Over the past year, the use of bitcoin—an Internet-based “currency” that operates without the control of a central bank—has increased significantly, generating some debate about whether it is the wave of the future or simply a new market for financial speculation. Shmuel Even asks a different question, of particular import to Israel: can it be prevented from serving as a tool for terrorists?

Internet currencies do not claim to replace state currencies, but even if [they become mainstream without doing so], it is hard to dismiss the idea that they could deprive states and the financial establishments that control the global financial system of their exclusive hold over means of payment, just as the Internet deprives states and the media of their exclusive control of information. With the existing systems, it is hard for the state to track “new money” and its usage, so the main risk posed to states by these currencies is of financial activity moving beyond the state’s knowledge or reach.

This includes the financial activity of terrorist and criminal organizations, which can use virtual currencies to pay their activists, acquire weapons on the black market, buy forbidden substances, launder money, and move money from country to country with no supervision. In the future, this currency system could also be used to bypass sanctions imposed on countries and [other entities], including the purchase of banned substances and technologies, since it is a separate global financial system that is not controlled by states or banks. . . .

Israel is still formulating its position [with regard to cybercurrency]. . . . In an open letter of February 2014, the Bank of Israel warned the public about the dangers of using decentralized virtual currencies, and stressed that they were not legal tender. . . . The bank said that [the use of these currencies constitutes] “a high-risk factor with regard to money laundering and funding of terror,” since it facilitates anonymous financial transactions that bypass regulated systems. . . .

Israel would do well to accelerate the process of deciding on its approach, with an integrated examination of the subject by all the regulatory bodies involved. . . and in collaboration with other elements worldwide.

Yesterday, the beepers used by hundreds of Hizballah operatives were detonated. Noah Rothman puts this ingenious attack in the context of the overall war between Israel and the Iran-backed terrorist group:

[W]hile the disabling of an untold number of Hizballah operatives is remarkable, it’s also ominous. This week, the Israeli defense minister Yoav Gallant told reporters that the hour is nearing when Israeli forces will have to confront Iran’s cat’s-paw in southern Lebanon directly, in order to return the tens of thousands of Israelis who fled their homes along Lebanon’s border under fire and have not yet been able to return. Today’s operation may be a prelude to the next phase of Israel’s defensive war, a dangerous one in which the IDF will face off against an enemy with tens of thousands of fighters and over 150,000 rockets and missiles trained on Israeli cities.

Seth Frantzman, meanwhile, focuses on the specific damage the pager bombings have likely done to Hizballah:

This will put the men in hospital for a period of time. Some of them can go back to serving Hizballah, but they will not have access to one of their hands. These will most likely be their dominant hand, meaning the hand they’d also use to hold the trigger of a rifle or push the button to launch a missile.

Hizballah has already lost around 450 fighters in its eleven-month confrontation with Israel. This is a significant loss for the group. While Hizballah can replace losses, it doesn’t have an endlessly deep [supply of recruits]. This is not only because it has to invest in training and security ahead of recruitment, but also because it draws its recruits from a narrow spectrum of Lebanese society.

The overall challenge for Hizballah is not just replacing wounded and dead fighters. The group will be challenged to . . . roll out some other way to communicate with its men. The use of pagers may seem archaic, but Hizballah apparently chose to use this system because it assumed the network could not be penetrated. . . . It will also now be concerned about the penetration of its operational security. When groups like Hizballah are in chaos, they are more vulnerable to making mistakes.