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The Middle East has been a conflict hotspot for decades.

Since 1948, at least four separate wars have broken out, and violence continues to be a fact of daily life for many residents in the area.

This week, however, the small scale conflicts escalated into what could be all out war, with Hamas launching a military offensive along Israel’s southern border and Israel launching counter offensives against the Gaza Strip.

The war's spillover effects are far-reaching.

But what is perhaps surprising is the scale of the attacks by Hamas. This time, it is not a case of irregular warfare to oppose Israeli settlers or the Israeli Defence Forces. Instead, it is a large-scale conventional war.

Hamas has been designated as a terrorist organisation by more than just a handful of countries, and the Gaza Strip, where they mainly operate from, has been under blockade not just by Israel, but also by Egypt since 2007.

Binance, the largest crypto exchange in the world, is aiding Israel in cutting off funding for Hamas.

Despite this, they have managed to obtain significant amounts of arms and munitions to fight the conflict.

So the question is, how?

New year, old wars

In some sense, this conflict is nothing new. Israelis and Palestinians have never been the most peaceful of neighbours.

Even during the Cold War, the US and USSR supported different sides and in some sense contributed to the conflict, with the US being a staunch ally of Israel and the USSR supplying arms to the Arab states.

The pattern of conflict has not diminished despite the collapse of the Soviet Union and the end of the Cold War.

In contrast, these patterns have continued to manifest in other ways as well, as Israelis and Palestinians continue to joust over land and squabble over national identities.

And in their quest for national security, both the Palestinians and Israelis have turned to global powers to seek security guarantees, economic support, and military supplies.

Arab states like Egypt purchased arms from Eastern Bloc countries like Czechoslovakia, and Soviet intelligence forces consistently passed information on to Arab countries like Syria, including warning them of an incoming operation prior to the Six Day War in 1967. Following this conflict, the USSR restocked the arsenals of these countries and allowed them to prepare for another conflict, which would turn out to be the Yom Kippur War of 1973.

Israel has traditionally partnered with the US to guarantee its own security, and the US, for its part, has seen Israel as a key partner in containing Soviet influence in the region. It was the US that sold new state-of-the-art aircraft to Israel in 1968, and it was with US intervention that Israel was able to survive the 1973 Yom Kippur war.

But the relationship between global powers and local concerns has never been clearly straightforward. Were the US and USSR in control and directing affairs from behind the scenes? Or were they drawn semi-willingly into a conflict that they were not completely prepared for?

Scholars continue to debate this issue, but it is likely that there were periods where either argument could be seen to be more reflective of the real situation on the ground.

What is cut and dried is that the participants have often relied on external aid to arm themselves and maintain their own capacity for war.

Even during interwar periods, when irregular conflict replaced regular conflicts, local groups sought aid to fund their efforts, which could include the commission of terrorist acts by both Jewish and Islamic fundamentalist groups.

In recent years, Iran has emerged as one of the staunchest supporters of Hamas and their acts of terror.

Previously, Iran has exported its brand of fundamentalism to other parts of the Middle East as well, including aiding the development of Hezbollah in Lebanon, which has also carried out terrorist attacks and guerilla raids against Israel and its allies.

Now, Iran is again in the spotlight, and has been suspected of helping Hamas in the ongoing conflict.

That being said, no evidence has thus far surfaced that can conclusively point to Iran as complicit in the attack, and Iran has denied any involvement, claiming that any such accusations are politically motivated.

Yet, it would not really surprise anyone to find out that Hamas has had some backing from regional or international powers? Probably not.

The multidimensional nature of war

The nature of modern war is that it is no longer just about the troops on the ground and the generals that lead them.

Modern war is total war, where everything from civilian production, financial backing, and online sentiments are in a leader’s toolkit to be used to their maximum effect.

And in this sense, war is now multidimensional.

No nation can successfully prosecute a war without taking into account logistics, supply lines, political sentiment, and financial constraints.

Considering where Hamas is able to obtain such a large arsenal is therefore an area of interest.

Thus far, we have considered that Iran may be providing support for Hamas- but is Iran’s support monetary in nature? Probably not.

Since 1979, the primary form of support that Iran has provided to groups friendly to Iranian interests is direct military training, as it did with Hezbollah.

Instead, we should look elsewhere to consider where Hamas might be getting monetary support from.

Since the outbreak of war, support has come from another source- Russia. Specifically, Russian volunteer hackers purporting to be part of the Killnet group.

Thus far, they have managed to attack several government and media websites, and announced that they would target all Israeli government systems with DDoS attacks.

The group has also blamed Israel for the war and accused Israel of supporting Ukraine, where another war is ongoing.

While Killnet may not be funding Hamas directly, it does perhaps suggest that Russia may be at least turning a blind eye to any efforts to aid Hamas that are being directed through Russia.

Such actions would not be without precedent. On-chain investigations have repeatedly shown that Russia is a hotspot for money laundering, especially cryptocurrency money laundering, and a large portion of this money flows through Federation Towers in Moscow. The Russian government would almost certainly be aware of this- though they have not yet taken any action to curb such activity.

Could Russia be funding Hamas, or at least helping Hamas hide their money trail? It’s not out of the question. In recent days, Israel has shut down several fundraising efforts for Hamas, which has been using crypto for fundraising for several years.

These fundraising methods mirror activities taking place in the Russo-Ukraine war as well, with even prominent militant groups like Wagner receiving crypto donations.

That being said, Hamas has stopped accepting Bitcoin donations, citing an increase in “hostile” activity against donors.

So what kind of cryptocurrencies would Hamas accept? It’s possible that they might take other tokens, possibly privacy coins like Monero. But these coins are already under heavy scrutiny for their supposed usage for illicit activity.

Instead, given Hamas’ religious persuasion, it might be more likely that they would accept something like the newly unveiled Islamic Coin, a cryptocurrency that is supposed to be Sharia compliant.

Islamic Coin itself has a mix of Arabic and Russian founders, and given that crypto can be anonymous, it would not be out of the question for wealthy Muslim donors to donate through Islamic Coin.

This would be an ideal vehicle for anonymous donations.

Some of Israel’s oldest enemies are in the process of peace talks, and would likely not appreciate having their donations exposed. The anonymity of crypto would provide the perfect cover for them.

However, thus far no evidence has surfaced of such activity, so we can only speculate as to Hamas’ crypto assets.

Yet, it’s still almost certain that whatever efforts have been taken to limit Hamas’ financial capabilities cannot be declared a complete success. After all, to launch such a large-scale attack on Israel despite years of deprivation suggests that they were able to develop and protect new sources of funding that hitherto remain open.

No end in sight

Crypto certainly has its advantages- according to its supporters. Privacy, censorship resistance, and much more.

But depending on the context in which these advantages are used, it may end up doing more harm than good.

Privacy can protect people from overreaching governments and mass surveillance, but it can also be used to launder money.

Censorship resistance can mean transacting with anyone and everyone without anyone being able to tell you otherwise, but it can also mean easier funding for terrorist groups and criminals.

Like all things, it's a matter of who uses it, and why. The technology itself is amoral- it is whether we choose to use it in an ethical way or not, and what frameworks determine what these ethical ways are.

The new Hamas-Israel war is no exception- crypto is now part of the financial and political calculations of both sides, and a part that neither side can hope to disregard, no less.

Is this really the future of crypto adoption that we want?