The development and application of the zakat collection blockchain system

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Khairil Faizal Khairi ORCID logo, Nur Hidayah Laili ORCID logo, Hisham Sabri ORCID logo, Azuan Ahmad ORCID logo, Van Hieu Pham ORCID logo, Manh Dung Tran ORCID logo

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Zakat in Islam has historically been a vital institution in fulfilling religious needs and social welfare. Its effectiveness in medieval and modern Islam is evident. However, this institution is seemingly not without inefficiencies. Ineffectiveness distribution process and lack of transparency in the zakat management are commonly cited as key impediments (bin Khatiman et al., 2021). Blockchain is expected to solve these issues due to its ability to record and trace every transaction, allowing administrators to discharge their accountability to zakat stakeholders. Thus, this study intended to develop a zakat collection blockchain system with the aim to provide economical and integrated continuous real-time zakat transactions, transparency and traceability by developing smart contracts in zakat management. The study employed four stages of process based on waterfall model starting from the interview session and analyse of the standard operating procedure (SOP) on zakat collection in the Zakat Collection Centre or Pusat Pungutan Zakat-Majlis Agama Islam Wilayah Persekutuan (PPZ-MAIWP). Then, design requirement specification (DRS) is employed after being reviewed and approved by PPZ-MAIWP. The results show that the development of blockchain in the zakat collection system could be eradicating extreme poverty and boost shared prosperity among the community in the country. The study contributes through a transparent and reliable environment for exchanging data and carrying out transactions through a decentralized digital ledger technology to record anything of value and as a result able to ensure transparency, reliability, trust ability and traceability of the zakat transactions.

Keywords: Blockchain, Fintech, Smart Contract, Islamic Finance, Zakat, Malaysia

Authors’ individual contribution: Conceptualization — K.F.K.; Methodology — N.H.L.; Validation — H.S. and A.A.; Writing — Review & Editing — K.F.K. and M.D.T.; Visualization — V.H.P.; Supervision — N.H.L., H.S., and A.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: F65, G02, G21, O16

Received: 02.08.2022
Accepted: 14.03.2023
Published online: 16.03.2023

How to cite this paper: Khairi, K. F., Laili, N. H., Sabri, H., Ahmad, A., Pham, V. H., & Tran, M. D. (2023). The development and application of the zakat collection blockchain system [Special issue]. Journal of Governance & Regulation, 12(1), 294–306.