Smart Contract in Islamic Trade Finance

Abstract

Smart contract is a computer program that can execute contract terms using Blockchain technology. The contract has started getting applied in financial services or used to assist companies in managing the financial aspects of the trading, and was presumed to undertake the trading, banking, and insurance industries in the applications, processes, and business models. The objective of this paper focuses to discuss on the possibility to apply the smart contract in Islamic trade finance practice and to understand how the smart contract works. This study will explore the smart contract technology, whether it is Sharia compliance and well as the advantages of the smart contract. Besides that to understand the context of smart contract which is one of the technologies from Blockchain that holds great potential across the Islamic trade finance. This study will refer to secondary data such as online journal, books, and news. Resulting to understand the context of smart contract, this study will show how the usage of smart contract can have a huge impact in the future of Islamic trade finance. The recommendations will emphasis on the roles of traders to grab the opportunity and adapting the smart contract technology in their business practices with the fact that smart contract will expect stronger growth in the future.