Israeli blockchain industry poised for boom time
Several novel concepts are being tried and tested:
Blockchain industry watchers often define the Israeli blockchain ecosystem as a microcosm of the global industry and believe in the coming few years, the country will be home for some of the most meaningful blockchain startups globally. When blockchain gained prominence in 2017-18 in the country, the focus was on raising funds to set up cryptocurrency units, which was then considered as the breakthrough technology with potential to change the world. Many felt a crypto startup could raise unprecedented levels of funds. But this outlook changed sometime in late 2018 when the real worth of blockchain came to the fore across the world where concepts like collective intelligence and governance (DAO Stack) or data privacy in blockchain applications (Enigma), have become realities and platforms based on these technologies came to be created. So, fintech and insurtech blockchain companies have started operating and consumers using them in real life.
What the intervening period between 2017 and 2018 saw was the conversion of ideas into enterprises. The hype about crypto gave way to meaningful projects that can truly create equally meaningful products. Today in Israel, projects are no longer for raising money; they are focused on products that can gain traction in the market and bring in benefits to the customers. Many see this as a crucial phase in the blockchain space - just like in any other startup field - when projects are realistic and product and market-oriented.
CRYPTO STILL A FAD
Israel is no doubt shying away from cryptocurrency. In fact, the Bank of Israel and the Finance Ministry are discussing on making it legal tender and devising regulations to control it. The government tax authority and the stock exchange have released statements suggesting establishing regulation for the issuance, exchange and use of cryptocurrencies. Many international experts on cryp to currency believe Israel could maintain its dominance in cryptocurrency at the global level and there has been rush of top global blockchain investors to Israel indicating that the industry is maturing and that meaningful companies are being created.
200 STARTUPS
Israel is making use of its position as a Startup Nation to promote blockchain startups. The Israeli Blockchain Association has released findings that showed more than 200 blockchain star tups had registered there in 2020, positioning the country to become a top Blockchain Nation. The country is working to strengthen its Startup Nation brand and this is being enabled by effective regulation and effortless cooperation among blockchain startups and academic research institutes. The Israeli government is also encouraging the tech community to take risks to explore more uses of new innovations.
IN DIAMOND INDUSTRY
One unique example of how innovative ideas can be beneficial to the industry is the union of the country’s top rated diamond industry and blockchain. Being very vast and dominant, and its value running into billions, the diamond industry was one of the first to implement blockchain. It is also one of the sectors where blockchain can make a big impact because the technology can bring an element of transparency that was hitherto missing in the multitude of transactions holding this industry together. Automation of documentation, ease of transacting online and tracking the digital currency in the blockchain network, and storing a history of transactions in a secure, immutable distributed digital ledger are the central advantages that have been introduced thus far. The country is now planning to set up blockchain diamond consortia which can bring together players in the diamond business to conduct trade in a secure environment.
In Israel, an increasing number of blockchain startups are testing new blockchain-based applications targeted at SMEs and entrepreneurs. Mind you, Israel has played a crucial role in the development of the global Distributed Ledger Technology (DLT) industry, including some of world’s largest ICOs. The country is also examining the viability of alternative forms of investments like Security Token Offering (STO), Simple Agreement for Future Tokens (SAFTs). Almost half of the startups involved in blockchain-based applications are targeting sectors other than financial services and system architecture, with products at early stage of development. These are mostly micro, small and medium-sized enterprises (in sectors such as healthcare, agriculture, logistics et al.), but they also focus on governments and large firms.
GOVT SUPPORT
The Israeli government is evincing keen interest in the development of the industry and there is ample cooperation among concerned authorities and ministries. The initiatives of the Bank of Israel, Israel Tax Authority (ITA), Ministry of Finance, Israel Securities Authority (ISA), Israel Innovation Authority, Small and Medium Business Agency, Digital Israel and others are towards defining the regulatory boundaries for the development of the technology so that investors’ interests are taken care of.
Israel’s blockchain industry is maturing and many ventures are implementing necessary critical security measures and protocols to take care of investor interests. This comes as part of the evolution of the technology and the players believe understanding and complying with strict security standards would not only assure cryptocurrency holders and investors but create a required level of confidence among the stakeholders, especially the investors.