Blockchain-based Zakat Collection to Overcome the Trust Issues of Zakat Payers

Abstract

Zakat is one of the five pillars in Islamic principles, subject to all qualified Muslims which requires them to contribute a proportion of one of their income or the wealth possession for the welfare of the Muslim community. In Malaysia, lembaga zakat is the organization appointed by each state government to manage the zakat transactions. The zakat transactions can be done either through online transactions or over the counter.  However, there are issues related to zakat management, such as the zakat payers are not satisfied with the zakat distribution, and there are claims on lack of transparency in the zakat management which lead to trust issues among zakat payers to contribute their zakat through lembaga zakat. One way to respond to the issues is by having transparency in the zakat transaction by applying a trust model such as blockchain in zakat management.  Thus, this project aims to use blockchain technology and its main component, smart contract, as the base of the zakat collection and utilize Ethereum as the platform.