Tuesday, April 8, 2014

How Israel Can, and Should, Become Ground Zero for Bitcoin

Michael Eisenberg is a partner at early-stage venture capital fund Aleph. A key figure in Internet and software investing in Israel, he currently resides in Jerusalem and lectures on entrepreneurship at Hebrew University.

Here, he makes a case for Israel as a potential hub for digital currency innovation.

This week, the US Internal Revenue Service (IRS) handed Israel a golden opportunity on a silver platter. Or, shall I say, a virtual gold opportunity. By deciding to tax bitcoin as an asset, like gold, the US Government effectively doomed bitcoin as a currency.

As Robinson Meyer correctly writes in The Atlantic:

“To tax bitcoin as property destroys its fungibility: one bitcoin can no longer be exchanged for anotherThis was one of the original intents behind the service. Bitcoin aimed to function as a kind of digital money, meaning it had to work as a unit of account, a medium of exchange, and a store of value.”

To be clear, this does not doom bitcoin. The protocol and architecture of the block chain-based ledger will still enable endless disruption of existing industries.

However, it does cripple some of the nascent US-based entrepreneurial efforts to boost bitcoin-based commerce until the currency abstraction layer arrives on top of the bitcoin block chain...

- Source, CoinDesk, Read More Here: