Bitcoin is considered to be inefficient by officials in Israel and is on the verge of being written off, criticized by the Israeli Economic Tsar, Avi Simhon.
Avi Simhon, the head of the National Economic Council and senior economic policy adviser to Israel’s Prime Minister, gave his thoughts on the current state and future of the most popular cryptocurrency, Bitcoin (BTC) at the Tel Aviv University. Mr. Simhon believes that to support bitcoin to operate at a national level and worldwide would actually cost “trillions of dollars of cost of energy” whereas the same purpose can be fulfilled using fiat currency, which costs way lower than the digital currency.
The never ending debate whether bitcoin should be considered an asset or should be dealt with as a currency has been going on worldwide as experts argue to solve this matter, Mr. Simhon believes that the cryptocurrency’s inability to serve as a currency makes it a mere speculative asset, as also affirmed by legal authorities in Israel in the year 2018.
This confusion of bitcoin’s function gave rise to the idea of bitcoin’s bifurcation in the world- dividing bitcoin into two parts for different purposes across the globe, both as a currency and as an asset, suitable to the regulations of the different countries and with accordance to bitcoin’s functionalities under those parameters.
Mr. Simhon being doubtful about bitcoin’s progress within Israel, he still believes that there might be some form of cryptocurrency which may be acceptable to the local government. He says that there are institutions that might be ready to compromise on cost and the profits they get from the fiat currency if the digital currencies may prove to be more effective and efficient in the banking system. But that’s just a question of if and might, however, very much possible as we see bitcoin’s growth over the years in different parts of the world, both as an asset and as a currency.
The Economic Tsar of Israel claims that whatever the decision will be, it will be “made for the sake of the greater good”, that is subjective to the fact that if the digital currency can bring greater economic benefits to the country.
Mr. Simhon is quite confident that the type of money will inevitably change due to the global adoption of this new wave of cryptocurrencies but in Israel’s case, it will not be due to bitcoin’s model as a decentralized and peer-to-peer network but would be adopted due to its ability to function as a central-bank backed digital currency (CBDC).
An issue had been raised when the central bank of Israel, the Bank of Israel thoroughly looked into the possibility of introducing digital shekels (Israel’s national fiat currency) but a decision against this outcome was made followed by valid arguments stating that no other country in the world had yet done so- introducing a national digital currency.
More on this matter, there are experts and economists who believe that Switzerland’s experiment to introduce its own state-backed digital currency, Pilot, would be a massive step towards change in the world of trade globally. That is, if only it comes out the other side as a successful outcome.
Mr. Simhon also suspects that many government institutions will stand firm on the belief that digital currencies should not be introduced on a national level and the fraudulent events in recent times have contributed in raising this uncertainty, where there is high influence of the underworld.
Furthermore, Christine Lagarde, the managing director of the International Monetary Fund (IMF) has also encouraged institutions and countries all around the world to take the adoption of government backed digital currencies into consideration but the doubt of adopting non-government backed digital currencies and even assets remains intact.
Thus, bitcoin’s future within the premises of Israel looks like a blurry image reviewing the current affairs of the state and the ideology of institutions that have a significant effect on such matters. Leaving bitcoin hanging and that is certainly not a good place to be in.