Israel’s blockchain community is bidding 2018 farewell with a very strong reputation, and industry experts have high hopes for blue-and-white developers and academics to make a mark in 2019.
Startups in the sector are expected to continue to multiply and developers and academics are being relied on for new, transforming uses for blockchain technologies.
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“Israel is on the forefront of solving the real issues plaguing the blockchain world,” Josh Liggett, a fintech and blockchain investment analyst, tells NoCamels.
“Blockchain will be the next big thing in Israel because it mixes all the technologies that we have here including AI, IoT, cloud, cybersecurity, etc., we have them all. Most of the products blockchain needs are here. We’re well positioned and on the front line,” says Yael Rozencwajg, founder and CEO of Blockchain Israel.
If foreign investments are anything to go by, it would seem the global community agrees that Israel is a good place to look for blockchain innovation. This past year, European investment bank Benson Oak, Swiss VC fund Lakestar, and South Korea’s Kakao Investment, among others, have all put money in Israeli startups focused on blockchain.
“Under the radar, some of the top people in the world are investing in Israeli companies in blockchain. Ethereum Founder Vitalik Buterin, Polychain Capital, Naval Ravikant. These are high profile,” says Liggett, who blogs at OurCrowd about blockchain developments.
Israel secured numerous blockchain-related headlines in 2018 for its startups, ICOs, investments, and educational initiatives. Most of the headlines were positive but some Israelis were allegedly linked to the initial coin offering (ICO) scams.
While 2016 and 2017 were all about ICO offerings and new startups using crypto to raise funds, 2018 will be remembered as the year of the great crypto crash. Many of the startups that used crypto and blockchain technology to raise funds either turned out to be frauds or couldn’t deliver what they promised.
“The ICOs we saw in 2017 and 2018 are gone. They’re not coming back. This was a situation where you could say, ‘hey I might decide to open something, I’ll give you a token. If I don’t open, then too bad. There’s no recourse.’ You can’t do that anymore,” says Liggett. “ICOs are not coming back.”
The ICO crash, however, is seen by some industry experts as a way to clean the blockchain image and now propel it forward to the significant technology it can be for mainstream companies, charities and financial institutions.
“The Israeli blockchain industry is currently experiencing both a boost and a transformation. On the one hand, we see unprecedented growth among blockchain startups, but on the other hand, many of them are skipping ICOs in favor of equity financing. Today there are fewer startup founders coming out of morally questionable markets, such as Forex, binary trading, and gambling. Instead, more institutional players are starting to enter the market. Thus, the market is going through a self-purification,” Roman Gold, founding partner of the Israeli Blockchain Association, told Forbes.
Rozencwajg says blockchain technology will become a crucial part of everyday life.
She says fintech, medical and biotech, agriculture, and the gaming industry will show the greatest benefits from blockchain technologies in the coming year. “We need blockchain to secure all the networks,” she explains.
Blockchains record, collect and transfer all sorts of data. Industry experts believe that it is only a matter of time before blockchain platforms will be used for asset management, insurance claims, cross-border payments, property rights and real estate contracts, healthcare management, music ownership rights, voting, and a host of other possibilities.
According to data on the Israeli Blockchain Association website, local blockchain startups are concentrated in the fintech, protocols/core infrastructure, and security sectors.
Israel has some 300,000 developers, according to Blockchain Israel, and many are working on enterprise web application, advanced solutions and blockchain and crypto technologies.
“It will take some time for people to understand how truly powerful this technology is. There are so many technologies that still need to be developed,” says Liggett.
The OurCrowd analyst sees 2019 as a year to tweak blockchain protocols as opposed to implement the technology into new sectors.
“I don’t think the solution will come in 2019. I think Israel is going to work more on the technology because blockchain is a protocol, people will work on the technologies. Once the tech is established, people will build on top of it and apply it to different industries. I don’t think the focus will be on sectors, I think the focus is on underlying tech,” he tells NoCamels.
Liggett says some names to keep tabs on in the coming year include: Technion professor Eli Ben-Sasson, who co-invented Zerocash – a privacy-preserving cryptocurrency, and co-founded the startup behind its implementation – Zcash; Maya Zehavi, blockchain entrepreneur and a founding board member at Israeli Blockchain Industry Forum; Gal Landau-Yaari, former acting CEO of the Tel Aviv Stock Exchange, who is researching blockchain technologies and cryptocurrencies, governance of emerging technologies and financial stability at the University of Haifa; and Yonatan Sompolinsky, a PhD candidate, and Dr. Aviv Zohar, both of the Hebrew University, who proposed the GHOST protocol.
“These are the people who are busy working on building the next big thing [in blockchain],” says Liggett.
Indeed, Israeli tech is famous for evolving according to a world need. From telecommunications to semiconductors, mobile tech to autonomous driving, cybersecurity to blockchain, the country’s academics, computer scientists and developers are renowned for creating new technology protocols.
“Israeli academics were among the first to develop the philosophy of Zero Knowledge Proofs,” Jonathan S. Rouach, CEO of Israeli startup QED-it, told Start-up Nation Central. In cryptography, ZKP a method by which one party can prove to a second party that they know certain information without telling them what that information is. “We’re using this advanced technology to bring blockchain into the enterprise world.”
The Blockchain Academy and Blockchain Incubator, run by Blockchain Israel and Microsoft, are also inspiring change in the tech arena.
On December 24, Microsoft and Blockchain Israel launched their first Blockchain Incubator venture. The Blockchain Incubator will offer workshops to help guide entrepreneurs and teams flourish in the blockchain community.
“As any coder can attest, many current technologies have undergone a serious revolution that has had a lasting impact on development. That’s why we’ve designed our initiative around an educational model that strongly leads the way for tech education,” says Rozencwajg.
In related news, Microsoft and Blockchain Israel announced that the second class of its blockchain education program, Blockchain Academy, for R&D leaders, CTOs and senior developers to master the tools to help early-stage startups thrive, will begin on January 28, 2019.
Israel will make a mark in 2019 in the blockchain space. Whether in groundbreaking protocols or new startups is left to be seen.
“The bottom line,” says Rozencwajg, “is that Israel is really promising on the blockchain.”
Viva Sarah Press is a journalist and speaker. She writes and talks about the creativity and innovation taking place in Israel and beyond. www.vivaspress.com