The Decentralized Shariah-Based Banking System in Bangladesh Using Block-chain Technology

Abstract

: Shariah-based banking aims to apply Islamic finance while adhering to Shariah principles. The primary distinction between conventional and Islamic finance is that Sharia law explicitly forbids several of the activities and principles applied in conventional banking. According to Sharia law, “Paying or charging an interest (Riba)” lending with interest payments as an exploitative practice that benefits the lender at the expense of the borrower, “investing in businesses engaged in banned activities" like producing and selling alcohol or pork, “speculation or gambling(Maisir)” That means financial institutions are prohibited from participating in contracts where the ownership of goods depends on an unpredictable future event, and Participation in contracts with a high level of risk or uncertainty is referred to as "uncertainty and risk (Gharar)", which are strictly prohibited. As a result, consumers must be aware of whether they are taking Riba, Gharar, Maisir or if their money is invested in a halal firm. Because of its qualities, blockchain would be useful in this situation. This research tries to determine how blockchain technology can be used to make investments and profit or loss returns more transparent, more secure, Immutable and sharia compliant. Blockchain networks can be utilized in the financial industry, such as banking, to provide safe sharia banking.