Japan is the third world economic power, but most payments continue to be made with physical money. His plan to digitize the economy for the Olympics is to develop a Blockchain network to facilitate payments in cryptocurrencies.
Japan is not ready for the Olympics. Despite being the third world economy, the vast majority of payments continue to be made with physical money in the Japanese country.
The lack of digitalization of the Japanese economy is already expensive. It involves maintaining many ATMs, ATMs, and means of transportation to move the money, which in total amounts to expenses of about 18 billion dollars a year. However, the problem is about to be much more serious with the arrival of the 2020 Olympic Games.
Hundreds of visitors from all over the world will land in Japan with their credit cards to which they are so accustomed, and will find themselves with a financial system that is not prepared to face digital payments. The losses could be huge.
The government is aware that the Japanese country’s attachment to cash is a problem, and it has been proposed that by 2025, 40% of the payments will be digital. To achieve this, they are offering economic incentives to companies that strive to digitize their payments, and for the moment some of the most powerful proposals to achieve it involve going from one extreme to another: Japan could go from accepting most of the payments in cash, to promoting payments with cryptocurrencies.
Mitsubishi UFJ Financial Group (MUFG), the largest bank in Japan, has signed an agreement with Akamai to develop a payment network in Blockchain for the Olympics. In case the project was a success, we would be facing the fastest and most powerful payment network developed to date.
They ensure that you can deal with more than one million transactions per second, confirming each transaction in less than two seconds. To put this in context: the Visa network processes thousands of transactions per second, while Bitcoin deals with 7 per second and each transaction takes at least an hour to be confirmed.
Betting on cryptocurrencies as a way of economic digitalization seems to be a prevalent option in Japan. MUFG has already tested its own token; Mizuho Financial Group is developing its own cryptocurrency for payments in the retail sector that it plans to launch in March; and SBI Holdings is developing its first token also for retail payments. In the investment market, cryptocurrencies have also been welcomed in the country.
Japan thus becomes an ideal country to make the final leap to payments based on Blockchain, since it also lacks competition from other electronic payment methods. We could see how one of the largest economies in the world would digitize all types of transactions, taking place at a faster rate than anywhere else.
But the viability of the project can also be questioned. So far blockchain payments have not yet managed to succeed at all. The volatility of cryptocurrencies, coupled with the threat of hackers and the irreversibility of transactions are some of the disadvantages, to which we must add that it is a slow, expensive and unsustainable system.
However, in the case of MUFG it could be different. The Blockchain network would be based on the servers of Akamai, a company whose track record and experience would allow it to operate the blockchain network much more efficiently, quickly and economically than in a public network.