Israel is becoming a Hub for Blockchain Projects
Since the establishment of the state in the middle east, Israel has come to be known as one of the primary diamond hubs in the industry. It is a center for voluminous trade in the rare stones and a stop where one-third of the rough diamonds produced (in dollar terms) in the world goes through for polish. [1]The Israeli Diamond Industry contributes nearly $800 million a year to Israel’s balance of payments. Apart from giving employment to over 20,000 people, the Israeli Diamond Industry also indirectly supports tourism, banking, aviation, communications, and security as well.
As it goes, to keep up with the increasing supply of rough diamonds for processing, Israel has also made upgrading the technology required to produce the best quality diamonds a priority. In fact, many sophisticated diamond processing technologies were developed locally and are considered the best in the industry globally. Lasers for cutting a diamond, brutting machinery, automatic polishing equipment, and computer-aided design systems are attributed to Israel. The diamond hub has also expanded its manufacturing operations to offshore locations in India, China, and Africa among others. It is no surprise therefore that this rapidly expanding industry would eventually make space for the revolutionary blockchain technology known for streamlining areas of operations existing on several planes of complicated networks.
The proliferation of blockchain in Israel:
Having said that, Israel is making use of its position as fertile land for startups (the country is recognized as the World’s Startup Nation). In 2018 itself the number of blockchain startups — dedicated to explore and adapt the innovation unrivaled in popularity — to three times its original size. The [2] Israeli Blockchain Association had in fact released findings that showed more than 200 blockchain startups had registered there last year, positioning the country to become a top Blockchain Nation.
Israel 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 encouraging the tech community to take risks to explore more uses of new innovations. Since this has given rise to the mushrooming of so many enterprises, the government of the country has been proactive to draw up and put into place regulations to enable their smooth functioning.
As a nation well aware of funds that flow within its economy, it has recognized the benefits of adopting blockchain to manage the huge amount of money that streams into this industry. A critical advantage stems from the option of using cryptocurrency — the digital money that functions in blockchain networks. The regulators, therefore, have made it a priority to draw up regulations supporting it and have already passed specific laws that enable taxation and trading of cryptocurrencies.
In March 2018, the Israel Securities Authority released its meticulously detailed “Interim Report on the Regulation of Decentralized Cryptocurrencies.” Subsequently, virtual currencies came to be accepted as “financial assets,” and licensing for related services became mandatory. The Israeli Supreme Court also decided against banks and other financial institutions restricting access of crypto companies to banking services based on assumptions of risk.
A confluence of the Diamond Industry and Blockchain
The annual turnover of the Ramat Gan Diamond Exchange is $28 billion and an annual rough trade of about $8 billion-$10 billion, which is nearly a quarter of Israel’s annual industrial export. Being so vast and dominant, and its value running up into the billions, the diamond industry was naturally one of the first to implement blockchain. It is also one of the sectors where blockchain can make a big impact. This is because the technology can bring an extent 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. This is also one of the reasons why the idea of blockchain diamond consortia which brings together players in the diamond business together to conduct trade in a secure environment is the need of the hour.
Israel is a major center for the trade in rough diamonds, and one of the largest global exporters of polished diamonds as well. If the majority of the transactions in diamonds that make it to the world market via is a blockchain system in Israel, it greatly brings down the possibility of unethically sourced gemstones to become a part of one of the most valuable industries we have.
Reference to:
[1] https://en.israelidiamond.co.il/about-the-israeli-diamond-industry/
[2] http://www.blockchainisrael.io/
