Israel to launch blockchain-based national cryptocurrency

Israel has joined the growing list of countries planning to launch their very own state-backed cryptocurrency. The country’s interest in promoting a digital currency is aimed at minimizing risks of money laundering and tax evasion offenses. The news originally came through The Jerusalem Post. Three unnamed officials confirmed that both the Israeli Finance Ministry and Central Bank are considering issuing a bitcoin-like cryptocurrency. This move, however, would first need the approval of Knesset, the Israeli government’s legislative branch.

The new currency, called the ‘digital shekel’, would operate much similarly to the fiat shekel. Both would be identical in value. Transactions  would also be quite similar. The digital shekel, like the fiat shekel, would not need to pass through a bank's clearing system. This means that transactions would be held peer-to-peer. Unlike transactions completed via bank transfer or check, these transactions would be immediate.

The officials explained that one can simply imagine this as a central bank-issued piece of code. This digital code would work in place of the physical money. Similar to other virtual currencies, the digital shekel would be stored in a wallet.

The Middle Eastern country’s so-called black market makes up 22% of its GDP, as shown by statistics. The digital shekel would be registered with the Israeli government. Regulators hope that creating such a currency would minimize amount of cash going into the black market. In fact, the move especially targets the country’s $70 billion black economy.

Central Banks in China and Russia have already announced trial runs of prototype cryptocurrencies. Japanese and South Korean banks are also exploring ways to improve payments between the two countries through the use of cryptocurrencies. Sweden is taking measures to launch a state-backed virtual currency, as well.

Additional details reveal that Israeli government wants to adopt blockchain technology in this project. This does not come as a surprise, as the technology is considered to be today’s most popular solution to financial frauds. First introduced with bitcoin, blockchain technology has gained immense popularity. Various prominent companies have integrated the technology into their systems to enhance over-all efficiency.

A state-sponsored virtual currency, however, still sounds like something that would not be easily approved by the Knesset. That being said, the idea is still in early stages and no date has yet been announced for its official launch.