Abstract
This study aims to provide a scientific contribution to the feasibility of metal backed cryptocurrencies as a medium of exchange to pay zakat. To understand the dynamics and mechanisms of metal backed cryptocurrencies, the autoregressive conditional heteroscedasticity and generalized conditional heteroscedasticity (Arch Garch) methods were used. The metal backed cryptocurrencies used for this research are Bitcoin Gold, GoldFinch, Gold Coin, Digix Gold Token, E-Dinar Coin, Gold-Money, and E-Gold. Our analysis finds that even though these are metal backed cryptocurrencies, the volatility is high. Gold-Money has a long-term volatility 67 times higher than the volatility of gold, while E-Gold has eight times the volatility of gold. As a result, due to high levels of volatility, metal backed cryptocurrencies are not suitable as a medium for zakat payment.References
Abdeldayem, MM, & Aldulaimi, SH. 2018. The economic islamicity index, between islamicity and universality: Critical review and discussion. International Business Management, 12(1), 46-52
Abdullah, A. 2016. The Islamic currency. Kuala Lumpur: International Council of Islamic Finance Educators.
Abdullah, A. & Nor, RM. 2018. A Framework for The Development of a National Crypto Currency. International Journal of Economics and Finance, Vol. 10. No.9.
Abdullah, A. 2016. An Islamic monetary theory of value and equation of exchange: Evidence from Egypt (696-1517) Humanomics, 32(2), 1-28.
Abdullah, A. 2015. Economic security requires monetary and price stability: Analysis of Malaysian macroeconomic and credit data. Al-Shajarah: Journal of the International Institute of Islamic Thought and Civilization (ISTAC), 205-247.
Abubakar, M., Hassan, M, K., Haruna, M, A. 2019. Cryptocurrency Tide and Islamic Finance Development: Any Issue?. Disruptive Innovation in Business and Finance in the Digital World. International Finance Review, Volume 20.189-200. Emerald Publishing Limited.
Abubakar, N., Rosbi, S., Uzaki, K. 2017. Cryptocurrency Framework Diagnostics from Islamic Finance Perspective: A New Insight of Bitcoin System Transaction. International Journal of Management Science and Business Administration. Volume 4, Issue 1, November 2017, pages 19-28.
Abdullah, A. & Nor, RM. 2018. A Framework for The Development of a National Crypto Currency. International Journal of Economics and Finance, Vol. 10. No.9.
A. Brauneis, R. Mestel, R. Riordan et al. 2021. How to measure the liquidity of cryptocurrency markets?. Journal of Banking and Finance. Vol. 124.
Abu Ubaid Al-Qasim bin Salam. 1988. Al-AMwal. Tahqiq Muhammad Khalil Harras. Beirut: Dar al-Fikr. Page 512.
Akcora, CG, Dixon, MF, Gel, YR, Kantarcioglu, M. 2018. Bitcoin risk modeling with blockchain graphs. econ. Lett. 173, 138-142
Al-Ghazzi, MS. 2003. Mausuah Al-Qawaid Al-Fiqhiyyah. Beirut, Lebanon: Muassasah Al-Risalah
Alotaibi, MN, Asutay, M. 2015. Islamic Banking and Islamic e-commerce: Principles and Realities. International Journal of Economics, Commerce and Management, III (4) 1-14.
Alzubaidi & Abdullah. 2017. Developing a Digital Currency from an Islamic Perspective: Case of Blockchain Technology. International Business Research, Vol. 10 No. 11.
Amalin, G. 2018. The Legality of Cryptocurrency Trade in Accordance with the Principles of Islamic Banking Law. thesis. Indonesian Islamic University, Yogyakarta.
Antonakakis, N., Chatziantoniou, I., Gabauer, D. 2019. Cryptocurrency market contagion: market uncertainty, market complexity, and dynamic portfolios. J. Int. finance. Mark. Inst. Money
Arsov, A. 2017. Bitcoin as an Innovative Payment Currency in Germany : Development of the e-Gold Standard. Journal of International Business Research and Marketing Volume, 2(2), 33-42.
Asif, S. 2018. The Halal and Haram aspect of cryptocurrencies in Islam. Journal of Islamic Banking and Finance 35(2)
Abdul, M., Chowdhury, M., Bin, D., & Razak, A. (2019). Dynamism and Mechanism of Digital Currency ( Cryptocurrency ) towards Islamic Finance. 1989, 1-9.
Abubakar, M., Hassan, M. K., & Haruna, M. A. (2019). Cryptocurrency Tide and Islamic Finance Development: Any Issue? International Finance Review, Emerald Publishing Limited, 20, 189-200. https://doi.org/10.1108/S1569-376720190000020019
Brauneis, A., Mestel, R., Riordan, R., & Theissen, E. (2021). How to measure the liquidity of cryptocurrency markets ? Journal of Banking and Finance, 124, 106041. https://doi.org/10.1016/j.jbankfin.2020.106041
Haruna, M.A & Abubakar, M. (2020). Precious Metal Backed Cryptocurrency in Islamic Finance. Lapai International Journal of Management an Social Sciences, 12(1), 189-201.
International Shariah Research Academy for Islamic Finance. (2011). Islamic Financial System Principles and Operation. ISRA.
Quest, M. (2018). The Crypto Master Set The Art of HODLING.
Siswantoro, D., Handika, R., & Farah, A. (2020). Heliyon The requirements of cryptocurrency for money , an Islamic view. Heliyon, 6(October 2019), e03235. https://doi.org/10.1016/j.heliyon.2020.e03235
Ozili, PK. 2018. Impact of Digital Finance on Financial Inclusion and Stability. Borsa Istanbul Review. Elsevier.
Reedy, P. 2020. Interpol review of digital evidence 2016-2019. Forensic Science International: Synergy (2) 489-520.
Sapovadia, V. 2018. Financial Inclusion, Digital Currency, and Mobile Technology. Handbook of Blockchain, Digital Finance, and Inclusion, Volume 2. Elsevier.
Senyo, PK, Osabutey, ELC. 2020. Unearthing Antecedents to Financial Inclusion Through Fintech Innovations. technology. Elsevier.
Shariyah Review Bureau. 2018. The Shariyah Factor in Cryptocurrencies and Tokens. The Central Bank of Bahrain.
Sigler, K. 2020. crypto-jacking: how cyber-criminals are exploiting the crypto-currency boom. Spiderlabs at Trustwave. Computer Fraud and Security.
Siswantoro, D., Handika, R., Mita, AF 2020. The Requirements of Cryptocurrency for Monwy, an Islamic Law. Heliyon Journal. ScienceDirect. Vol. 1 Issues. 1.
Stearns, David L. (2011). Electronic Value Exchange: Origins of the Visa Electronic Payment System. London: Springer. p. 1.ISBN978-1-84996-138-7.Available through SpringerLink.
Meera, AKM. 2018. Cryptocurencies from Islamic perspective: the case of Bitcoin. bulls. Monet. econ. Bank. 20(4), 475-492.
Mills, DJ, Nower, L. 2019. Preliminary findings on cryptocurrency trading among regular gamblers: a new risk for problem gambling? Addict. Behav. 92, 136-140Tan, Z., Huang, Y., Xoao, B. 2020. Value at Risk and Returns of Cryptocurrencies Before and After The Crash: Longrun Relationship and Fractional Cointegration. Research in International Business and Finance. Elsevier.
Tran VL, Leirvik, T. 2020. Efficiency in the markets of crypto currencies. Finance Research Letters. ScienceDirect.
Usmani, MT. 2015. Fiqh al-Buyu. Damascus, Syria: Dar al-Qalam.
Vo, DH, Nguyen, NT, Hong Van, LT. 2020. Financial Inclusion and Stability in The Asian Region Using Bank Level Data. Bosta Istanbul Review. Elsevier.
Xu, X. 2019. Trust and Financial Inclusion: A Cross Country Study. Financial Research Letters. Elsevier.
Yang et al. 2020. Public and Private Blockchain in Construction Business Process and Information Integration.Automation in Construction. Elsevier.
Zachariadis, M., Hileman, G., Scott, SV. 2019. Governance and Control in Distributed Ledgers: Understanding The Challenges Facing Blockchain Technology in Financial Services.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.