Israeli-Palestinian conflict: How are Israeli crypto businesses doing?

On October 7, local time, the Palestinian Islamic Resistance Movement Hamas announced military action against Israel, and Israel declared itself to be in a "state of war."

As the new round of Israeli-Palestinian conflict continues to escalate, its derivative impact on the global economy has gradually emerged - international oil prices have fluctuated sharply, the price of safe-haven asset gold has risen, Middle Eastern stock markets have fallen across the board, and US military and energy stocks have soared. Reuters pointed out that this conflict has brought new uncertainty to global stability, which has already been hit by the escalation of the Ukrainian crisis, hit market confidence, and hindered global efforts to curb inflation.

While not receiving mainstream attention, Israel's crypto companies have also suffered many adverse effects in this conflict.

Israel’s Cryptocurrency Conflict

After the large-scale conflict between Palestine and Israel broke out, many Web3 projects headquartered in Israel attracted industry attention.

On October 11, Alon Muroch, founder of Ethereum staking infrastructure SSV Network, said on his social media platform that he had been drafted into the Israeli army and said that the actual situation was much worse than described . X tweeted that we are turning the situation around, but this process will neither be short nor beautiful. Alon Muroch's social media profile location shows that he lives in Israel.

Source/X

Ben Samocha, CEO of Israeli crypto company CryptoJungle, was on his way to the funeral of one of his students on Tuesday, who was attacked along with 260 other young people at a nearby music festival.

Samocha is one of a microcosm of Israeli crypto workers suddenly grappling with a crisis the worst they’ve ever seen. Samocha helped organize an aid campaign to raise cryptocurrency donations while dealing with the fallout from the Israeli-Palestinian conflict and trying to remain optimistic.

“I believe that we as a country, as a people, as a company will be able to get back on our feet and get back to normal,” Samocha said. “Crypto is here to stay, blockchain is here to stay, we need education, we need content, and we’re here to provide that content.”

Several cryptocurrency executives and developers in the country, many of whom are working remotely, told CoinDesk they have not experienced major business disruptions. They are mainly dealing with the personal impact of the conflict, such as the stress and annoyance of empty supermarket shelves and responding to security scares.

“We are very aware that life needs to go on, even in these unimaginable times,” said Guy Itzhaki, CEO and co-founder of Fhenix, an upcoming blockchain network that will introduce homomorphic encryption technology to smart contracts.

Following the conflict, day-to-day operations and employees of cryptocurrency companies more or less came to a standstill.

The conflict gave rise to the "Crypto Aid Israel" campaign, akin to crypto fundraising in Ukraine during the Russo-Ukrainian conflict, a campaign led by a number of Israeli cryptocurrency companies that accepts cryptocurrency donations to help those affected or displaced by the war.

Samocha helped organize the event along with the company’s chief operating officer, Tal Mor, which raised about $85,000 in the 24 hours since it launched on the 9th. Samocha said his employees at CryptoJungle participated in the event.

More cryptocurrency companies are also organizing volunteer activities, such as preparing food or clothing for those in need, with many companies working together as a team to support those most affected by the violence.

Asaf Nadler, co-founder of Israeli Web3 marketing company Addressable, said that half of his employees are volunteering to help, either donating blood or helping to carry clothes or food, and as a company, people are deeply involved.

Many cryptocurrency executives said that employees have been drafted into the military, and the company allows employees to take time to participate in volunteer services or support relatives affected by violence. For now, most cryptocurrency companies maintain a relaxed attitude, but are also making plans to adapt to the impact of employee turnover.

Tal Shalom, a partner at Israeli Web3 investment company Collider Ventures, said that no one expects employees to be 100% committed to their work now. Companies focusing on Web3 are now preparing for different situations, such as fully remote work or working in different locations to prevent the impact of not being able to resume offline work for a long time.

For people in war, work is a way for them to temporarily escape the harsh reality.

A cryptocurrency analyst working in the West Bank said he was working from home because schools were closed and had not been affected much, other than the distraction of having his children around. Supermarkets were mostly sold out of bread, eggs, milk and produce, apparently due to supply chain disruptions and hoarding.

Israeli officials have always been relatively open to crypto companies, but according to the Financial Times, Israel has ordered the freezing of cryptocurrency accounts to prevent the flow of funds to Hamas.

The encryption pole that cannot be ignored

Prior to the conflict, the Israeli Web3 ecosystem was growing at a rapid pace. Israel’s pioneering mix of adventurous entrepreneurs, academic luminaries, and intelligence experts has put the country at the forefront of the world’s technological advancement.

Israel has always been a hot spot for technological innovation, especially in areas such as blockchain technology, network security, cryptography, etc. Israeli universities and research institutions have trained many outstanding computer scientists and cryptographers, who have made important achievements in the research and development of encryption technology.

Israel has a large number of successful start-ups. Although Israel's population accounts for only 0.1% of the world's population, the number of unicorn companies ranks seventh in the world. These companies have provided innovative solutions in the fields of cryptocurrency, smart contracts, digital identity verification, etc., attracting a lot of international investment and partners. For example, Eli Ben Sasson, Shaffi Goldwasser, Yehuda Lindell, Aviv Zohar, Eran Tromer and other well-known masters, their conception and proposal of MPC and ZKP, etc., are important technologies in the development of blockchain.

Israel is an ideal hotbed for blockchain and cryptocurrency innovation. Israel is known as the "startup nation" and has a thriving venture capital environment that provides funding and support for crypto and blockchain startups. In addition, Israel has a variety of incubators and startup accelerators to help crypto projects grow. This also lays the foundation for disruptive innovation in all walks of life, and Israel also hopes to become a global leader in the field of blockchain, Bitcoin and cryptocurrency.

Israel Web3 Ecosystem Image Source/collider

Israel's Web3 projects cover many fields such as Layer2, DeFi, Layer1, NFT and games. Starkware, one of the more successful unicorn companies, has a valuation of up to $8 billion. There are also many startups that have been successfully acquired by giants, such as Unbound Security, which provides hosting services and cryptography technology, was acquired by Coinbase for more than $150 million, and the crypto security company Curv was acquired by PayPal for about $200 million.

In terms of corporate quality and technological influence, Israel is destined to be an important link in the global encryption ecosystem that cannot be ignored.

Conclusion

The conflict may cause some international investors to be cautious about Israeli startups and crypto projects, fearing that geopolitical instability may pose risks to their investments. This will cause some disruption to some projects in the short term, but Israel’s crypto ecosystem does not appear to have suffered a fatal blow. Local companies and projects are also actively responding to the impact of the conflict and remain optimistic.

From the Russian-Ukrainian conflict to the current Israeli-Palestinian conflict, the decentralized crypto world is also hard to be unaffected by geopolitics. In the current conflict, we can also see news such as Binance banning related accounts. Cryptocurrencies, which claim to be decentralized, can also be influenced by power. This is a complex issue, that is, how to protect individual rights and freedoms while respecting the legitimate requirements of the law and national security. At present, this problem has no solution.

May the world be at peace and crypto prosper.