WASHINGTON—Gaza’s reconstruction faces two pressing financial problems. The first is the massive cost, which the United Nations estimated at upwards of seventy billion dollars. The solution to this problem is clear though daunting: Nearly all the reconstruction funds will need to come from international donors, many of whom are beginning to contribute. The second problem is just as important: ensuring funds go to the right individuals. Here a digital identification system in Gaza incorporating distributed-ledger technology—the same kind of technology used in blockchain currencies—could be transformative.
By necessity, most financial aid in Gaza will move through digital channels. The question is whether the people in Gaza are going to be participants in that system or recipients of it; whether they will have wallets and agency, or whether they will be waiting at distribution points for cash that takes weeks to arrive and disappears into informal economies.
The identity problem in Gaza started well before the attacks on October 7, 2023 and the subsequent war. In 2021, for example, roughly five thousand Gazan residents still had open, unresolved cases with no recognized identity documents, out of an estimated 55,000 cases that had accumulated over decades. The situation is complicated further by the 2007 split between the Palestinian Authority (PA) and Hamas. Each has maintained separate civil registries. While some Gazans hold PA-issued IDs, others are registered only through Hamas’s internal system. A meaningful share of people are not counted in either system. Moreover, it is not clear how much of Hamas’s internal documentation has survived the war, or how many hospitals managed to maintain birth registration records throughout the fighting. Reconstruction planners, therefore, are starting from a fractured slate.
That’s not to say they are starting from nothing. In September 2025, for example, the Palestinian Monetary Authority (PMA) launched iDplus, a digital financial identity platform. This is a mobile application that allows citizens to create a digital financial identity that is linked to banking apps. With the app, citizens can authenticate transactions via biometric verification, including facial recognition. The PMA’s project manager described it as a “strategic enabler of national digital transformation” and a first line of defense against fraud and financial crime. However, the problem is that iDplus works off PA population databases, and those databases do not cover Gaza the way they cover the West Bank. It is a genuine achievement for the West Bank, but for Gaza it is a starting point for a different conversation.
What a blockchain-based digital ID actually does
In February of this year, the World Bank proposed a model for a digital ID built around two components. The first is verifiable credentials: cryptographically signed attestations that a user stores in a digital wallet and presents to service providers without those providers needing to query a central database each time. The second is the payment identity credential, a standardized bundle of those credentials that links a verified identity to financial accounts. It enables individuals and vendors to complete “know your customer” (KYC) requirements at onboarding and then check eligibility and authenticate that identity at every transaction afterward.
In practical terms, this means the following: A person enrolls in the system once. Their identity is verified to whatever level is possible given their documentation. And they receive a credential stored on their phone. When they want to make a payment or receive aid, they present that credential, via a QR code, a payment app, or even a basic SIM toolkit for older phones. The counterparty verifies the cryptographic signature on the credential without seeing the person’s full identity file.
With modifications, this architecture can be adapted for Gaza. Specifically, three levels of identity assurance should be available: basic verification for low-stakes services, document-based verification for financial transactions, and full biometric verification for high-security applications. Each level would unlock a different set of capabilities in the wallet.
The QR-based payment process has the benefit of not requiring a live internet connection at the moment of transaction. Instead, the credential is stored locally, and verification happens on the local device. Synchronization with the central ledger happens later, when connectivity is available. This is essential in a territory where most surviving cellular infrastructure currently operates on 2G. The key difference is that in Gaza, instead of having a centralized ledger, the transactions would be logged on a distributed ledger that no single party controls.
Israeli and Palestinian interests on this specific issue are highly aligned, which makes implementation of digital ID onboarding more realistic. A system built on verifiable credentials creates an auditable, tamper-resistant trail of every transaction. Anyone receiving a full-access digital wallet will have passed KYC requirements. Every transfer is traceable to a verified identity on the ledger. This is the general direction reflected in the 2025 GENIUS Act, which requires payment stablecoin issuers to comply with counterterrorist financing, customer identification, and due diligence obligations. The US Treasury has also highlighted digital identity, blockchain analytics, and privacy-preserving tools as ways to strengthen verification while limiting unnecessary disclosure of personal information. For the United States, and for international institutions considering how to route aid money into Gaza, a digital ID ecosystem with embedded KYC and transaction monitoring would likely be easier to audit than the existing, largely cash-based economy.
This initiative should draw inspiration from Ukraine, which successfully integrated digital identity into its national e-governance platform Diia after the Russian invasion. This demonstrates that digital ID infrastructure can succeed under wartime conditions; it can enable a stream of international payments in those crucial moments, while still reducing fraud risks and increasing oversight.
The three hard problems with digital ID implementation
There are three challenges that any attempt to move into digital IDs in Gaza must address, and they do not have simple solutions.
The first is trust. Any system that ties aid to biometric verification can also be used as a surveillance system, and Gazans have a good reason to worry about who ends up with access to data about their payments. The World Bank has also warned that this model creates a risk of overcollection and data misuse. As a solution, the credential architecture has tools built in to address this. Technological flagging mechanisms, such as zero-knowledge proofs, can provide monitoring institutions with proof that a wallet meets KYC requirements without exposing any personal data on the ledger. It also helps that, ideally, onboarding would run through platforms Gazans already use and trust, so the user experience would not feel very different, although the infrastructure underneath has changed.
The second problem is governance. The World Bank model centers on a trusted access and credentialing hub: an entity that bridges the national identity system and the payments infrastructure, manages the lifecycle of credentials, and establishes the trust framework. In the standard design, this is a government function. However, there might be a way around the governance issue: Rather than a single sovereign issuer, the system could run on a consortium model, in which multiple recognized institutions, such as the PMA, UN agencies, licensed financial institutions, and international NGOs, each hold issuing authority for credentials within their domain. This way the distributed ledger maintains the trust chain without requiring a single central authority. The PMA is perhaps the most natural anchor institution here. It has maintained a neutral enough position to be trusted by many Gazans, as well as by Israeli authorities and international financial institution officials.