Everyone is waiting to see what happens in Japan. The world’s largest experiment in using blockchain-based networks to pay for things is right around the corner.
Japan’s citizens have a surprising and expensive habit: they currently pay for everything in cash. An odd habit to have in the world’s third largest economy, it sets it apart from China and South Korea where various “cashless” electronic payment schemes dominate. Similarly, in the West credit and debit cards are the popular choice.
As of now, Japan has approximately 200,000 ATMs, as well as cash registers and fleets of vehicles constantly moving money around. This all adds up to an estimated $18 billion a year in costs, a staggering amount borne by the financial industry. But all of this is about to change.
Next year, the country will experience hundreds of thousands of foreign visitors traveling to Tokyo for the Olympics. Of course, the vast majority of them will be from countries where credit cards and digital payments are second nature. The fear is that the country will not be prepared for the billions of dollars expected to be spent during the event. If not, hundreds of millions could be left on the table.
How is Japan planning to approach the issue? Prime Minister Shinzo Abe has said that he wants 40 percent of payments to be cashless by 2025. Back in August, the government announced its plans to offer tax breaks and subsidies for companies that agree to jump on board. Some of the biggest financial players think the key to shifting away from cash lies in the technology that runs Bitcoin.
A plan has been put together by the country’s largest bank (and the fifth largest in the world) and American internet company Akamai. Their aim is to build a blockchain-based consumer payment network in time for the Olympics. If successful, it could be the fastest and most powerful consumer payment network to date, even surpassing Bitcoin in speed.
If this test works, Japan’s economy will completely be transformed. From small purchases to huge transactions, all transactions could be carried out with impressive speed at a fraction of the current cost. Many are asking if Japan is ready for this kind of change. Are they really ready to ditch their cash for blockchains?
Yoriko Beal, cofounder of HashHub, a co-working space for blockchain startups in Tokyo, is hesitant and skeptical. She says, “If MUFG and Akamai are so sure that using blockchain can reduce costs a lot compared to, like, using metro cards, it might happen.” Only time will tell.
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Author Bio:Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards. His understanding of the industry and sagepay review has helped thousands of business owners save money and time.