The Bank of Israel and the Israeli Financial Ministry are reportedly viewing the prospect of launching a state-backed cryptocurrency, with negotiations still in progress on how to use blockchain to solve tax evasion issues.
Since the launch of Bitcoin in 2009, there has been a steady growth in the recognition and acceptance of cryptocurrency. In December 2017, the value of BTC peaked at $20,000 per coin, and in January 2018, the general market capitalization rose to over $800 billion. This remarkable rise in value and general market capitalization contributed to bringing blockchain to the mainstream and taking cryptocurrency to a new level as its adoption improved among individuals, corporate bodies and governments.
Nevertheless, there have been three sides to government adoption of blockchain. While countries like China placed a complete ban on cryptocurrency and all crypto-related activities, some states are skeptical. Others, like Liechtenstein, Venezuela, Switzerland, Israel, and Russia, are optimistic toward blockchain technology.
Countries like Switzerland and Liechtenstein have opened their doors to blockchain technology, while Venezuela and Russia have taken a step further to establish a state-backed cryptocurrency. While Venezuela came up with its Petro coin, Russia also proposed the release of CryptoRuble in October 2017. Israel hopes to follow in their footsteps.
The Financial Ministry and Bank of Israel are hinting at developing Israel’s own state-backed cryptocurrency. The proposed digital currency (digital shekel), will reportedly go a long way towards helping the Israeli state solve problems associated with tax evasion.
The Israeli crypto setting
Israel is considered a very technologically advanced nation. This has made blockchain technology thrive in the small nation and its acceptance is growing—not just individually, but also among corporate bodies.
Corporate nations like The Bank of Hapoalim have created partnerships with Microsoft Azure to use blockchain for asset digitalization. This partnership hopes to bring fast and safe transactions to the state of Israel.
How Israel will benefit from a state-backed cryptocurrency
First, it will create a fast, secure method for financial transactions that would be regulated by the state. Ultimately, this would make the transition extremely easy for its citizens.
Secondly, it would make the fight against tax evasion easier for the Israeli government, since all transactions using mobile phones can easily be recorded. The Israeli government already considers cryptocurrency as taxable properties and has placed a tax on a crypto corporation of 46% on its profit, while the individual tax rate is 25% on profit.
The Israeli government is taking the bold step of creating a state-owned blockchain ecosystem, but it seems to be taking its time. This could be in an effort to filter all inconsistencies currently faced by the blockchain world, leaving only the useful attributes that blockchain technology has to offer.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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