Application areas of blockchain technology in Islamic finance sector

Finance is one of the most important elements of economic life. Finance is a tool that affects the production of goods and services, consumption, distribution, savings, investment, borrowing, payment, insurance, cooperation, development, welfare and many other activities. Finance is also a factor that determines people's lifestyles, value judgments, moral attitudes, social relations, cultural characteristics, political preferences, religious beliefs and many other aspects. Because finance is such an important and influential field, it has always been the center of attention and has produced different systems, institutions, products, services, models, theories and approaches. Islamic Finance is an interest-free, fair and sharing financial system based on the basic principles of Islamic law. Islamic Finance is the set of rules, values, goals, objectives, methods, institutions, products, services, models, theories and approaches that Islam brings to economic life. Islamic Finance covers economic life, the purpose of human creation, the balance of the world and the hereafter, the consent of Allah, the welfare of the society, the establishment of justice, increasing sharing, protecting the trust, choosing the halal, avoiding the haram, preventing the harm, providing the benefit, observing the welfare, taking the necessity into consideration. It is a system that aims to organize services in line with basic principles such as obtaining information, providing convenience, and eliminating difficulties. Economic systems based on interest cause many human and financial problems in terms of Islamic finance. Among these problems, there are many problems such as unfair distribution of wealth, income inequality, poverty, indebtedness, inflation, speculation, uncertainty, unethical investments, social injustice, wars, moral collapse, violation of human rights. Islamic Finance offers an alternative system to the interest-based capitalist economic systems that dominate today's world. Islamic Finance rejects the definition of unlimited needs and scarce resources and argues that the problem is not resource scarcity but sharing. Islamic Finance has shown great development on a global scale in recent years and has begun to attract great attention in both Muslim and non-Muslim countries. However, in order for Islamic Finance to become widespread and competitive, it must overcome some international obstacles. In the global economic arena, unfair standards and restrictions imposed by central banks, international financial institutions, banking regulatory bodies and interest-based banking force Islamic countries and Islamic finance to act in a narrow area. In this sense, Blockchain technology and its usage areas offer very important opportunities to overcome this narrow framework. Blockchain technology may have different areas of application in the Islamic finance sector. Making payments quickly and securely in the financial sector can improve the delivery and management of many financial products and services such as commercial finance, digital identity, sukuk, zakat, takaful. And improve the efficiency and transparency of processes such as credit reporting. It can make it easier for the Islamic finance sector to stay away from elements prohibited by Islam, such as interest, gambling, speculation, uncertainty and unethical investments. It can increase the global competitiveness of the Islamic finance sector, increase customer satisfaction and ensure compliance with Islamic finance principles. Blockchain, along with Bitcoin, has opened a new era in financial markets, specifically for cryptocurrencies. Blockchain, which can be used in many areas such as crypto currencies, transfer applications, commercial reconciliations, data recording, supply chain, internet banking, makes it necessary for Islamic finance and participation banking to be involved in this process. Cryptocurrencies can be defined as an alternative medium of exchange to money that is used in the digital environment, is not dependent on a central authority, and is secured by cryptographic methods. Bitcoin, the first and most popular of cryptocurrencies, emerged in 2008 with an article published by a person or group named Satoshi Nakamoto and quickly became a global phenomenon. Today, in addition to Bitcoin, many virtual currencies such as Ethereum, Ripple, Litecoin and Tether are available in the market.