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Cryptocurrencies

Why Palestinians are using Bitcoin for cross border transactions

Wednesday 19 September 2018 | 10:41 AM CET

In the occupied Palestinian territories of the Gaza Strip and the West Bank there is no payment gateway, like PayPal, for entrepreneurs to receive payments internationally.

As a result, for the small community of crypto users living in those territories, Bitcoin has become a lifeline. A financial analyst in Gaza estimates there are at least 20 unofficial “exchange” offices in the area dealing cryptocurrency to local users. One such currency dealer in Gaza told CoinDesk that over the past four years he helped up to 50 families a month purchase an average of USD 500 worth of Bitcoin each to send money abroad or shop online.

What makes appealing the use of Bitcoin for Palestinians is the core property of public blockchain networks: censorship-resistance. Anyone can conduct a peer-to-peer Bitcoin transaction. Once the transaction is paid for, it can’t be vetoed by an intermediary. According to CoinDesk, this would appear to solve a real problem for a population with restricted access to the global economy amid the ongoing conflict with Israel.

As online crypto exchanges don’t work with local banks, Palestinians cannot get their Israeli shekels, US dollars or Jordanian dinars from those exchanges. Therefore they must rely on dealers as liquidity gateways, and that adds friction back in. Also, Palestinian communities revolve around local trust networks and physical assets like cash, because high unemployment and poverty rates create urgent daily needs.

In that context, volatile and illiquid assets are predominately useful for cross-border transactions, but not everyday ones.

More: Link
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