Cryptocurrency Framework Diagnostics from Islamic Finance Perspective: A New Insight of Bitcoin System Transaction

Nashirah Abu Bakar, Sofian Rosbi and Kiyotaka Uzaki
Additional contact information
Nashirah Abu Bakar: Islamic Business School, College of Business, Universiti Utara Malaysia, Malaysia
Sofian Rosbi: School of Mechatronic Engineering, Universiti Malaysia Perlis, Malaysia
Kiyotaka Uzaki: Department of Business Studies, Oita University, Japan

International Journal of Management Science and Business Administration, 2017, vol. 4, issue 1, 19-28

Abstract: This paper analyses the operation of cryptocurrency system in perspective of Islamic finance. The purpose of this study is to evaluate the cryptocurrency framework whether it is meet the Islamic Finance rule. In addition, this study performed in providing the Islamic minded investor a proper information regarding investment in Bitcoin. Cryptocurrency is a digital currency in which encryption techniques that implement to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. A transaction is a transfer of Bitcoin value that is broadcast to the network and collected into blocks. A transaction typically references previous transaction outputs as new transaction inputs and dedicates all input Bitcoin values to new outputs. This cryptocurrency has no physical form and exists only in the network. Bitcoin also has no intrinsic value in that it is not redeemable for another commodity, namely gold. Then, this study evaluates the framework according to Islamic Finance rule. The bitcoin account holder is anonymous. Therefore, it is difficult to track the real account holder if any suspicious activity occurs. In addition, the value of Bitcoin is unstable because of high volatility. Bitcoin also suffers variance in perceptions of Bitcoins store of value and method of value. All of these three conditions contribute to uncertainty in transaction framework of Bitcoin. As a conclusion, Bitcoin transaction is classified as a transaction with high uncertainty (gharar).

Keywords: Cryptocurrency; Bitcoin; Transaction framework; Islamic finance; Uncertainty (search for similar items in EconPapers)
JEL-codes: M00 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://researchleap.com/wp-content/uploads/2017/1 ... agnostics.edited.pdf
https://researchleap.com/cryptocurrency-framework- ... -system-transaction/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mgs:ijmsba:v:4:y:2017:i:1:p:19-28

DOI: 10.18775/ijmsba.1849-5664-5419.2014.41.1003

Access Statistics for this article

More articles in International Journal of Management Science and Business Administration from Inovatus Services Ltd.
Bibliographic data for series maintained by Bojan Obrenovic ().