Keiichi Hida About Peculiarities Of Blockchain Implementation In Japan
Japan has the world's most progressive and still quite tense legal environment for the cryptocurrency and blockchain regulation. It was the first one to declare cryptocurrencies as payment assets along with fiat money. As a result, the Japanese daily bitcoin trading volume has reached the maximum point among other countries, overtaking even the US. It was also the first country to successfully test the voting system on blockchain.
After the Mt. Gox tremendous collapse, we all witnessed a number of huge hacking attacks and funds leakages that spread like a curse onto several Japan-based exchanges and nearly destroyed them. The FSA regulator has set stricter requirements for licensing of cryptocurrency exchanges in Japan, thus forcing many companies to change their location. Currently, there are only 16 regulated exchanges in the region.
The combination of rough regulation and progressive views in Japan is astounding. At the BlockchainUA conference in Kiev Blockspoint interviewed Executive Director of Japan Blockchain Association, Keiichi Hida to learn more about the peculiarities of blockchain development in Japan.
The Story Behind The Japan Blockchain Association Creation
One of the world's first bitcoin meetups was held in Tokyo back in 2012. Since I was always a kind of a tech person, I was already greatly interested in cryptocurrency and technologies behind it. At school, I gained some experience in the network engineering and then worked as a system administrator. I was also lucky to work for Tokyo Metallic Communications which was the first company to implement the ADSL service in Japan.
In 2014, I decided to leave my job and devote the whole time to bitcoin and blockchain. That was an amazing moment when I got to know about this technology for the first time. It was comparable with the first access to the Internet. I managed to co-found two organizations — the Rising Bitcoin Japan and the Japan Authority of Digital Assets (JADA). The last one was transformed into the Japan Blockchain Association (JBA) in April 2016.
Our main activities are aimed at applying blockchain technology and cryptocurrencies to social infrastructure. We set up educational meetups and programs for those who are interested in new technologies, as many people are not familiar with them. A key part of our work is facilitating communication between the decentralized industry and government departments, banks and regulatory bodies. The Association is divided into two branches. One of them deals with cryptocurrency, and the other is about blockchain development in general. Not only does our group consist of blockchain experts but also representatives of the Parliament and FSA.
Blockchain And Bitcoin Adoption Under The Japanese Philosophy
Cryptocurrencies are not extremely popular among Japanese people. It is just another payment option. Cryptocurrencies have low-cost transaction fees and some other advantages, and people use them. There is a Japanese coin called MonaCoin (MONA) which was designed by Mr. Watanabe who hides his personality, just like Satoshi Nakamoto does. MonaCoin tokens have a relatively high market cap and a unique community of contributors. It is also used to pay a small amount of funds on Twitter like the tip system. However, Bitcoin remains the most popular cryptocurrency in Japan.
The principal obstacle on the way of blockchain and bitcoin adoption is the traditional Japanese cultural insolation. The culture is rather closed. People in Japan do not want to learn other languages, and this causes great difficulties in sharing ideas about decentralized technologies. The local media do not make it easy as they form the informational field in which cryptocurrencies and blockchain are mentioned in the context of Silk Road, hacking attacks, funds leakages, money laundering, and other negative subtexts.
Now we can see the expansion of the cryptocurrency mining industry in Japan. The electricity here is much more expensive than in many other countries, but about 30-40 companies launched mining farms on the island anyway. Among them are some European enterprises that decided to enter the Japanese sector.
Japanese Regulators — Not Severe But Fair And Secure
In 2015, Japanese regulators formed the rules which determined the activities of local crypto exchanges. In particular, AML and KYC standards were implemented. I think this sphere should be regulated to protect us from scammers and hackers. The Japanese regulatory system is the example of the balance between precise rules and creating possibilities for the business development. Now we are working on creating rules for ICO regulation. This is a very interesting way of investing but still dangerous and unregulated.
It is very important to gain political support to increase the blockchain and bitcoin usage among residents of Japan. It becomes even more important during the often-negative coverage by the local media following various scandals. The Japanese government is very interested and researches blockchain trying to determine the advantages it can provide to the state.
The Internet was developing very rapidly but still it needed over 20 years to gain the global coverage and mass adoption. Nowadays, technologies are developing faster, so I think it may take 5-10 years until the global adoption.
We need to concentrate on promoting and developing self-regulated instruments for the cryptocurrency market in Japan as well as provide safe and customer-oriented trade inside the secure ecosystem.
People in Japan were already familiar with traditional trading tools, like stocks, forex and commodities. It was an easy transition to decentralized instruments for many of them. Today we can see that the Japanese way of doing business and well-developed e-commerce have formed a new cryptocurrency culture. There is a lot of service distributors and online merchants that prefer using cryptocurrencies and blockchain for payment operations. Also huge Japanese communication companies are now applying blockchain to provide international mobile payments.