Move Over Bitcoin, Make Way for the Isracoin

Israel’s first virtual currency to be launched Wednesday night.

Daniel Bar-On

A new virtual coin called the Isracoin will be available in Israel Wednesday, in what its developers describe as an effort to counter the concentration of power in the Israeli economy. The currency is based on the same principles as the virtual bitcoin and others of its ilk, among them virtual national coins such as the Icelandic Aurora.

The creators of Isracoin (labelled Isr) intend to distribute 10% of the total value of coins to businesses and residents of Israel, in order to initiate usage of the currency in commerce.

The launching of the virtual coin, announced on Channel 10 a few days ago, became possible with the advent of new digi wallet software and a mining kit.

The Isracoin was created by six developers, some of whom are associated with the social protest movement in the summer of 2011 and with the open source community in Israel. Among the first developers are Amnon Dafni, who coordinated the digital activity on the J14 website, Omer Dahan and Guy Shefer. The creators have mined 10% of the total amount of planned Isracoins -- 480 million out of 4.8 billion available for mining. These will be distributed according to a plan that is specified at isracoin.org.il.

“The first phase of the plan calls for distribution of 500 Isracoins to every business that adopts it as a means of payment, up to 50,000 businesses. This will happen one month before the second phase, in order to prepare as many businesses as possible for the day the general public receives the virtual coins,” state the coin’s developers on their website. The second phase will involve “distributing the coins to every verified Israeli citizen, up to a maximum of 2,850,000 people,” they state.

According to Dafni, the Isracoin is designed to counter the concentration of power in the Israeli economy. “The problem with the Israeli economy is over-concentration. A few banks control most assets, and these banks wield great influence over political parties. This expresses itself in high commission rates and in non-competitive services.”

Last Monday, every registered resident of Iceland received 31.8 Aurora coins. According to the Twitter accounts of its developers, by mid-day there were 2,600 people in Iceland who had made use of the Aurora coins available to them. This virtual coin, which inspired the development of other national virtual coins intended for local markets, has attained high values in the market for digital coins, although, as with other such coins, the values fluctuate substantially. At 13:00 Israel time on Monday, the Aurora traded for $11.37. At this value, Icelanders who had exercised their option to obtain the coin received $360.

Until now virtual coins have appeared mainly in countries with plummeting economies, such as Iceland, Spain and Cyprus. The developer of the Icelandic Aurora coin, Baldur Odinson, declared that he created the coin in response to strict capital limitations imposed by the Icelandic government following the collapse of Iceland’s economy and currency in 2008. According to these limitations, Icelandic citizens, still reeling from high inflation, cannot exchange their currency to dollars or Euros. They are also unable to purchase virtual coins such as the bitcoin.

According to Isracoin’s developers, the distribution plan of the virtual coin will enhance its usage in commerce.Using Isracoins on portable devices should be simple and fast, as is the case with other virtual coins.