A group of big banks in Japan have come together to develop a new digital currency called the J Coin.
The consortium is hoping to release the currency in time for 2020 Tokyo Olympics.
Cryptocurrency is a digital asset (in other words a form of digital money) that is designed to stay secure. It uses cryptography to secure its exchanges making it nearly impossible to counterfeit. Cryptocurrency in particular is classified as a subset of digital currencies.
Despite the inherent risks, ICOs have become increasingly popular, especially with companies in Silicon Valley. According to a report from Financial Times, software developers have been able to raise about $1.8 billion through the sale of new currencies. The value of cryptocurrencies like Bitcoins and Ripple have risen exponentially in 2017.
Japanese economy, which is one of the largest economies in the world, is heavily cash-dependent. According to some estimates nearly 70% of all transactions that place in the country are through cash. However, there is also a growing market for digital currencies. As of September 2016, about 2,500 stores across Japan accepted Bitcoin as a means of payment for various services rendered.
In a bid to reduce cash dependency in Japan, a group of banks in the country have been working on their own form of digital currency. The coalition of the banks is being led by Mizuho Financial Group and Japan Post Bank. The group hopes to have a viable digital currency in time for the 2020 Tokyo Olympics. The digital currency will be called J Coin. A person will be able to pay for goods and services through their mobile phones.
The new digital currency is a response to the threat posed by China’s Alibaba. The e-commerce company has recently launched a mobile-phone payments services in the country. Yasuhiro Sato, president and chief executive officer of Mizuho Financial Group, told the Financial Times, “I think this electronic money is quite ahead of [credit and debit] cards, because when you use the cards the shops pay a certain fee.” Sato said that with this move, the banks are hoping to break the dependency on cash in the country. He added, “We like cash, because Japan is a very safety-conscious country. But cash is not so productive so we have to change the structure from cash to electronic money.”
In August 2017, it was announced that another group of big banks are working to a new digital currency. Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street have come together on this project. An MUFG spokesman said that the company would not be commenting on J Coin adding, “We are aware of the issue or concept [of J Coin], however, we would like to refrain from answering. We want MUFG coin’s results and know-how to be used across Japan, including by other banks, but have not decided on what concrete measures to take.”
Our assessment is that banks across the world have begun to realize that cryptocurrencies are here to stay. These forms of digital currencies will reduce transaction costs and they are decentralized. They will also help governments across the world to move towards cashless societies.