Cryptocurrency As A Means Of Payment: World’s Largest Cryptocurrency Experiment Set To Take Place In Japan

There are some members of the cryptocurrency community who believe that cryptocurrencies will eventually replace fiat money. Those in this camp have predicted a time when the people will get tired of using centralized money and start using cryptocurrencies as a method of payment on a global scale. No doubt, cryptocurrencies are fast and efficient as payment methods. However, the main problem is its volatility. The question is: will people be willing to risk sending and receiving volatile cryptocurrencies as a means of payment when they have the fiat option? Well, financial giants are no longer waiting to find out.

Will People In Japan Ditch Fiat For Cryptocurrencies?

Unlike other parts of the world that depend a lot on credit and debit cards, citizens of Japan are known for depending on cash for making payments. The third largest economy in the world isn’t ready to become a cashless society yet. This is why there are over 200,000 ATMs, fleets if vehicles and thousands of cash registers around the region. The use of cash rounds up to about $18 billion on a yearly basis and most of this comes from their financial sector.

Thanks to the upcoming Olympics scheduled to take place in Tokyo, this figure is going to rise next year. The billions of dollars that will be spent next year needs to be spent in the right financial system. Right now, Japan isn’t ready to handle such pressure and this may make it lose out on hundreds of millions. This is one of the reasons why the Prime Minister of Japan, Shinzo Abe announced that companies that get on the cashless train will receive tax incentives.

Big financial players in the country believe that the best way to promote the cashless society is to promote the use of cryptocurrencies. The largest Bank in Japan and the 5th largest bank in the world Mitsubishi UFJ Financial Group (MUFG), has partnered with Akamai, an American-based internet company to create a payment network for the Olympics that would be based on blockchain technology.
If things go according to plan, this would be the fastest and most efficient customer payment network in Japan. During the test, the system was able to process more than one million transactions per second. Each transaction was confirmed within no more than two seconds. The team involved claims the system will keep being upgraded until it can handle at least 10 million transactions in the world. The system was designed to handle all forms of payments from large to small in different sectors.

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Mizuho Financial Group, another big player in the market, is also working on a blockchain-based system. This company plans to release a digital currency in March 2019. SBI Holdings is creating a token for retail payments. These companies recognize that the Japanese financial system is ripe for restructuring. So, they want to be ahead of it. However, a lot of effort needs to be made to educate the citizens. No matter how good a technology is, it will fade away if no one is using it. The citizens need a guide that will take them from depending on cash to depending on cryptocurrencies and other forms of digital payments.

Do you think the Japanese people will embrace the use of blockchain-based payment systems? Share your thoughts.

Max writes about blockchain projects and regulation with a special focus on United States and China. He joined Smarterum after years of writing for various media outlets.


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