What about Israeli cryptocurrency companies in the midst of the Israeli-Palestinian conflict?

What role do Israeli cryptocurrency companies play amidst the Israeli-Palestinian conflict?

Author: Octopus Brother

On October 7th local time, the Palestinian Islamic Resistance Movement Hamas announced military action against Israel, and Israel declared a “state of war.”

As the new round of Israeli-Palestinian conflict continues to escalate, its derivative impact on the global economy is gradually becoming apparent – international oil prices are experiencing severe fluctuations, safe-haven asset gold prices are rising, Middle Eastern stock markets are plummeting, and US military and energy stocks are soaring. Reuters pointed out that this conflict brings new uncertainties to the already impacted global stability due to the escalation of the Ukraine crisis, undermines market confidence, and hinders efforts to contain global inflation.

From a less mainstream perspective, Israeli cryptocurrency companies have also been adversely affected by this conflict.

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The situation of Israeli cryptocurrency under the conflict

After the outbreak of the Israeli-Palestinian conflict, many Web3 projects headquartered in Israel have attracted industry attention.

On October 11th, Alon Muroch, the founder of the Ethereum staking infrastructure, SSV Network, stated on his social media platform that he had been conscripted into the Israeli army and described the actual situation as much worse. His tweet read, “We are turning the situation around, but this process will neither be short nor beautiful.” According to Alon Muroch’s social media profile, he resides in Israel.

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

Samocha is a representative of the Israeli cryptocurrency industry, which suddenly finds itself busy dealing with an unprecedented crisis. Samocha helped organize a cryptocurrency donation campaign for relief efforts while dealing with the impact of the Israeli-Palestinian conflict and attempting to remain optimistic.

Samocha said, “I believe that as a country, as a nation, as a company, we will be able to stand up again and return to normal. Cryptocurrency will continue to exist, blockchain will continue to exist, we need education, we need content, and we will provide that here.”

Several cryptocurrency executives and developers in the country, in interviews with CoinDesk, have stated that they have not experienced severe business interruptions, as many of them are working remotely. They are primarily busy dealing with personal impacts of the conflict, such as the pressure and anxiety caused by empty supermarket shelves, and managing security concerns.

Guy Itzhaki, CEO and co-founder of Fhenix, stated, “We are very aware that even in this unimaginable time, life must go on.” Fhenix is an upcoming blockchain network that will introduce homomorphic encryption technology in its smart contracts.

After the conflict, the daily operations of cryptocurrency companies and their employees were more or less stagnant.

From this conflict emerged the “Crypto Aid Israel” initiative, similar to the crypto fundraising in the Russia-Ukraine conflict, led by many Israeli cryptocurrency companies. They accept cryptocurrency donations to help people affected or displaced by the war.

Samocha and the company’s COO, TalMor, assisted in organizing this initiative, which raised about $85,000 within 24 hours since its launch on the 9th. Samocha said that all the employees at CryptoJungle were involved in this initiative.

Many more cryptocurrency companies are also organizing volunteer activities, such as preparing food or clothing for those in need, with numerous companies supporting the most affected individuals as a team.

AsafNadler, co-founder of the Israeli Web3 marketing company Addressable, stated that half of his employees are volunteering, either donating blood or assisting in moving clothes or food. As a company, everyone is deeply involved.

Several cryptocurrency executives have stated that employees have been enlisted for military service, and companies allow employees time to participate in volunteer services or support relatives affected by violence. Currently, most cryptocurrency companies maintain an open mindset but are also making plans to adapt to the impact of employee loss.

Tal Shalom, partner at the Israeli Web3 investment firm Collider Ventures, said that now no one expects employees to be fully dedicated to work. Companies focused on Web3 are preparing for different scenarios, such as fully remote work or working in different locations to mitigate the impact of prolonged offline work.

For those in war zones, work is a temporary escape from the brutal reality.

A cryptocurrency analyst working on the West Bank of the Jordan River said that, since schools have been closed, he is working from home and is not greatly affected except for having children around that distract him. Most of the bread, eggs, milk, and agricultural products in supermarkets are sold out, apparently due to supply chain disruptions and panic buying.

The Israeli government has always had a relatively open attitude towards cryptocurrency enterprises, but according to the Financial Times, Israel has ordered freezing cryptocurrency accounts to prevent funding for Hamas.

The Indispensable Cryptocurrency Hub

Before the conflict, the Israeli Web3 ecosystem was rapidly growing. Israel has brought together daring entrepreneurs, academic figures, and intelligence experts, creating a pioneering combination that puts Israel at the forefront of technological advancement worldwide.

Israel has always been a hotbed of technological innovation, especially in fields like blockchain technology, cybersecurity, and cryptography. Israeli universities and research institutions have produced numerous 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 startups, despite its population representing only 0.1% of the global population, it ranks seventh in the world in terms of the number of unicorn companies. These companies provide innovative solutions in areas such as cryptocurrency, smart contracts, and digital identity verification, attracting a large amount of international investment and partnerships. Renowned experts like Eli Ben Sasson, Shaffi Goldwasser, Yehuda Lindell, Aviv Zohar, and Eran Tromer have proposed important technologies such as MPC and ZKP, which play a crucial role in the development of blockchain.

Israel is an ideal hotbed for blockchain and cryptocurrency innovation. Known as the “Startup Nation,” Israel has a vibrant venture capital environment that provides funding and support for crypto and blockchain startups. Additionally, Israel has various incubators and startup accelerators that help crypto projects grow. This lays the foundation for disruptive innovation in various industries, and Israel aims to become a global leader in blockchain, Bitcoin, and cryptocurrency.

Israel Web3 Ecosystem Map Source: /collider

Israel’s Web3 projects cover a wide range of areas including Layer2, DeFi, Layer1, NFT, and gaming. Starkware, as one of the successful unicorn companies, is valued at $8 billion. There are also several startups that have been successfully acquired by giants, such as Unbound Security, a provider of custody services and cryptographic technology, which was acquired by Coinbase for over $150 million, and the crypto security company Curv, which was acquired by LianGuaiyLianGuail for around $200 million.

In terms of enterprise quality and technological influence, Israel is an important part of the global crypto ecosystem that cannot be ignored.

Conclusion

Conflicts may lead to some international investors being cautious about Israeli startups and crypto projects, fearing that geopolitical instability may pose risks to their investments. This may cause some disturbances to certain projects in the short term, but Israel’s crypto ecosystem seems to have not suffered a fatal blow, and local companies and projects are actively responding to the impact of the conflict while maintaining an optimistic attitude.

From the Russia-Ukraine conflict to the recent Israel-Palestine conflict, the decentralized crypto world is also difficult to be unaffected by geopolitics. During conflicts, we can also see news such as Binance banning related accounts. Decentralized cryptocurrencies, touted as being immune to central authority, can also be influenced by power. This is a complex issue, as it is currently unsolvable how to protect individual rights and freedoms while respecting the legal and legitimate requirements of national security.

May there be peace in the world, and may crypto thrive.

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