Japan joins the virtual currency race

calendar iconOct 10, 2017


Japan's banks are aiming to introduce a national virtual currency dubbed J Coin in an attempt to 'fend off global e-payment players' and simultaneously 'amass a treasure-trove of consumer data.' Unlike Bitcoin, J-Coin would be managed by a coalition of banks and should, in theory, 'be free of Bitcoin's famous volatility' by simply reflecting the value of Japan's currency, the Yen. 

After a brief trial in December 2016, the group of banks, including Mizuho Financial Group and Japan Post Bank and over 70 regional banks, are hoping to introduce the Japanese virtual currency by 2020 - in time for the Tokyo Games. This move seems to be a reaction to the recent introduction of Alipay (China's Alibaba mobile payment service) in Japan. 

Some argue that despite what the name suggests, J-Coin is nothing like Bitcoin but is instead more of an e-wallet service using ledger technology, warning that the if cash disappears in favour of this option, the ability to pay for things privately would be lost while privatised banks gain further control of the market and consumer choice. 

Currently, 70% of Japan's transactions by value is conducted through cash - a high percentage for a developed country, which suggests a strong loyalty to cash in a landscape of various alternative payment options. In light of this, banks are now (confusingly) seeking to minimise costs of handling and transporting cash services by motivating their nation of cash-loyal consumers to give up cash and informational self-determination for a cashless future they didn't ask for.

Perhaps, the developing battle between decentralised and nationalised virtual currency will remind the public of what cash (and no other payment option) can offer: privacy, social inclusion, emergency money and freedom to name a few. But will that be enough to motivate a public declaration of cash support? Or will the people sit by as their freedoms and financial rights are taken away from them? 

Simon Dixon explains some of the key limitations of paperless fiat money in an article on Coinidol.com, “Central bank digital fiat is convenient and stable for spending in a local economy, but you don't legally own the money like cash, it can be censored when you spend it on something the government does not like and it will be subject to an inflationary monetary policy encouraging debt over savings..." Continue reading...

'The end result is people will spend convenient but inflationary money (J-coin) and save less convenient Bitcoin outside of government control. Digital fiat like J-coin makes Bitcoin stronger.'
"Simon DixonCEOBnkToTheFuture.com

Excerpt from Nikkei Asian Review article by Motonao Uesugi and Koji Okuda

'The banks intend to use the new currency to offer electronic payments, plus other services like commission-free remittances. They hope to counter the growing e-payments services of international tech giants like Alibaba Group Holding and Apple. There is a possibility Japan's other big banks could join the group, creating a massive coalition...'

'The J Coin management company would accumulate users' shopping and remittance records, along with other related information. This data would be shared -- anonymously -- among the banks and sponsor companies, allowing them to enhance their marketing and pricing strategies.'

'Data is a big reason the rival banks are coming together: There is concern about valuable information on Japanese consumers being dominated by overseas competitors.' Continue reading...

'This suggests banks are basically tokenizing yen, but whether they retain any control over the token after it is issued is somewhat unclear at this stage.'
"Contributor"Japanese Banks to Launch J Coin."Trustnodes

Excerpt from Trustnodes article

'This suggests banks are basically tokenizing yen, but whether they retain any control over the token after it is issued is somewhat unclear at this stage.'

'Likewise, the exact technology to be used remains unclear, but Mizuho has been working in a partnership with IBM for some time in efforts to create a digital currency by using Hyperledger...'

'The banks aim to cash-in on data, which is seen as a big prize with many fintechs gaining a competitive advantage because they know far more about their customers than traditional banks through the use of algorithms which allows them to track payments and learn more about their customers habits, giving them the ability to recommend goods or services.' Continue reading...

'J Coin designed to wean Japanese off heavy dependency on cash'
"Martin Arnold (Banking Editor)and Leo Lewis (Tokyo Correspondent)Financial Times

Excerpt from Financial Times by Martin Arnold and Leo Lewis

'This is the how the banks have had to 'respond to the threat from China’s Alibaba, which recently launched its mobile-phone payments service in the country...'

'The J Coin is designed to wean the Japanese off their heavy dependency on cash, which accounts for 70per cent of all transactions by value. That is higher than any developed country, which have on average reduced cash utilisation to only 30per cent.' Continue reading...

Read original article here


"Japanese Banks to Launch J Coin." Trustnodes. September 17, 2017. Accessed October 11, 2017. Web.

Arnold, Martin, and Leo Lewis. "Japan’s big banks plan digital currency launch." Financial Times. September 26, 2017. Accessed October 11, 2017. Web.

Motonao Uesugi and Koji Okuda. "J Coin: Japanese banks' virtual currency without the volatility" Nikkei Asian Review. Published September, 17th 2017. Web.

Thompson, Patrick. "When Fiat goes Paperless: Japan's J-Coin." Latest Bitcoin News. September 28, 2017. Accessed October 11, 2017. Web.

Last Updated: Dec 18, 2017