Increasingly, Palestinians are turning to Bitcoin to circumvent the US-led financial blockade of Palestinian banks. According to financial analysts, there are now some 20 unofficial ‘exchanges’ in Gaza, where people can go to purchase cryptocurrencies to move money abroad.
Palestine’s Bitcoin Push
Palestinians, like Venezuelans and Iranians, are increasingly turning to crypto to escape the limitations placed on their native currencies. In Venezuela, there is runaway inflation, while in Iran – as in Gaza, there are strict sanctions imposed by the international community. These restrictions can be pretty harsh – a U.S.-led financial blockade against Palestinian banks has made it very difficult to transfer money between Palestine and other Arab nations.
Physical blockades by Israel and Egypt and the often time-consuming security checkpoints for Palestinians wishing to enter Israel are also bleeding Palestinian markets. The net effect of these barriers is that many Palestinians want to invest abroad where conditions for businesses are more favorable but have a difficult time moving their money out of Palestine.
Bitcoin Opening Doors
And this, of course, is where cryptocurrencies come in. Despite many products and services being challenging to get hold of in Palestine, some 63% of the population do have Internet access, and with Internet access, crypto. The decentralized nature of cryptocurrencies makes them highly censorship resistant and allows money to flow relatively freely across borders and through blockades.
The limitation, of course, is that Palestinians cannot purchase crypto on foreign exchanges, but are forced to rely on what exchanges have sprung up within Palestine itself, where prices are often higher than in the rest of the world, especially during times when Bitcoin is rising in value. Not unlike the ‘Kimchi premium’ in Korea.
Right now it is estimated that there are some 20 exchanges in Gaza (population ~1.8 million), which people have to visit in person to purchase their crypto. But while Bitcoin is much desired by people wanting to transfer money abroad, in day to day life it is difficult to find any businesses that accept payment in crypto, and with exchanges often far away and high fees, liquidity is low.
All in all, Palestine is an exciting case for crypto. The people are not loathed to hold their native currency, unlike Venezuela and its inflation, so business adoption is low. But for anyone wanting to move money across borders – into Gaza or out of it, Bitcoin has become the medium of choice.