Application of Blockchain and Smart Contracts in Zakat Management: Perspective of SWOT Analysis and Islamic Law

Abstract

Zakat has great potential in improving the welfare of Indonesian society. Despite the huge potential of zakat in Indonesia, the reality is that the amount of zakat collected is still far from the potential, with the lack of transparency and digitalisation in zakat management as the main causes. This research aims to describe the application of blockchain technology and smart contracts as a solution to improve efficiency and accountability in zakat management seen from SWOT analysis and Islamic law. The research method used in this research uses a library research approach by reviewing and/or exploring several articles, books, and documents as well as other sources of data and/or information deemed relevant to the study. The results show that from the SWOT analysis, blockchain technology is a decentralised technology that offers transparency in recording zakat transactions that are secure and cannot be changed, while smart contracts can automate the distribution of zakat according to set criteria, without the need for a third party. This technology can accelerate the distribution of zakat and reduce the operational costs of zakat institutions, as well as increase public trust. However, the application of this technology requires adequate infrastructure and supporting regulations, as well as a better understanding of the benefits of blockchain technology and smart contracts from the public. From the perspective of Islamic law, the use of this technology is acceptable as long as it is in accordance with the principles of maqasid sharia, which emphasise justice, transparency and security.

Keywords: Blockchain, Smart Contracts, Zakat Management, SWOT Analysis, Islamic Law

JEL Classification: O2, O3