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.

Early Friday morning, Israel attacked military installations near the Iranian cities of Isfahan and nearby Natanz, the latter being one of the hubs of the country’s nuclear program. Jerusalem is not taking credit for the attack, and none of the details are too certain, but it seems that the attack involved multiple drones, likely launched from within Iran, as well as one or more missiles fired from Syrian or Iraqi airspace. Strikes on Syrian radar systems shortly beforehand probably helped make the attack possible, and there were reportedly strikes on Iraq as well.

Iran itself is downplaying the attack, but the S-300 air-defense batteries in Isfahan appear to have been destroyed or damaged. This is a sophisticated Russian-made system positioned to protect the Natanz nuclear installation. In other words, Israel has demonstrated that Iran’s best technology can’t protect the country’s skies from the IDF. As Yossi Kuperwasser puts it, the attack, combined with the response to the assault on April 13,

clarified to the Iranians that whereas we [Israelis] are not as vulnerable as they thought, they are more vulnerable than they thought. They have difficulty hitting us, but we have no difficulty hitting them.

Nobody knows exactly how the operation was carried out. . . . It is good that a question mark hovers over . . . what exactly Israel did. Let’s keep them wondering. It is good for deniability and good for keeping the enemy uncertain.

The fact that we chose targets that were in the vicinity of a major nuclear facility but were linked to the Iranian missile and air forces was a good message. It communicated that we can reach other targets as well but, as we don’t want escalation, we chose targets nearby that were involved in the attack against Israel. I think it sends the message that if we want to, we can send a stronger message. Israel is not seeking escalation at the moment.