In an unprecedented initiative, authorities in Gaza are working to overcome the financial siege enforced on the coastal enclave through a new monetary channel: Bitcoin.
Bitcoin, an entirely electronic currency circulated online, is a system of electronic credit, which shares some of the qualities of traditional currencies but is not monitored by a unified authority like central banks.
While the Islamist rulers of the Gaza Strip have in recent months received lifeline injections of cash from the allied Qatari government, they are looking to Bitcoin for a longer-term solution amid increasing international pressure.
The military wing of the Palestinian resistance movement Hamas announced earlier this year it would raise funds through Bitcoin to avert near-total financial isolation.
Abu Obaida, the spokesman for the Qassam Brigades in Gaza, said Israel was fighting the Palestinian resistance by cutting it off from all channels of support, and encouraged supporters to back the group through Bitcoin.
“Resistance supporters all over the world are fighting these Zionist attempts and are seeking all means to support the resistance,” he said in a statement on the encrypted messaging application Telegram on January 31.
A statement on the Qassam Brigades website now includes a Bitcoin wallet address through which supporters can donate.
Monitoring electronic currencies
Aside from the militant group, money traders say the new currency is already gaining traction among residents.
“The lack of monitoring over electronic currencies made them popular among Gaza residents since their emergence, amid the strict monitoring and crackdown from the Israeli government on money transfers,” said Mohamed al-Borasy, who owns a currency-exchange office in Gaza.
Borasy says dealings in electronic currencies in Gaza are growing every day. Currency-exchange offices have no problem buying and selling Bitcoin in any quantities, he added, as there is no ceiling imposed on the trading of the currency in the strip.
For programming expert Mohamed Fahgan, who runs a software company called Space, Bitcoin represents a natural development in finance, on par with dollars, euros and other currencies.
“The only difference is that Bitcoin is virtual, only used on the Internet, with no material existence,” he told Asia Times.
The Palestinian resistance turned to Bitcoin, Fahgan says, because it is encrypted and Israel will be unable to monitor its flow in the absence of serial numbers to track. Encryption also limits the control of foreign governments and banks, which means Israel should not be able to intercept the money reaching resistance factions through Bitcoin.
‘Battle of the brains’
Central banks in Egypt, Palestine, the United Arab Emirates and Morocco have previously warned against dealing in electronic currencies, concerned that there is no legal framework for their operation worldwide.
Nevertheless, bitcoins can already be exchanged for regular currencies in exchange offices across the Gaza Strip and are accepted for a variety of online services and goods, according to Fahgan.
Political analyst Abdallah al-Akkad considers the timing of the Qassam Brigades’ announcement savvy, as it coincides with what has been dubbed “the battle of the brains” between the movement and Israeli and US authorities regarding the resistance movement’s international funding.
Hamas identified Bitcoin as a critical tool in parallel with Israel and the United States working to cut off all its financing channels. Gaza has been under financial siege for more than a decade, during which time a number of cases have been brought before US courts against individuals and groups charged with financing terrorism, because of suspicions of facilitating money transfers to authorities in the strip.
Just last week, the Hamas television station Al-Aqsa was blacklisted as a terrorist organization by the Israeli government, a sign of ever-tightening pressure on all arms of the Islamist authorities.
Analyst Akkad says the Bitcoin embrace is not occurring in a vacuum and comes amid several planned actions by the so-called Financial Disruption Units of the Qassam Brigades.