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The Kibbutz Economy and The Blockchain – A Hypothetical Scenario

Kibbutzim is a social experiment that has successfully achieved its pre-set goals during the initial years following establishment of this Israeli collective community. During the later parts of the twentieth century, the altered circumstances have faced Kibbutzims with criticism regarding the goals and functioning style of this social experiment. Nonetheless, Kibbutzims have successfully managed to develop and become one of the main contributors to Israel’s economy. The blockchain technology has become relatively saturated in terms of acceptability and commercialization. This is due to, at least partly, the fact that the blockchain technology is developed and utilized by private entities, that are anonymous in most cases. As such, most of the public are suspicious of the blockchain technology and all of its applications, yet the recent interest of governments in cryptocurrencies and various applications of the blockchain technology is likely to change this attitude soon.

An Indian author envisioned a scenario where the Kibbutz concept fully integrates with the blockchain technology, which represents a win-win situation for both concepts. He analyzed in detail a proposed scenario for an interplay between the life in the Kibbutz and the blockchain technology; cryptocurrencies are used for payments of day-to-day activities of the Kibbutz using their own blockchain.

What is A Kibbutz?

A Kibbutz represents an Israeli collective community. Initially, the community’s economy was based on agriculture. Presently, farming is supplemented by several other economic activities such as high tech enterprises and industrial plants. The past few decades have witnessed privatization of some Kibbutzims and the communal lifestyle have markedly changed. A Kibbutz member is known as a Kibbutznik. Some Kibbutzniks developed enormous high tech industries, such as Kibbutz Sasa which recorded $850 of yearly revenue in the year 2010.

The following represents the unique features of Kibbutzims:

1- For Kibbutzims, the society is the primary focus. Each individual functions according to his/her skills and abilities to add more value to the society as a whole, apart from individuals or family units.

2- Kibbutzims have an egalitarian character.

3- Kibbutzims provided the world with many entrepreneurs and innovators.

4- Kibbutzims are fully autonomous when it comes to how they conduct themselves, so the activities of the Kibbutz are not controlled by the government.

5- Kibbutzims have autonomous governance. Accordingly, they represent decentralized governance, in a way or another, inside the borders of Israel.

6- Kibbutzims have a high volume of annual financial transactions. In 2010, the factories of only 270 Kibbutzims accounted for approximately 9% of Israel’s yearly industrial income, around $8 billion, and approximately 40% of Israel’s yearly agricultural income, around $1.7 billion.

How Can Kibbutzims and the Blockchain Technology Synergize One Another?

The paper proposed Kibbutzims encouraging and implementing exchanging value and doing business using various cryptocurrencies and smart contracts. He also proposed issuing “KibbutzCoin”, a theoretical cryptocurrency ( created using a Turing Complete Private Blockchain – a Kibchain). The Kibchain will be used as a model that will be used for various Kibbutzims related cryptocurrencies.

The KibbutzCoin will be a form of a NationCoin, or a sovereign based cryptocurrency, that will receive is backup from the Kibbutz, as opposed to governmental sovereign authority with other forms of NationCoins. Accordingly, KibbutzCoins will be backed up by a Qasi-Autonomous entity such as a Kibbutz, that has sovereign recognition.

The following represents the merits of for both Kibbutzims and the blockchain technology from such integration:

1- Kibbutzims will benefit markedly from the low transaction fees of blockchain based transactions, which will save them hundreds of thousands of dollars worth of yearly transaction fees and commissions.

2- After implementation of KibbutzCoins, a significant volume of transactions data will accumulate over time. This information can be mined for repetitive patterns and statistical variations that can provide valuable insights to improve the blockchain.

3- A trial-run for implementation of KibbutzCoins can be used as a general reference of implementation of Regulated and Sovereign Backed Cryptocurrencies (RSBCs); thus, helping in taking the blockchain technology to an international level.

4- KibbutzCoins can be used to analyze and predict the Universal Basic Income concept, which is a form of a social security. Every born baby will receive a certain amount of Kibbutzoins in his/her wallet and will receive a monthly income as well as increments upon reaching specific criteria.

5- Lending, ownership, contracting….etc among Kibbutzims will be easily and efficiently conducted on the KibChain.

6- Implementation of the blockchain experiment, will draw attention to the Kibbutz culture which can have many positive influences on the community.

7- The blockchain can be used for voting for various elections providing a secure and fair means for exercising democracy for the Kibbutz.

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