Bitcoin and Israel: A Talk with Eli Sklar of the Israel Bitcoin emBassy

By Mark Norton: Editor @ BitcoinWarrior.net

Eli Sklar is one of the thousands of people around the world who are innovating, educating, and pushing for Bitcoin use and adoption. He is CTO at the Bitcoin emBassy in Tel Aviv as well as an advisor of the Lifeboat Foundation, among other businesses that he has started and runs.

I caught up with Eli to ask him about his involvement with Bitcoin and what Bitcoin is like on the ground there:

So first of all, I notice that you’ve taken an interest in the Pirate Party. Can you tell me something about how you got involved with that and your activities?

I’ve never been a member of the pirate party, although I’ve met and talked with the founder of the pirate party in Iceland, Birgitta Jonsdottir, and explored the option of joining the Israeli Pirate Party. I never really came to any meaningful position. Since then I’ve decided to stay away from politics and instead focus on development and technology.

To a lot of people, ‘pirate’ sounds kind of confrontational. Why take such an ‘in your face’ kind of stance?

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The short answer is that it is what it is, and it’s not worth hiding behind other meanings. The longer answer is that we, as a species, came to be the dominant species on the plant thanks to our ability to rapidly adapt to the environment and our ability to envision and share information – essentially our ability to copy behavior from one another. Nature takes a long time to adapt a species to particular environment, but we humans can develop much faster.

All our advances in technology are a direct result of our ability to innovate individually and to build on top of innovations already made. Current attempts to control or restrict information from the majority of the population – whether that be technology, movies, music, imagery, or whatever – is directly hampering our ability as a species to do what we do best: to copy and mutate information into something new and even more useful. This is hurting our technological development as a whole. Rather than the limits on information sharing in place now, I would rather see a world where information is free and accessible, especially in an age where the Internet allows people test new ideas and spread them around.

How did you initially get involved in Bitcoin? What attracted you to it and what kind of effect for yourself and for the world do you think it could have?

Initially, I was a sideline spectator, but pretty quickly I became a prominent leader and advocate for the technology because of its new kind of possibilities that it introduces. It’s a completely transparent and non-discriminating financial technology that leapfrogs the existing infrastructure by a long shot. It’s a protocol that is decentralized and egalitarian: Anyone can become involved with Bitcoin, anyone can use it, anyone can build on it or even help develop the core protocol if they want. Up until Bitcoin arrived, these things were primarily in the domain of Sci Fi and cyberpunk literature, but now that Bitcoin’s arrived, we see for the first time that this is not just the stuff of fantasy.

I believe that Bitcoin will transform our species as much as the printing press, electricity, and the Internet have done, if not more. Bitcoin promises a truly free market, regulated directly by the market itself rather than by someone who might not have the best intentions at heart. We’ve seen too often markets controlled by people who prefer certain companies and give them a higher priority than other businesses, and as a result we get a market controlled by giants, leaving little room for new players to come in and make any real improvements. With Bitcoin, I believe that this situation won’t exist anymore.

It looks like you were working on a Bitcoin wallet that doesn’t seem to have come to fruition. What was the idea there and what happened?

I started Safebit in the early days of Bitcoin, and made the mistake of trying to approach traditional investors at a time when they were unaware of what Bitcoin is or how to treat it. After trying to raise funding for the project for a year and a half on and off, I moved on to other things and am currently develop Tibb, a financial platform that integrates directly with social networks.

Now you a founding member of the Bitcoin emBassy Tel Aviv. I’ve seen that there have been a number of Bitcoin embassies set up around the world, but the idea seems a little funny. What exactly is a Bitcoin embassy and what kinds of things are you doing?

I can’t speak for the rest of the embassies around the world, but our embassy acts as a physical social hub that connects people and provides a working space and a meeting hub for Bitcoin enthusiasts to meet and network, but also acts as an information center for newbies and companies that are interested in learning about Bitcoin. We also do social events like Satoshi Squares, which are a weekly events that allow people to exchange bitcoins face-to-face in a safe and familiar environment. We have workshops on how to use and secure Bitcoin wallets, and as ambassadors, we are invited to company events and conferences to introduce Bitcoin and spread the idea of the technology.

We hope that the embassy will live on as an independent source of knowledge and as a community center.

Do you have any relationships with the other embassies?

We have some communication with other embassies and we’re sharing whatever we can with them, but so far no official connection has risen as far as I know. We are working to establish a diplomatic list of contacts for Bitcoin activists around the world.

What the Bitcoin scene like in Israel? Do people know about it? If they do, what kind of impression do they have of it?

Israel is kind of known as “startup nation,” and it’s primarily due to our entrepreneurial nature. We swarm to new technologies and usually adapt them far quicker than other nations. And as Bitcoin is indeed a very interesting technology for Israelis, it’s being adopted rather quickly here. I’m not sure how up-to-date this information is, but I think we have the largest Bitcoin MeetUp group in the world relative to our population, and there is a strong technical community here of startups and developers who focus on Bitcoin technology. One of our goals, that of the Bitcoin Embassy and the Israeli Bitcoin Association, is to create a “cryptocurrency valley” here in Tel Aviv.

Is there any key problem that people have that you think Bitcoin provides an answer for? How do you see Bitcoin transforming Israel if it really catches on?

The main problem it solves, IMHO, is the ability to transact financial value without restrictions and in a transparent manner. There are a lot of problems with the current financial system, and as a result we are seeing greater and greater financial inequalities around the world: some people are given better treatment than others, some can’t participate in this economy simply because they were born in a nation that has sour relations with credit card companies, and millions of others don’t even have a bank account.

Bitcoin in my view will eliminate a lot of the issues that are currently causing problems in the current economy. It will, in a sense, ‘level the playing field,’ and will eventually allow millions of people on the planet to participate in the global economy regardless of what certain service providers (see PayPal) think of their business of choice. For me, this is the major point that Bitcoin solves. People have a tendency to see the world they live in as the right world, and think the way they live is the right way to live. They tend to forget that what we see as harmful, others may consider to be absolutely acceptable.

When you talk with people, what’s your favorite way of convincing them that Bitcoin is something that they really ought to try?

My favorite point to get across is the ‘agentless interaction.’ We have gotten used to using agents to do a lot of things for us, banks, money transmitters, credit card companies, and so on. This causes a chain of fees that grow larger and larger the further away that agent is from us geographically and socially. Bitcoin introduces a completely new way of doing business, literally, by removing all of middle man and third parties and leaving the two involved parties to conduct their business directly.

This particularly strikes home with a lot of people that are involved with remittances and those who are involved with large financial transactions on a daily basis. In both of these cases, Bitcoin can provide a cheaper alternative that might save 15-20% in some extreme cases.

How are taxes and regulations playing our in Israel?

Regulation is somewhat ambiguous at this point. We’ve (the Embassy and the IBA) recently had some meetings with the Central Bank of Israel as they are currently trying to make sense of Bitcoin. We are trying to be as helpful as possible, but so far they are continuing their investigation and no conclusive message has come out yet.

As for taxation, right now most people who deal with Bitcoin in Israel are reporting it as if it was a regular foreign currency, and in some extreme cases I’ve heard of people that keep 15% of their profits in a safe place in case the regulator decide to tax them retroactively.

You have another business, GridCT, that seems to be a web design and consultation company. Can you tell me something about that?

GridCT started out as a location based startup in early 2010, but pretty quickly turned to providing consultant services in the Web development world. Today, its primary operation is Bitcoin and Javascript consultancy. That being said, I’m currently working on a new Bitcoin product which I mentioned earlier, Tibb, and it’s been getting most of my attention for the past couple of months.

Finally, Bitcoin seems to have been in a bit of holding pattern since the spring. How do you think that Bitcoin is going to change and develop over the next six months to a year?

It seems that a lot of money flowed into Bitcoin and Bitcoin related companies in the last 6-12 months. The Bitcoin hash rate has also grown 1000% over the past year! And just now it seems that the really big money (traditional and institutional investors) are discovering Bitcoin and begging to pour money into developing it and surrounding technologies. It seems that we are very close to seeing some very interesting projects come out to the public. Can’t say for sure when those are going to happen, but for me, it’s hard to ignore the outrageous amounts of money coming in to Bitcoin R&D, and I’d expect to see something soon.

Mainly I expect to see major adoption of Bitcoin and its satellite technologies by 3rd world countries in the next years or so and also stronger adoption in the high-tech and fin-tech worlds.