Quantifying Gharar in Islamic Digital Finance

Abstract

The new economy is substantively digital and trust based. Prohibition of Gharar (contractual uncertainty) in the traditionally economy serves as a guardrail to enhance trust in the markets. This paper shows that Gharar in the digital economy has additional features and develops a quantitative framework for assessing Gharar in Islamic digital finance. Two structural axes - Specifiability (S, the epistemic determinacy of a contract’s terms) and Deliverability (D, the ontological certainty of its subject matter) - are derived from the classical taxonomy of Gharar sources and combined into a coordinate space (S, D) ∈ [-1, +1]². Admissibility is determined by axis signs alone: a contract is admissible if and only if (S, D) ∈ Q1 (S > 0 and D > 0); contracts in Q2, Q3, and Q4 are categorically batil and instantiate the classical taxonomy without remainder. Within Q1, quality is continuous, stratified by min(S, D) into Robust, Standard, and Marginal bands and measured by the d-gap from the optimum v* = (+1, +1). A maqasid-grounded Tayyib constraint τ ∈ [0, 1] operates as an independent floor alongside the (S, D) admissibility test. The framework is then extended to digital contracts, which exhibit five structurally novel properties - entanglement of the two axes, composability across protocols, governance mutability, ordering risk through adversarial transaction sequencing, and time-dependence through continuous attestation - that the classical taxonomy was never required to address. The paper formalises these properties, decomposes each axis into three sub-dimensions specific to digital contracts, generalises the framework from points to trajectories, specialises the τ-constraint to digital-asset maqasid considerations, and proposes a Substitution-Transformation-Offset (STO) remediation taxonomy with digital instruments. Five case studies illustrate the framework across structurally distinct digital instruments. The paper concludes by identifying the absence of a dedicated multilateral Shari’ah Standard on cryptoassets as itself a finding and positioning the framework as a candidate scaffold for future standards-development work.