Cryptocurrency in Japan: from Mt.Gox to BCH Survival Challenge

When we think about cryptocurrency, our thoughts will instantly address to Japan. This beautiful country of the rising sun is supposedly the Bitcoin motherland as its founder – Satoshi Nakomoto is allegedly from Japan. Though in fact, nobody knows his real identity and where he comes from. Additionally, due to the correct and friendly policy towards crypto, Japan is an essential player in the cryptocurrency and blockchain market.

Highlights:

  • Japanese crypto market history: from Satoshi to everyday payments
  • 3 most interesting Japanese crypto projects
  • Mt. Gox hack forced authorities to establish of Financial Services Agency (FSA) and further crypto regulation
  • You can buy almost everything with crypto in Japan
  • CDBC wasn’t launched as the nation’s reserve bank might become the only storage for the entire nation’s transaction data

In 2008, Bitcoin was invented in order to exclude third parties that are traditionally required to conduct monetary transfers; to provide peer-to-peer transactions; to avoid a major bubble collapse that current banks are forcing societies to. Yes, more and more people stop trusting the traditional banking system.

Nowadays, people with such philosophies tend to believe in crypto and some even become investors or launch start-ups. Certainly, Japan is not an exception, moreover, its crypto community is one of the largest in the world. The latest regulatory environment development boosted the launch of start-ups in Japan.

What it has all started with

Though in order to immerse you in Japan’s crypto world, we will tell you first about notorious hacks that happened a couple years after crypto was invented. In Japan, these occasions helped people to keep track of their funds more carefully, forced companies to realize that everything needs to be done correctly and properly to avoid sad consequences.

Japanese citizens were among the first to start mining and using Bitcoin. And Mt. Gox – the world’s biggest crypto exchange at the time, was a Japanese company.

Some of the world’s biggest crypto heroes lived in Japan. Roger Ver (bitcoin investor and promoter) advertised Bitcoin strongly around the country. Ver was the one who convinced Mark Karpeles (former Linux Cyberjoueurs Software developer) to purchase Mt. Gox from programmer Jed McCaleb in 2011 and operate it as a Japanese corporation.

Mt. Gox suffered a huge hack in February 2014. Hackers stole $460 million worth of Bitcoin at the time. In total, 6% of the world’s Bitcoin supply was lost. As a result, the attackers gained access to the private keys of millions of wallets on the exchange. Mt. Gox filed for bankruptcy, Karpeles went to jail for falsifying records during the ordeal, and trust in cryptocurrency collapsed. The whole world was waiting for the Japanese government to further action, and Japanese authorities imposed measures to formalize and monitor cryptocurrency investments in order to protect consumers.

But of course, that hasn’t stopped all cyberattacks in Japan. In 2018 alone, exchanges in Japan have lost over $600 million in user funds. Despite its continued history of hacks, since 2016, Japan has officially recognized crypto as a type of money. This official recognition brought cryptocurrencies under the purview of the Financial Services Agency (FSA) which both legitimizes cryptocurrency and puts standards in place for operating a cryptocurrency exchange.

In sum, a lot of people’s funds suffered from the Mt.Gox collapse, besides that the market impact was partly positive due to the aforementioned facts. Therefore, such wonderful projects exist in Japan now:

BitFlyer

BitFlyer was founded back in 2014 and nowadays it is Japan’s most-used virtual currency service. In March 2019, the company celebrated 2,5 million users and is rapidly growing. It has a payment license from EU and US regulatory authorities which makes BitFlyer one of the biggest crypto exchange players in the world. Furthermore, BitFlyer provides its customers with an API (that allows anyone to connect to the exchange platform using third-party software), but does not support many of altcoins.

Soramitsu

Soramitsu is a Japanese fintech company delivering blockchain-based solutions for enterprises, universities, and governments. They work with such giants as Honda, Panasonic, Sony Financial Holding, Hitachi, etc. Soramitsu has launched a real-time gross payment system called Bakong. Bakong App (based on their distributed ledger technology – Ihora), Cambodia’s only integrated payment system that allows users to do everything – e-wallets, mobile payments, online banking, etc. It helps banks to save substantial cost and development time, and reach a whole new user base while increasing speed and efficiency. It also allows the central bank to monitor the activity of the whole system and leverage a much faster and safer financial infrastructure.

Credify

This startup from Tokyo provides blockchain-driven solutions for companies active in e-commerce and digital finance. Credify is a software development company building a universal financial passport-like “proof-of-trust” credibility protocol and providing services to these addresses that need trust in systems. Also, software has a gamification in its ecosystem. Companies that use Credify can reward and transfer each other tokens, in order to successfully verify the confirmation of services and product delivery. In simple words, If vouching is successfully completed, rewards will be given to the user. If vouching is not successful, the users will cover the loss. And this interesting concept is supported by blockchain, meaning that the information won’t be leaked.

Where and what can you buy with crypto in Japan?

The aforementioned facts led to a situation that you can pay for a huge amount of products and services with cryptocurrencies in Japan. Small stores, family cafes, and little coffee shops have long accepted Bitcoin in Japan — often as a way to distinguish themselves and attract business from an increasingly tech-savvy customer base.

Companies that accept crypto payments include convenience stores like Daily Yamazaki, opticians like Megane Super, music schools, and even capsule hotels like June. Some Japanese companies like GMO have started to give employees the option to receive bitcoin as part of their salaries.

Additionally, Japan’s biggest railways operator is planning to accept payments in cryptocurrency.

Bitcoin Cash Survival Challenge

Akane Yokoo, Tokyo Bitcoin Cash meetup organizer, decided to make a 3 days experiment in Tokyo, where she used only crypto – no fiat was allowed. Her payment currency was Bitcoin Cash, which is a cryptocurrency that has the characteristics close to such of original Bitcoin. Akane loaded her Bitcoin.com mobile wallet with 1 BCH and went to explore the crypto-friendly city. Some restaurants, cafes, bars, and other services accept crypto directly from the wallet while some use the indirect method.

In order to spend crypto indirectly, Akane used a Japanese exchange Decurret – a service that allows holders to load with some crypto (BCH, BTC, LTC, and XRP) to cards/wallets such as Rakuten Edy, Nanaco, and Au wallet. Here is Decurret’s press release for the service. In simple words, if you have funds on these cards, it means you can shop at more than 400,000 shops for Edy card, 490,000 shops for Nanaco, and Au wallet can be used for places that accept Visa or Mastercard.

So that is definitely a lot of shops that again prove that Tokyo is a “crypto city”. Akane Yokoo suggests travelers downloading the Bitcoin Cash map, which shows all the stores and services available in Tokyo which accept crypto.

CDBC

CDBC is a digital form of fiat currency, centralized and issued by the state. Many countries like Uruguay, England, Sweden, Barbados announced starting tests to issue digital currencies. Japan wasn’t an exception.

However, according to the deputy governor at the Bank of Japan, mature global economies like Japan’s won’t need a virtual currency. Therewith, deputy governor Masayoshi Amamiya said that a central bank digital currency, or CBDC, won’t provide any significant benefits to Japan’s $5 trillion economy. Amamiya stated that if Japan issues a virtual yen, then the nation’s reserve bank might become the only storage for the entire nation’s transaction data. This would lead to concerns about how the bank would securely store and protect users’ financial details.

Welcome to Japan!

Japan is a unique country with a unique culture. Its crypto-friendly policy showed the whole world that adopting cryptocurrency as an alternative method of payment is safe and modern. The Japanese government made a correct regulatory approach to managing the whole new crypto industry. It opens up opportunities for tech start-ups and companies to develop further the blockchain and crypto tech industry forward. This is why such astonishing companies exist in Japan, making it one of the leading countries of the world today.