Blocks away from the Tel Aviv Stock Exchange and the headquarters of two major banks, in the corner of the lobby of a boutique hotel, Nimrod Gruber sticks his hand into an ATM.
A few seconds later, a QR code prints out. Gruber takes the slip of paper and walks away, no cash in hand.
He’s not worried. He owns the ATM, and there’s nothing like it in the Middle East. It identifies users by scanning their palms, and instead of dispensing dollars, euros or shekels, it dispenses Bitcoin.
“It shows up in your account in 30 seconds, a minute,” he said.
Bitcoin, a digital currency invented in 2008, has spread across the world, and made a hefty profit for its holders, without printing a single bill. As Bitcoin has gained value over the years, an ecosystem of startups and organizations has taken shape in Tel Aviv to promote its use in Israel’s tech scene.
“Here we adopt new technology earlier than other places,” said Gruber, 28, a former model who became involved in Bitcoin technology during a stint living in New York City. “It makes sense that this would be a Bitcoin center. We’re at the heart of the high-tech area and the Tel Aviv financial district.”
Called a “cryptocurrency” because it is secured by encrypted data, Bitcoin itself could be best described as cryptic. Its reputed inventor, who goes by the name Satoshi Nakamoto, has communicated only by email. Unlike mainstream currencies, Bitcoin isn’t backed by a government or central bank and has no physical form.
Instead, it exists in computer code, and its value is determined purely through supply and demand in online exchanges where Bitcoin holders buy and sell it for other currencies. People can “mine” new Bitcoins by performing complex calculations on their computers.
Bitcoin has encountered a host of issues in its development, from the question of government regulation to use for illegal activities to a volatile growth pattern. According to a digital currency tracker, one Bitcoin was worth about $100 a year ago and had spiked to nearly $1,000 by last November. Three weeks later, though, its value dropped to about $600 after China banned its use. It’s worth roughly $630 now, with $8 billion of total Bitcoins on the market.
The ups and downs haven’t deterred Israeli Bitcoin believers, who expect growth ahead and say the currency will stabilize as more people adopt it. Dozens of startups have proliferated around Bitcoin use in Israel, and more than 120 Israeli businesses, from restaurants to real estate firms, accept Bitcoin as payment.