Abstract The rapid growth of cryptocurrencies has revealed a significant disconnect between speculative digital assets and the ethical principles of Islamic finance. Bitcoin’s volatility, three to four times higher than traditional equity indices, along with its energy-intensive mining process, directly contradict Shariah principles emphasizing stability, asset-backing, and minimization of gharar (excessive uncertainty). This study addresses the gap between blockchain technology's potential and the requirements of Islamic financial systems by proposing and empirically testing a Shariah-compliant digital finance model. A mixed-methods approach was employed, integrating a PRISMA-guided systematic literature review, panel data analysis of 100 fintech firms from 2018 to 2024, and Monte Carlo simulation. Fixed-effects regression was used to assess the impact of blockchain adoption on financial performance (ROA, ROE) in both Islamic and conventional fintech firms. The simulation evaluated the efficiency of a Hybrid Shariah Blockchain Model for tokenized waqf (Islamic endowment) operations. Results indicate that blockchain adoption significantly improves financial performance in Islamic fintech (ROA: β = 0. 023, t = 3. 41; ROE: β = 0. 067, t = 2. 79). Simulation results demonstrate a reduction in transaction latency from 3. 2 days to 12. 4 seconds (95% CI: 10. 1–14. 7), complete auditability, and transaction costs below 1. 00 per operation. This study presents the first simulation-based validation of waqf blockchain governance grounded in Islamic jurisprudence, offering a scalable framework for ethical, decentralized financial services benefiting 1. 8 billion Muslims worldwide. Policy recommendations include regulatory sandboxing and institutional integration strategies to mainstream Shariah-compliant blockchain applications.
Syamsul Bachri Soamole (Tue,) studied this question.
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