Blockchain technology and the potential of waqf (Islamic endowment) sector revival

The waqf (Islamic endowment) sector encompasses significant untapped wealth that can contribute to socioeconomic and sustainable development. The sector suffers, however, from prevailing trust issues that have weakened its role and impaired its effective utilisation. As a trust-building technology, blockchain emerges as a potential solution to overcome waqf challenges. To demonstrate the prospects of blockchain technology in waqf revival, this paper presents the challenges faced by the waqf sector and the value that blockchain technology can bring to the sector, the challenges facing the adoption of the technology considering the prevalent governance and management structures and the current operating models. It also overviews blockchain in practice. This paper argues that the value of blockchain technology in waqf lies primarily in the development and management of waqf assets. This value, however, may only be reaped once existing waqf challenges have been resolved and a carefully architectured governance structure is developed. The waqf development and management model warrants close coordination with government agencies and waqf authorities as the current custodians of waqf assets. This renders some features of blockchain, namely decentralisation, irrelevant. Challenges related to legal and Sharia uncertainties surrounding blockchain technology and cryptocurrencies pose risks that must be carefully considered to ensure that blockchain waqf platforms are not pursued as a venture driven solely by blockchain hype.