Blockchain Implementation in Islamic Accounting

Abstract

This study aims to explore and examine blockchain technology from an Islamic perspective, as well as investigate its potential and utilization in accounting and auditing. Through a qualitative literature review methodology, this study analyzed relevant literature sources such as journals, reference books, and online documentation related to blockchain from an Islamic perspective. The main findings of this study show that blockchain is consistent with the Islamic accounting principles of accountability, fairness, and truthfulness by enabling transparent, secure, and immutable recording of transactions. The decentralized nature of blockchain eliminates the need for intermediaries, increases trust, and reduces costs. However, this research also identifies vulnerabilities such as 51% attacks and confidentiality issues on public blockchains that need to be addressed. Theoretically, this research contributes to the understanding of blockchain's compatibility with Shariah accounting principles, paving the way for the integration of this technology into the Shariah-compliant financial system. Practically, this research provides guidance for auditors, regulators, and technology providers to integrate blockchain into existing business procedures and change the current audit model. The novelty of this research lies in exploring the convergence of blockchain technology and Islamic accounting principles, providing valuable insights on how to harness the power of blockchain to strengthen accountability, fairness, and honesty in financial reporting while remaining compliant with Shariah guidelines. As such, this research makes a significant contribution to the existing literature and industry practice, and offers potential solutions to enhance the integrity and efficiency of the Islamic financial system.