Cryptocurrency enthusiasts will agree that Bitcoin has always been big in Japan. After all, the country was last year named as one of A to Z Forex’s top 3 most Bitcoin-friendly countries in the world. Roger Ver, the so-called “Bitcoin Jesus,” has called Tokyo “the world’s most Bitcoin-friendly city” – a tag that many of the city’s tech officials have been only happy to cultivate.
But as China has recently raced ahead in the East Asian bitcoin stakes, some Japanese tech gurus are instead pinning their hopes on finding innovative uses for blockchain technology.
Japan’s economy has long been stagnant, but only a fool would write off its massive technological prowess. Indeed, many Japanese have been holding out for an economy-changing breakthrough from the country’s many IT pioneers. And in blockchain, some think they have found it.
Government impetus and auto trends
Much of this recent blockchain fervor is being driven by the central government itself. In March this year, the government announced it had launched a trial blockchain-based platform for processing tenders. The results will come to light when trials comes to an end in spring next year.
“In for a penny, in for a pound” appears to be the government’s motto when it comes to blockchain. Next year, it will reveal an ambitious roadmap for incorporating blockchain technology in e-government. The ultimate goal, it would appear, is to move all government-citizen interactions onto blockchain platforms.
News outlets say the government will move a step further, looking to manage power stations and other public infrastructure using blockchain-powered solutions.
Perhaps even more notably, Japan’s auto giants are now looking to fuse blockchain with a product they hope will help propel them back to the top of the world’s car markets: driverless vehicles.
Toyota Research Institute’s CFO Chris Ballinger recently stated, “Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers and manufacturers […] bringing forward the safety, efficiency and convenience benefits of autonomous driving technology.”
In fact, Toyota (already a member of the Enterprise Ethereum Alliance) has teamed up with a whole range of blockchain experts for its latest project. Companies from as far afield as Germany, the United States and Israel are involved. Toyota is hoping that incorporating blockchain technology early in the autonomous vehicle game will let it reap dividends further down the line.
Rival Japanese conglomerates have also begun probing the blockchain landscape.
Last year Mitsubishi UFJ, the car firm’s financial arm, released a comprehensive blockchain mission statement. The company then went on to conduct extensive blockchain-powered processing system tests in Singapore, in conjunction with Hitachi. Both companies are confident they will be able to launch domestic payment platforms at some point next year.
Meanwhile, Mitsubishi UFJ’s biggest competitor, the Mizuho Financial Group, has announced that it will also enter the blockchain fray, with an IBM-constructed trade platform now in the pipelines.
Other Japanese financial groups have followed suit. In spring, a huge multi-bank consortium (also including Mitsubishi UFJ) began looking into a range of blockchain-based money transfer platforms. These include a Ripple-designed system that some claim can handle 200 times more data per second than standard Bitcoin blockchain platforms. The consortium hopes to find a way to provide low-cost virtual currency-based international transfers using blockchain technology.
Emi Yoshikawa, Ripple’s director of joint venture partnership, was quoted by CNBC as saying, “The objective of the consortium is to make domestic and cross-border payment efficient by taking advantage of the latest distributed ledger technology.”
Finally, in June, AEOM Financial Services announced trials for Japan’s first major blockchain platform for international users. The trial will make use of the Linux Foundation’s Hyperledger Fabric framework. AEON’s Masaaki Mangetsu said the company will use the system to improve its financial services offerings, in addition to “offering new services to under-served customers in Asian countries.”
Although blockchain fever is more subdued beyond Japan’s financial and government spheres, there are signs that this could soon change.
Telecommunications giant NTT has allowed its IT services subsidiary, NTT Data, to team up with Tokio Marine & Nichido Fire Insurance for an ambitious blockchain-based shipping documentation platform. This can handle invoices, insurance certificates and more. Testing is complete, and NTT Data has branded its trials “a success.”
Insurer Sompo Holdings, meanwhile, last year began pioneering blockchain-powered domestic risk transfer products that will provide coverage for natural disasters, like earthquakes, typhoons and volcanic eruptions. The company has added that it hopes to apply blockchain technology to a whole range of new insurance packages.
Skeptics will note that some of Japan’s biggest industry players – such as Honda and Nissan – are still to get into blockchain. Beyond a few cursory, non-committal white papers, there has been little initial movement from many such companies. Unless they are working behind the scenes, it could be that blockchain technology has yet to appear on their radars, or that they consider they have bigger fish to fry.
However, the fact remains that many of Japan’s biggest conglomerates are now fully committed to blockchain pilot schemes. In other cases, these conglomerates have allowed their finance or IT service subsidiaries to conduct well-funded preliminary studies. Should these turn out positive, group-wide blockchain adoption could well be on the cards.
But as for the foreseeable future – just as is the case in neighbouring South Korea – it appears that the government and the banking sector will have to continue powering Japan’s growing blockchain momentum.
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