Netanyahu's Blockchain Plan Faces Expert Skepticism Over Sanctions Evasion
Translated & summarized from Maariv by baba
Prime Minister Benjamin Netanyahu has proposed using blockchain technology to bypass potential international banking sanctions, but a cryptography expert, Prof. Yevgeny Wiborsky, warns of significant obstacles. Wiborsky cited issues with anonymity, security, and the limited trading capacity of cryptocurrencies, arguing they are unsuitable for state-level transactions. Bank of Israel also expressed doubts, emphasizing the importance of maintaining existing trade relationships over seeking alternative economic systems.
The story in 5 lines · by baba
- Prime Minister Netanyahu is exploring blockchain technology to circumvent potential banking sanctions.
- A cryptography expert, Prof. Yevgeny Wiborsky, warns blockchain is not sufficiently anonymous or secure.
- Wiborsky highlighted that transaction history is public, and privacy coins face regulatory hurdles.
- The expert noted cryptocurrencies' volatility and limited trading volume make them unsuitable for state reserves.
- Bank of Israel also doubts cryptocurrencies' ability to bypass sanctions, favoring traditional trade relations.
Prime Minister Benjamin Netanyahu has proposed exploring blockchain technology as a potential method for Israel to circumvent international banking sanctions. In a recent interview, Netanyahu stated that Israel needs to prepare for the possibility of banking sanctions by developing an "alternative economy" and confirmed he had requested a plan for utilizing blockchain.
However, a cryptography expert, Prof. Yevgeny Wiborsky, has raised significant concerns about the feasibility and security of such a plan. Wiborsky argues that blockchain technology, including Bitcoin, is not as anonymous as commonly believed. He explains that while transactions use pseudonymous addresses, the transaction history is publicly recorded on the blockchain, allowing for potential identification through external data correlation. Even privacy-focused cryptocurrencies like Monero and Zcash face limitations, as many exchanges avoid them due to difficulties in preventing money laundering, making it hard to integrate such funds into traditional banking systems.
Wiborsky further elaborated that the ability to transfer funds does not guarantee that a counterparty can receive them and provide goods or services, as they remain subject to their own country's laws and restrictions. He also pointed out the volatility and limited trading volume of many cryptocurrencies, making them unsuitable for state-level reserves or large-scale acquisitions. The expert warned of the risk of state actors disrupting blockchain networks, citing that the cost of such attacks, while substantial for private entities, is negligible for nations.
As an example of a potential threat, Wiborsky suggested that Qatar could invest millions to disrupt Israel's ability to conduct arms deals using these networks, highlighting that as economic interests grow, so will the likelihood of such attacks. Bank of Israel also expressed skepticism, stating that cryptocurrencies cannot serve as a workaround for sanctions and that Israel should focus on maintaining economic relations with its main trading partners to prevent sanctions altogether.
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