This project investigates the four aspects of digital currencies and the questions arising therefrom from the perspective of Islamic finance. These four aspects are economic and financial aspects, shariah articulation, regulatory perspective and practical implication.
The world’s economy is fast transforming into a digital economy as digital assets are growing at an annualized rate of over 4000%. Unlike physical assets, digital assets face the problem of “double spending” as a digital asset can be infinitely copied causing prohibitive trust problems. To resolve the double-spending and trust problems, centralized ledger systems are being replaced by decentralized ledger technology (DLT). DLT necessitates a sustainable cost recovery system and an inbuilt incentive mechanism to keep the DLT perpetually robust. This incentive has been made available in the form of digital currencies – Bitcoin of the Blockchain DLT, Ether of the smart contract enhanced Etherium DLT etc.