Japan's Tryst With Cryptocurrency

An Overview of Japan's Crypto-Hub

Satoshi Nakamoto, the Japanese pseudonym tied with the invention of blockchain and therefore cryptocurrency, has provided a deep-seated interest and adoption of the newly developed value-sharing mechanism to Japan. With more than 3.5 million citizens trading in cryptocurrencies, Japan has become the crypto hub of the world. They were also among the first to mine and use cryptocurrencies, primarily Bitcoin, on a larger scale. The island nation's fascination for new technology and its adoption has opened up avenues for the rest of the world to follow. From the original Walkman by Nobutoshi Kihara, an engineer at Sony, to the creation of blue LED lights that enabled in creating the new generation of bright and energy-efficient white lamps, the Japanese public has witnessed technology disruptions for the longest time. 

Through Bitcoin, the Japanese found a new and effortless means of transacting, tied with the government support for such leading-edge technology. Among the working population of men in Japan between the ages of 25 to 30, more than 14 percent of them use cryptocurrencies in one form or the other, and such a large number of adoption can only be compared to the South Korean adoption per capita of the same. Although Japan houses the largest crypto-exchange in the world, Mt. Gox, Japan has seen its fair share of crypto-exchange hacks. In 2014, hackers stole $460 million worth of Bitcoin from Mt. Gox, which could undoubtedly amass up to a couple of billions today, while another significant hack involves the Coincheck hack of $530 million, in 2018. With security and immutability as the set cornerstones of blockchain, the crypto-hacks came as a shock, which led the government of Japan to install some measures to regulate and monitor cryptocurrency investments within the island country. 

While Japan is one of the few countries that have recognized crypto as a form of money under the Payment Services Act, on par with fiat currencies, the official recognition has brought cryptocurrencies under the purview of the Financial Services Agency (FSA) of Japan. The FSA has the power to legitimize and standardize the usage of cryptocurrencies in Japan. Being the world's biggest market for Bitcoin, Japan also has the most progressive regulatory climate for cryptocurrencies anywhere in the world. However, with several international bodies and regulatory authorities such as the G7 Finance Chiefs meet, and G20, on the outlines of Facebook's Libra coin, affirming their hesitance to adopt the technology citing "serious" risks relating to money laundering and illegal activities, the future of Japan's love affair with the newly developed financial innovation could be short-lived.