By Adam Abrams / JNS.org
In the latest development solidifying Israel as a key player in the emerging financial technology field, the founder of the Ethereum digital currency network, Vitalik Buterin, visited the Jewish state this week to meet with local digital currency and blockchain technology entrepreneurs.
During his visit, Buterin met with members of Alignment, Israel’s first blockchain technology incubator, which was launched in late August. He also spoke at the Technion - Israel Institute of Technology’s 6th Summer School on Cyber and Computer Security in Haifa.
Blockchain — a distributed database where transactions made in digital currencies such as Bitcoin are recorded chronologically and publicly — is being used in a variety of global industries as a new way to streamline operations.
Buterin is a 23-year-old Russian Canadian. His Ethereum, a programmable network with its own digital currency called “ether," has revolutionized the blockchain technology sector over the course of this year. It has become the second most valuable digital currency after Bitcoin.
Digital currencies, such as bitcoin and ether, are created on decentralized peer-to-peer networks, and are not controlled or distributed by a central governing agency like fiat currencies, such as dollars. In August, the combined value of all publicly traded digital currencies exceeded $172 billion.
Vitalik's Israel visit can be viewed as tacit acknowledgment of the Jewish state’s increasing prominence in the emerging financial technology sphere. As one of the leading authorities on digital currencies — the equivalent of Microsoft founder Bill Gates being an authority on computers — Buterin’s opinion on blockchain technologies can often make or break start-ups in the field.
“Israel is a leader in cyber and now blockchain technology with a long history of innovation in start-up R&D,” Bancor project architect Eyal Herzog told JNS.org.
The country is “well-positioned to be a leader in the blockchain ecosystem,” he said.
Recently, the Israeli Securities Authority (ISA) announced it will establish a committee to review potential regulations for initial coin offerings (ICOs)—a new form of raising capital with digital currency, akin to a stock market’s initial public offering (IPO).
Israel has recently been identified as global leader in the emerging blockchain and digital currency sphere, with experts in the field acknowledging that the Jewish state’s cyber capabilities, security proficiency and wealth of entrepreneurial expertise provide an ideal foundation for blockchain technology projects.
“I’m honored that Tel Aviv will take ownership, accountability and responsibility for building the blockchain technology and infrastructure,” Dany Fishel, president of Kik Israel, told JNS.org.
Israeli high-tech innovators are “gradually migrating” from cyber to building blockchain infrastructure, Fishel said.
Several Tel-Aviv based digital currency start-ups already have valuations in the tens and hundreds of millions, including Herzog’s Bancor at around $153 million and the Stox prediction market platform at around $33 million.
Major financial institutions in Israel have also recently expressed interest in creating their own blockchain projects, including Bank Hapoalim, which announced last week that it will create a digital banking system based on blockchain technology in a collaboration with Microsoft.
“The new process will enable Bank Hapoalim customers to receive security documents in a digital, automated and secure manner, without physically coming to the branch and in a very short process,” Hapoalim’s chief executive officer Arik Pinto said in a statement.
“The use of blockchain technology will significantly improve the customer experience and the level of trust in the banking system.”
The Israeli Diamond Exchange is also exploring the possibility of launching its own digital currency, named CDC, which will be backed by investments in diamonds purchased at the exchange.
"For the past several years, there have been many attempts to turn diamonds into a viable financial instrument, but none has succeeded,” said IDE President Yoram Dvash, reported Israel Hayom.
“We intend to make use of the incredible expertise that Israel's high tech industry offers," he added.