Since 2018, the West Bank has generated a growing bitcoin ecosystem dominated by peer-to-peer transactions, private social media groups and unofficial dealers.
Locked out of traditional financing, Hamas — which controls the Palestinian coastal territory of Gaza — uses bitcoin for cross-border fundraising and to fund its military and terror attacks.
However, civilian bitcoin usage in the Gaza Strip outstrips Hamas usage, experts told Coindesk.
An Islamic Palestinian resistance movement, Hamas is regarded as a terrorist organization by Israel, the U.S. and the European Union.
It’s hard to say how big the local Palestinian transaction volume is in bitcoin since the crypto ecosystem doesn’t connect directly to banks or global crypto exchanges.
As of 2017, there were 4.7 million people in the West Bank and Gaza Strip, the Palestinian Central Bureau of Statistics reported.
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Although 2.6 million Palestinians have smartphones, 77 percent of adults in the Palestinian territories are unbanked, according to recent data from the Palestinian Monetary Authority presented in July at a fintech workshop in the West Bank.
Unlike PayPal, which can shut down accounts and freeze funds, cryptocurrencies are attractive because they make it possible to hold and transfer money without a central authority. “Anyone in the world can create a Bitcoin address and begin receiving digital tokens without even providing a name or an address,” New York Times reported.
Visitors to the Qassam Brigades — Hamas’ military wing — are given a unique Bitcoin address to send donations in bitcoin. It’s a method that makes the donations almost impossible for law enforcement to track, New York Times reported.
Countries facing U.S. economic sanctions such as Iran, Venezuela and Russia are creating their own cryptocurrencies.
However, ethical uses of bitcoin are popular among civilians in Palestine, sources told CoinDesk.
There are up to 20 bitcoin dealers operating in Gaza. Bitcoin is one of the only ways to easily receive international payments since PayPal and other online services exclude the Palestinian territories.
Ismael Al-Safadi, a Gaza bitcoiner and freelance developer, told CoinDesk that he estimates there are 10,000 occasional bitcoin users in Gaza. Another source who teaches bitcoin seminars said there’s a bitcoin-focused Facebook group with 5,000 members.
Palestinians at home and abroad are also interested in ethereum applications. A Palestinian based in the United Arab Emirates who spoke anonymously to Coindesk is developing an ethereum-based charity platform that will distribute crypto donations to schools in Gaza and the West Bank.
In the past, terror groups were able to use the traditional financial system without needing bitcoin, NYT reported. However, their access to money has been significantly curtailed under the Israeli blockade of Gaza with Egypt’s help. Hamas has been pressured over the last year by financial cuts imposed by its rival, the Western-backed Palestinian Authority.
In 2016, the U.S. donated $368 million to the Palestinian Authority, and $350 million in 2017, but cut about a third of its contributions in 2018, according to the Jerusalem Post. President Donald Trump sought assurances that the Palestinian government wouldn’t use U.S. funding to support families of suicide bombers.