IsDB Institute secures US patent for ‘Proof-of-Use’ blockchain model

The Islamic Development Bank Institute (IsDBI) has received a US patent for a blockchain consensus mechanism known as Proof-of-Use (PoU), a system designed to support digital financial services and expand innovation in the Islamic fintech sector.

The mechanism allows participants to validate blockchain transactions based on their level of activity on the network rather than computing power or financial stake. IsDBI said the model is intended to encourage wider participation in digital finance while improving efficiency and reducing energy consumption.

Alternative to existing blockchain models

Blockchain networks typically rely on consensus systems such as Proof-of-Work or Proof-of-Stake to validate transactions and maintain security.

Proof-of-Work, used by cryptocurrencies such as Bitcoin, requires powerful computers to solve complex mathematical problems, a process that consumes large amounts of electricity. Proof-of-Stake allows participants who hold larger quantities of tokens to play a greater role in transaction validation.

In contrast, the Proof-of-Use model gives users validation authority based on their participation in the network. Participants verify each other’s transactions, with activity levels determining their ability to validate blocks.

According to IsDBI, the approach reduces energy consumption and lowers barriers to entry by removing the need for specialised hardware or large financial holdings.

Potential applications in Islamic fintech

The institute said the model could support a range of digital financial services aligned with the principles of Islamic finance, including fairness, transparency and broader access to financial services.

Potential applications include cross-border payment systems, trade finance platforms for small businesses, digital identity systems for unbanked populations, and blockchain-based tools for charitable giving and halal investment.

By linking validation power to usage rather than ownership, the system is designed to reduce concentration of control within blockchain networks and encourage participation from a broader base of users.

Part of broader digital finance strategy

IsDBI said the patent forms part of its wider strategy to promote innovation in financial technology across its member countries. The organisation is exploring partnerships with technology developers and financial institutions to test and deploy the Proof-of-Use model in practical applications.

While further work is required to test scalability and security, the institute said the new mechanism could help support digital financial infrastructure in markets where access to conventional banking services remains limited.

The initiative reflects growing interest among development institutions in using blockchain technology to expand financial inclusion and improve the efficiency of digital financial services.