Bitcoin is booming and Israel’s blockchain infrastructure and security startups hold a major key to the cryptocurrency revolution
"We are at the beginning of a revolution, with insane amounts of capital flowing from legacy institutions to Bitcoin and alternative coins. Trust and security solutions are critical for this financial revolution"
At least three Israeli blockchain startups have recently announced about completing major funding rounds: Unbound Tech, Celsius, and Fireblocks. Blockchain payments infrastructure startup Simplex has also announced the launch of its latest products, solutions that enable crypto exchanges and wallets to simplify the buying and selling of crypto assets.
The blockchain industry is maturing and many teams are implementing necessary critical security measures and protocols to ease the minds of worried investors. This comes as part of the technological evolution of new developments. Understanding and complying with strict security standards to appease cryptocurrency holders and investors is paramount and the importance of which wasn't lost on leading Israeli startups. Furthermore, development teams quickly realized that there is an immense gap between payment solutions across fiat and cryptocurrencies, which is why numerous Israeli startups, such as Simplex, devised practical solutions, with more to follow.
To people in the know, it’s not surprising to see the quick climb after a bearish ‘Crypto Winter’ for the past couple of years. Many retail investors and financial institutions are entering the fray, and the positive market sentiment caused Bitcoin to soar past its all-time-high mark. Exciting technological improvements coupled with financial speculation and lucrative store-of-value opportunities at times when fiat is experiencing a downtrend due to Covid-19 are a key driver in Bitcoin’s market-wide acceptance.
The cryptocurrency industry is rampant with malicious and nefarious actors. Many exchanges and high-profile individuals were the targets of elaborate hacks and exploits, and just recently, a company in the local scene has been hit with malicious ransomware attacks in which the hackers requested payment in Bitcoin. Many critics recited the end of cryptocurrencies is near due to these kinds of malicious attacks. Trust and security are paramount in the payments and remittance industry. Should a platform lose its investors' or clients’ trust, users will stray away. Thus, solving trust and security issues represents the unparalleled intrinsic value that was direly missing previously
So how did the Israeli blockchain startup persevere? There are a few reasons. Unlike most startups, which rely on venture capital funds to manage risk and invest small amounts of capital in early stages, blockchain startups rely on token distribution events akin to an IPO. It allows startups to raise money, similar to regular startup companies.
Most blockchain-related entrepreneurs have raised capital when cryptocurrency markets were on the green side. Extreme amounts of capital were raised by projects; those who focused on improving their product, research and development, and marketing survived to tell the tale. Those who didn’t - sank with the ship. The survivors are now breaking through as the spotlight shifts from legacy systems back to niche markets like commodities, metals, and cryptocurrencies. Moreover, those who persevered gained a massive competitive advantage versus newcomers who are now attempting to enter the fray.
We are at the beginning of a revolution, with insane amounts of capital flowing from legacy institutions to Bitcoin and alternative coins. As mentioned before, trust and security solutions are critical for this financial revolution. Nevertheless, improved security protocols and standards are not the remedies for price volatility which is the major component that still drives retail investors away. Should the volatility of cryptocurrency prices simmer down, we might observe true disruption in key industries coming from cryptocurrency startups, with Israeli startups leading the charge.
Liron Rose is a 3x entrepreneur and investor.
Adiel Yaakov is a cryptocurrency expert, researcher and analyst