For the few years after bitcoin first emerged, in January 2009, you would have been hard pressed to find someone in Japan familiar with the virtual currency. That all changed in 2014, with the spectacular failure of the Japan-based bitcoin exchange, Mt. Gox, which by one count lost coins worth a jaw-dropping $2.4 trillion. All of a sudden, the fledgling virtual currency was front-and-center in the Japanese consciousness, but for all the wrong reasons.
At the recent Rakuten FinTech Conference 2016, several of Japan’s leading bitcoin influencers recalled the rocky path they’ve endured – from anonymity, then infamy to the present, which is different again. As Bitflyer Co-Founder & CEO Yuzo Kano, Quoine Co-Founder & CEO Mike Kayamori and ResuPress CEO Koichiro Wada explained in their “Bitcoin Samurais” session, the one-time renegade cryptocurrency is now on the brink of legitimacy, as the Japanese government prepares to put into effect new legislation regulating its use.
Not long into the discussion, moderator Takashi Hara, of Nikkei FinTech, acknowledged the elephant in the room: Mt. Gox and the damage its collapse did to bitcoin’s reputation. He asked Wada, who created his own bitcoin exchange soon after the collapse, what it was like to start a business in that climate.
“Certainly it was difficult starting out,” Wada said. “I started our exchange on my own and even just opening bank accounts was a challenge, as banks were not enthusiastic about the idea of a business involving bitcoin. But over the past two years, regulations have opened up and it has made things much easier for startups like ours.”
Despite the challenging environment, Wada’s company, ResuPress, has been making headway, and may even have found a solution to the problem that has plagued bitcoin evangelists the world over: the public’s apparent lack of enthusiasm for actually using it. Wada’s approach is to take one step at a time, and his most recent step is the “Coincheck Electricity” platform, an initiative that enables customers to pay their electricity bills using bitcoin.
As alluded to by Wada, one breakthrough for the Japanese bitcoin industry appears to have been when the Japanese government acknowledged its relevance and began taking steps to regulate it. Although the bureaucrats opted to define virtual currencies such as bitcoin as “asset-like values” that can be used in making payments – and not as currencies per se – the move was applauded nevertheless as it is expected to foster trust among the public. The legislation, which is set to take effect in 2017, is also likely to spur a wave of investment by large Japanese corporations in virtual currencies and their infrastructures.
With the increasing support for bitcoin from regulators and financial institutions, conditions are clearly improving. What else did the panelists feel would be helpful to ensure the long-term success of bitcoin in Japan?
Bitflyer’s Kano suggested that the key was to get more large retailers to accept it: “Consumers need to see use-cases to better understand how bitcoin works,” he said.
Quoine’s Kayamori put the emphasis on building trust. “I actually like where Japan is in terms of regulation. In fact, it is far ahead of the rest of Asia, which helps with credibility. But Japan needs to continue building trust around the bitcoin infrastructure to encourage further adoption,” he said.
For his part, Kayamori was confident that such trust would come, and he is optimistic about bitcoin’s prospects. “Bitcoin has the inevitability to it that the internet had twenty years ago,” he said. “It is the future.”
Read more posts from the Rakuten FinTech Conference 2016 here.