Crypto as Freedom: How Gaza is Bypassing a Collapsed Financial System
Yousef al-Ashqar, 22, moves quietly through the aisles of the Hyper Mall supermarket in central Gaza’s Nuseirat. His shopping list is ordinary-rice, canned food, detergent-but his method of payment is anything but. When he gets to the cashier,al-Ashqar doesn’t pull out cash or a credit card. Instead, he unlocks his phone and opens a digital wallet containing USDT, a stable cryptocurrency pegged to the US dollar that is widely used in Gaza.A small QR code appears on the screen, which the cashier scans, and the transaction is completed within seconds. “I haven’t used real cash in months,” al-Ashqar says as he places his groceries in a plastic bag. “It’s either broken, fake, or simply gone. but with crypto, I can buy anything I need, including clothes, food, and electronics.”
Al-ashqar earns a living through online sports betting platforms, and his winnings arrive in USDT, which he stores in a digital wallet.From there, he sends and receives local payments in crypto, avoiding Gaza’s defunct banking system. “Sometimes I exchange a little bit through local brokers,” he says, referring to the informal network of cryptocurrency exchangers that has sprouted up in the Strip. “But most of the time, I simply pay with my phone.” He notes that many shops now accept crypto, especially in large shopping complexes like Nuseirat’s Abu Dalal Mall and Hyper Mall. “Everyone is aware that cash is unreliable,” he says. In this context,he adds,”crypto is freedom.”
Al-Ashqar’s story is just one example of a larger financial transformation taking place across Gaza. Two years of Israeli bombardment and siege have left the enclave in a severe economic crisis. lacking jobs or savings, families find it difficult to pay for essentials, and those lucky enough to still have work-mostly government staff, United Nations Relief and Works Agency (UNRWA) employees, or freelancers earning from clients overseas-often struggle to get paid. As this economic disaster is accompanied by a quieter,but no less significant,liquidity crisis. Banks have long stopped operating in Gaza, and without reliable access to electricity and the internet, it has been difficult for residents to access or use online banking.
The cash situation is even worse. Shattered ATMs sit like abandoned relics, their screens cracked, cash slots blocked, and buttons missing. Using currency in Gaza now requires hiring brokers, who often charge commissions ranging from 1% to 50% to exchange digital transfers for scarce physical cash. And even if you are able to get bank notes, this doesn’t guarantee that you’ll be able to use them. In the absence of freshly minted money, Gaza’s currency has deteriorated more quickly than it can be replaced, and the few remaining bills feel like fragile scraps of cloth, with faded ink and torn edges from repeated handling. Shopkeepers examine such bills in low light, weighing the value of each before deciding whether to accept it. The condition of the notes is so bad that streetside stalls have appeared to repair them, offering taping and pressing services to render the bills “good enough” to circulate again. But despite such efforts, currency is disappearing.The ten-shekel note, which was once common, is now so rare as to be almost unusable. Larger notes are not better. Paying with a 100-shekel note for an 80-shekel purchase frequently frustrates both buyer and seller: The shopkeeper has no change, and the customer is forced to buy needless items just to use the bill.In all cases, transactions that used to take seconds now take much longer or are altogether impractical.
As physical currency goes extinct,Palestinians in Gaza have turned to a variety of survival strategies,ranging from trust-based options like barter and informal credit lines between neighbors to,increasingly,alternative systems of exchange like cryptocurrency. “With banknotes damaged, banks gone, and no way to get dollars in or out, I can only do commerce and import necessities using cryptocurrenci
Cryptocurrencies Become a Vital Lifeline for Aid in Gaza, but Risks Remain
Cryptocurrencies, particularly stablecoins like USDT (Tether), have emerged as a crucial channel for delivering aid to Palestinians in Gaza, where the customary financial system has been severely disrupted by ongoing conflict and blockade. Aid organizations and individuals are increasingly relying on digital currencies to bypass traditional banking obstacles and directly purchase essential supplies.
“Donations simply couldn’t reach Gaza without cryptocurrencies,” one self-reliant aid organizer told reporters. Another volunteer working with an initiative in Nuseirat echoed this sentiment, stating that crypto has become “the easiest way to collect and move donations under siege.” They emphasized the critical role of USDT, saying, “without USDT, we wouldn’t be able to buy even a single water tank.”
The reliance on cryptocurrency stems from the collapse of Gaza’s financial infrastructure. Traditional methods of transferring funds have become unreliable or impossible due to the conflict. According to a 2023 report by the United Nations Conference on Trade and Growth (UNCTAD),the Gaza Strip’s economy has suffered a dramatic contraction,with a 50% decline in GDP during the third quarter of 2023. https://unctad.org/news/gaza-strip-economy-suffers-dramatic-contraction-october-november-2023 This economic devastation has made cryptocurrencies a vital alternative for receiving and distributing aid.
However, the use of cryptocurrencies in Gaza is not without significant challenges. A lack of digital literacy and access to technology leaves many vulnerable. Many Palestinians lack smartphones or the technical expertise to manage digital wallets, forcing them to depend on informal brokers to convert cryptocurrency into local currency or goods.These brokers frequently enough charge high fees, and instances of fraud are common.
Ghassan Shaker shared his experience of losing 357 USDT to a dishonest broker, highlighting the risks inherent in relying on unofficial intermediaries. This underscores the fragility of gaza’s emerging digital economy and the potential for exploitation. Moreover, individuals with digital wallets are susceptible to phishing scams and fraudulent websites designed to steal their cryptocurrency holdings. A recent report by Chainalysis indicated a surge in cryptocurrency-related scams targeting vulnerable populations in conflict zones. https://www.chainalysis.com/blog/crypto-scams-conflict-zones/
Experts caution that while cryptocurrencies offer a temporary solution for immediate survival, they cannot replace a functioning banking system. “even as aid flows through these channels, people who lack digital literacy or dependable internet access run the risk of being left behind,” said Mahmoud Deeb, a turkish financial expert of Palestinian descent. He added that cryptocurrencies are unable to address fundamental economic issues like unemployment and limited access to financial services, which require a comprehensive reconstruction of Gaza’s economy and the restoration of its banking infrastructure.
Deeb stressed, “reliance on cryptocurrencies is only a temporary solution.” Long-term stability and economic recovery for Gaza depend on rebuilding its financial institutions and fostering sustainable economic development.