Benefits of incorporating blockchain into Islamic philanthropy

For Muslims, charity is entwined with faith. To donate some of the wealth that Allah has blessed us with is a characteristic of those who are mindful of Allah. Therefore, it is unsurprising that numerous studies have found that Muslims contribute more towards charity than other faiths.

Charity is as old as Islam itself; the methodology of giving has developed over time. With the advent of the digital revolution, charity slowly became digitized. In the modern era it is possible to donate to the impoverished who are thousands of miles away with the click of a button. Blockchain is a new frontier in the development of financial services. Incorporating blockchain into Islamic philanthropy has numerous benefits. These benefits include ethe following:

Transparency

When you use a decentralized blockchain you can view all transactions if you have a node or make use of a blockchain explorer. Given that numerous charity organizations have had accusations of fraud levelled at them, the use of blockchain technology can instill a high level of trust into the process. It would be a pity if the many charitable organizations out there who are doing amazing work are disregarded due to unconfirmed reports casting doubt on their integrity.

Lowers costs

A report by PWC states that blockchains can “reduce the need for manual intervention in aggregating, amending and sharing data, and regulatory reporting and audit documents could become easier, requiring less manual processing.” This could reduce the cost of ensuring a highly efficient, effective, secure and honest philanthropic system. Blockchains will also reduce transactions fees. This will allow a greater percentage of charitable donations to reach the intended recipients.

Anonymity

Transactions on a blockchain are generally pseudonymous. It is easy to see precisely what transactions are made without knowing the person who does the transaction. This allows a Muslims to uphold the Islamic ideal of giving via a third party anonymously, while simultaneously being able to monitor a transaction for peace of mind.

Security

The immutability and transparency of blockchain enhances security. This will make it less risky to dispense of charity in areas with a poor auditing and governance track record. Smart contracts are contracts set up on a blockchain which are tamper proof and will only execute if certain conditions are met. This has immense potential, especially in perpetuating acts of charity as the contract may execute with the need for little to no manual human intervention.

Allah Knows Best

You can also read our articles on Developing trust in blockchains and Bitcoin: The new dinar.