Skip to content

Latest commit

 

History

History
65 lines (37 loc) · 3.4 KB

algorithm.md

File metadata and controls

65 lines (37 loc) · 3.4 KB
Raw

Mechanism of Zakat: The Rooms and Boxes Algorithm

The "Rooms and Boxes" algorithm introduces an innovative mechanism for managing financial accounts and meticulously calculating Zakat. By breaking down finances into distinct "rooms" and "boxes" this method ensures accuracy and comprehensive tracking of Zakat obligations.

Breakdown of Concepts:

Rooms and Boxes:

  • Room: Acts as a separate financial account.
  • Box: Represents each financial transaction (addition or deduction) within a room. Critical data such as the initial capital, the date of the transaction, remaining balance, Zakat cycles, and totals of Zakat paid are stored in the box.

Fund Management:

Adding Funds:

  • Each time funds are introduced into a room, a new box is generated. This box houses the transaction specifics and is arranged chronologically to the nanosecond for precise records.

Deducting Funds:

  • To deduct funds, the boxes are sorted in reverse (newest first) to deplete the most recent boxes first. Should deductions surpass the total remaining range within the room, a new box is formed with a negative value to indicate debt.

Box Lifespan:

  • The duration of a box begins from its creation and persists until its balance hits zero or negative. This lifespan continues even if funds are moved between rooms.

Zakat Calculation:

Zakat on Boxes:

  • Each box is evaluated for Zakat individually based on the "Hawl" (one lunar year) and "Nisab" (minimum threshold) requirements.

Aggregated Zakat:

  • If boxes meet the "Hawl" but don't individually reach the "Nisab" they are grouped. If their collective value hits the "Nisab" Zakat is calculated on the combined amount.

Nisab and Hawl:

  • Nisab: Typically based on the value of 85 grams of gold or 595 grams of silver, adjustable as required.
  • Hawl: Defined as 355 days.

Advantages of the Algorithm:

  • Flexibility: Offers continuous and sequential Zakat calculation for each box.
  • Automation: Automatically deducts Zakat when criteria are met.
  • Comprehensiveness: Encompasses all financial transactions for precise Zakat calculations.
  • Adaptability: Allows for adjustment in the "Nisab" value as needed.

Enhanced Features:

Given the numerous box deductions, the algorithm automates the process entirely. Discounts are made on the relevant box automatically, and it allows the collection and deduction of these discounts from a specific room or multiple rooms.

Unlike a fixed annual timeframe for Zakat, this algorithm enables Zakat to be payable multiple times a day if conditions are met, similar to the regularity of prayers.

Significant Considerations:

  • Silver "Nisab": By default, the algorithm uses the silver "Nisab" due to its lower value compared to gold, increasing the inclusivity of Zakat payers.
  • Capital Decrease Over Time: Zakat can decrease capital significantly (approximately 22% over a decade); thus, investments that preserve capital are recommended.

Suggested Enhancements:

  • Develop a user-friendly interface for easier room and box management and Zakat tracking.
  • Generate detailed reports on Zakat calculations and payments.
  • Integrate with existing accounting systems for streamlined Zakat calculations and recordings.

This structured, methodical approach ensures accurate and effective Zakat management, adapting to modern financial complexities while honoring the traditional obligations of Islam.