shared prosperity among the community in the country. The study contributes through a transparent and reliable environment for exchanging data and carrying out transactions through a decentralized digital ledger technology to record anything of value and as a result able to ensure transparency, reliability, trust ability and traceability of the zakat transactions.

The integration of Islamic social and commercial finance (IISCF): Systematic literature review, bibliometric analysis, conceptual framework, and future research opportunities

“…The proposed model topic includes the sub-topics of socio-economic development [ 33 , 80 , 81 , 108 , 22 , 15 ], financial inclusion [ 84 , 104 , 20 , 110 ], education [ 5 , 74 , 7 ], public housing [ 67 , 58 , 71 ], public goods [ 10 , 11 ], personal financing [ 70 ], institution performance [ 94 , 90 ], and sustainability financing [ 113 ]. In line with technological advancements, a sub-topic on the integration model with financial technology support has emerged in the last three years [ 78 , 80 , 94 , 81 , 110 , 90 , 15 ]. However, research on integration model sub-topics such as Takaful [ 75 , 77 ] appears to be dwindling.…”

“…In Thailand, technology-based crowdfunding platforms are urgently needed to support the development of waqf, which is limited in funding, to alleviate poverty, particularly for the Muslim community, which is a minority in the country [ 15 ]. A zakat collection model based on blockchain technology is predicted to increase the socio-economic impact of zakat in Malaysia by rendering each transaction more transparent, accurate, and professionally managed [ 78 ].…”

Revamping Tradition With Tech: Guiding Innovation in Zakat for Social Good

“…It's vital to recognize that marginalized groups, including those in poverty, may lack digital access and technological literacy. 30 The ethical obligation of zakat extends to these individuals, and efforts should be made to bridge the digital divide, ensuring that zakat remains accessible to all, regardless of their socioeconomic status or technological capabilities.…”

“…Cybersecurity concerns and the absence of comprehensive regulatory frameworks pose additional challenges to technology adoption in zakat management. Without robust safeguards, 30 technology can introduce vulnerabilities that may compromise the security and trustworthiness of zakat processes. Zakat institutions must prioritize cybersecurity to protect sensitive data and transactions.…”

Use of Blockchain Technology in addressing the issues in Zakah Collection and Disbursement in Pakistan: A Conceptual model

“…When handling and managing contracts manually, smart contracts in blockchain can reduce time and costs. Probabilities and pre-contract to automatic access systems and involvement from e-commerce to autonomous transaction machines are examples of smart contract cases (Khairi et al, 2023).…”