Abstract

Purpose:

One of the five pillars of Islamic law is Zakah, which applies to all qualified Muslims and demands that they contribute a portion of their wealth for benefit of the Muslim community. Muzzaki prefers to pay Zakah to Mustahiq directly due to the perceived ineffectiveness of Zakah institutions in the distribution and management of funds. As a result, there is a lack of confidence between Muzzaki and Zakah institutions. In this paper, we propose a model, for managing Zakah using blockchain technology. The aim is to create an innovative ecosystem that is more reliable, trustworthy, and transparent.

Methodology:

This study relies on a conceptual approach to describe the role of blockchain technology in Zakah organizations.

Findings:

This study explores the potential of blockchain technology and smart contracts to revolutionize Zakah management. By developing a conceptual model, it aims to establish how these tools can enhance transparency, build Muzzaki trust, and ultimately simplify the distribution of Zakah funds to deserving recipients.

Significance:

Zakah institutions’ transparency, competency, and trustworthiness in Zakah management are the most important characteristics that influence public willingness to pay Zakah through Zakah organizations. As a result, incorporating blockchain technology into Zakah management can track the status of Zakah funds and make the distribution and transaction of funds more transparent.

Practical Implications:

The use of blockchain technology would ensure that Zakah should reach directly to real Zakah recipients in an efficient manner. It will also help the payers and receivers anonymously.

Keywords

Zakah, Blockchain Technology, Smart contract, Zakah management, Zakah institution, Muzakki, Mustahiq