<![CDATA[Background and research gap – The global monetary system currently faces a dual paradox of trust: the failure of institutional trust in inflationary fiat money and the failure of algorithmic trust in volatile cryptocurrencies. While extensive literature has examined each failure separately, little work has synthesized them through an Islamic ethical framework. In particular, the potential of Maqashid al-Shari’ah to offer a coherent alternative that addresses both institutional and algorithmic distrust remains underexplored, leaving a significant theoretical and policy gap for developing nations seeking monetary sovereignty. Purpose – This study aims to deconstruct this dichotomy and offer a new synthesis through the lens of Maqashid al-Shari’ah. It argues that algorithmic technology should not be utilized for speculation, but rather as an auditing instrument (tabayyun) to prevent excessive money creation (seigniorage), thereby upholding Hifzh al-Mal (Preservation of Wealth). Design/methodology/approach – Employing a qualitative research method with a library research approach, this study dissects historical data, Islamic economic literature, and blockchain technical protocols. A comparative analysis of hyperinflation in Venezuela and Bitcoin volatility in El Salvador is conducted to evaluate how both extremes fail to uphold Hifzh al-Mal. Key Findings – The comparative analysis reveals that both inflationary fiat and volatile cryptocurrencies fail to preserve wealth, as evidenced by Venezuela’s hyperinflation exceeding 1,000,000% and Bitcoin’s price swings of over 80% within single years in El Salvador. As a solution, this research formulates the “Digitized Real-Asset Paradigm” model, proposing a Sovereign Asset-Backed Digital Currency (S-ABDC) anchored to a basket of real assets (gold/energy) and transparently validated through blockchain-based Proof-of-Reserve mechanisms. Research limitations/implications – This study is limited to a conceptual and literature-based analysis, without empirical field testing of the proposed S-ABDC model. The findings are therefore primarily theoretical and may require adaptation to specific national contexts. Nevertheless, the implications offer a roadmap for developing nations to restore monetary sovereignty that is just, stable, and free from dollar hegemony. Originality/value – This paper offers an original synthesis of Maqashid al-Shari’ah with digital currency design, reframing blockchain as a tool for transparency rather than speculation. It contributes a novel ethical framework for monetary reform and proposes future research steps, including pilot implementations and empirical testing of the S-ABDC model.]]>
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