Importance of consensus among Israeli banks on blockchain

Rage Comment : Israel has become the center of blockchain technology, and the entrepreneurial environment in related fields is the most active. However, Israel also has the pain points of blockchain research and development in the world. Just like the development trajectory of Internet technology in Israel more than ten years ago, it has achieved rapid development due to the recognition and approval of the government. However, the characteristics of blockchain technology are destined to make its development path not so smooth. Therefore, in order to successfully unleash the potential of blockchain, we must first take the core application field - the financial industry as a breakthrough point, and a high degree of consensus and cooperation is the way out.

Translation: Annie_Xu

The huge potential of blockchain has been widely recognized. Some say it could be comparable to the Internet, which changed the way information is transmitted, while blockchain will reshape the way value is traded.

Blockchain can completely change traditional industries, including financial transactions, legal contracts, verification mechanisms, and even voting processes. Blockchain may appear in any field where consensus is lacking.

What will happen next? Our intuition is that the financial system, namely the banks, will lead us into the institutionalization of blockchain.

The potential benefits of blockchain applications are clear. The most prominent benefit is the elimination of middlemen, enabling safer, cheaper and faster transactions. This will bring economic benefits to the financial system, which has a daily transaction volume of billions.

Blockchain will also bring huge benefits to developing countries with low government credibility, especially those with serious corruption. Citizens in these countries want to realize their civil rights, including voting, identity recognition, land ownership registration, etc. Blockchain is a secure, direct and decentralized technology that can achieve these goals in a better way.

Early adopters

It is said that the most active blockchain industry is currently in Israel. Encryption technology and big data have been developed in the security field, forming an active entrepreneurial environment for high-level talents, and have become the next milestone for enterprises to move towards the blockchain field.

These companies include decentralized messaging platform Synereo, Simplex, which supports Bitcoin transactions with credit cards, and colored coin platform Colu.

However, it is not difficult to find that Israel is not just a paradise for early-stage startups. Large Israeli financial institutions, whose scale and market share are not as large as their European and American counterparts, have begun to pay attention to the various applications developed by these startups.

Banks such as Citi, Bank Hapoalim, and Leumi have launched accelerator programs to provide professional infrastructure for early-stage projects. They provide the funds, technology, and opportunities needed to interact and cooperate with the banking system. This combination will be of great value because one of the biggest obstacles these entrepreneurs face is developing products and solutions that meet the needs of a conservative and strict regulatory environment; such as the complex environment in which the banking system exists.

In addition, many investors have also heard the news, driving the growth of venture capital and the boom in this field. Recently, lawyers and accountants have also begun to enter this field, exploring and solving the challenges facing blockchain with their clients.

Using regulation to promote technology application

Blockchain technology in Israel seems to be on the same trajectory as the Internet in Israel a dozen years ago. A small group of start-ups gradually developed into hundreds of powerful companies, becoming global innovative technology and multi-layer service providers. Of course, they are similar, but not the same. The current blockchain industry does not have the support of regulators like the Internet.

About twenty years ago, Israeli regulators realized the cutting-edge nature of the Internet and the attacks on national infrastructure and security facilities, which prompted regulators to support the development of the Internet. The ideal leaders of Israel's defense industry discussed how to mobilize national forces and jointly improve Israel's future risk resistance.

Ultimately, in order to promote the industry, the government took a comprehensive approach, emphasizing talent development, technology investment, institutional building, funding allocation, and regulatory support. These have jointly promoted the development of Internet security in Israel, and the benefits of this initiative are still significant today.

However, this trajectory may not be suitable for blockchain technology. Regulators around the world remain skeptical of virtual currencies because the sector is favored by criminals and banks and government agencies do not want to be excluded from the monetary system. Silk Road, Japanese exchange Mt Gox and the recent incident of Hong Kong Bitcoin exchange Bitfinex have all suffered the same fate.

In addition to deep concerns about criminal activities and consumer rights, regulators do not want the centuries-old government regulatory model to be replaced by a decentralized form. The Israeli government is also hesitant; after all, the impact and future trends of blockchain are still unclear.

However, regulators have provided the most basic support, including regulatory mechanisms and a favorable legal framework. These will promote consumer understanding and confidence in the technology, gradually pushing blockchain technology from the fringe to the mainstream trend. But who will be the leader?

The intersection of worlds

Companies in all sectors around the world are eyeing the economic value of blockchain applications. Intensified competition has further expanded the field's followers. However, this cannot realize the disruptive potential of blockchain. Therefore, the role of banks is crucial.

Looking back at the developments over the past few years, there is no doubt that the most mature sector is still the financial industry. Blockchain will have the greatest impact on financial institutions.

However, the regulation in this field is also the most stringent. Therefore, government agencies should deepen exchanges with the technology field, formulate appropriate regulatory frameworks, promote the advancement of this technology, and at the same time enhance consumer confidence and safeguard the economic model of the financial system.

So who can lead this trend better than the financial system? After all, it has the ability and knowledge to communicate effectively with regulators, and it is also the most in need of blockchain technology to reduce costs. Once successful, blockchain will become an institution, integrating cutting-edge technology with traditional infrastructure into a new high-end system.