That being said, the main application of Bitcoin right now is not sending money, its main application is speculation. People don’t really use Bitcoin as a currency now.
FL: So what lies ahead for Bitcoin then?
M.T.: It all depends of what decisions that the Core development team and the miners take right now. Bitcoin has come to a certain crossroads and either has to impress with innovations and try to expand the system’s usability, or we just pursue profits. Once things like SegWit are implemented, or maybe there’s block size increase, and the scalability issues are solved, it will have lots of potential. Otherwise there has been surprisingly little innovation in Bitcoin space compared to other projects.
FL: What do you think about the political battle between various camps in Bitcoin then? Some people want bigger blocks, while others insist SegWit is the only way to go.
M.T.: I don’t think it’s a political battle, rather a religious one. But I think there’s nothing wrong with trying new things as long everything is robust and there are no bugs like in Ethereum that would cause problems. Economic models change and they need to change.
FL: Speaking of blockchain, how deep is the level of penetration of the technology in Japan?
M.T.: If we talk about banks and other financial institutions, everyone knows about blockchain, there’s hardly anyone who doesn’t. People are really interested in the technology and study it, and books on blockchain are very popular in Japan. At least there’s not a single major company that doesn’t know what blockchain is. People in finance maybe even progressed to the point where they also know about the downsides of the technology, they know what it can do and what it can’t do.
So, lots of companies are interested in the technology, but individuals, well, I think basically not.
For normal people, their interest is more economical, I think. There are big companies like Bic Camera or online credit card processors that accept Bitcoin on one hand, and on the other hand, Japanese people don’t really use Bitcoin in daily life. Maybe until this year day Bitcoin’s reputation wasn’t too good, but after the Financial Services Agency changed the regulation people are starting to look at it more than before.
FL: Are there any special courses in Japan where people can study the technology?
M.T.: It’s interesting, but there’s not much education on blockchain right now. There are lots of people who are interested, but at the university level there’s really not much educational classes about it. Part of the reason maybe is the connection to cryptocurrencies, because in the academia you don’t want to have financial incentive. Blockchain is not just Bitcoin, blockchain itself is very interesting technology from the theoretical standpoint, so hopefully we’ll start to see more penetration into the classroom, and more computer science courses teaching blockchain development skills and things like that.
Anyway, it’s still very early in the field, there are no standards, and because of that I think it is going to take some time before we see more of it.
FL: Recently there have been many big banks and companies embracing blockchain, researching various aspects of the technology. SBI Holding, Bank of Tokyo-Mitsubishi UFJ, Mizuho just to name a few, also there’s Ripple obviously having interest in Japanese market. What do you think is their main incentive here?
M.T.: Yeah, it’s a good question. SBI has always been impressive in fintech, and their collaboration with Ripple is just one example of that. They are a huge financial group and they’ve always been very aggressive. They intend to open their own cryptocurrency exchange, and they’ve also been working on bringing other smaller banks into one network that will produce cost-efficient settlement. Whether it will be a success or not, I don’t know.
Mitsubishi are also doing something with that MUFG Coin. There’s very little detail about the project, but basically it’s a digital Japanese yen that is backed by Mitsubishi’s settlement. We could say it’s a private coin. Some Japanese banks are using Mitsubishi’s settlement, so I can see that settlement network will be expanded by creating a digital currency. It could be very strong, but not much details so far.
SBI is always going to be very aggressive with new things, and they are really fast. It’s funny, because Mitsubishi are bigger, but very slow. SBI are leaders in some sectors, they are very successful in banking and net security, and this also affects trading. That’s why I believe it’s a big deal that they’ve created companies that handle Bitcoin too.
FL: Cryptocurrency regulation in Japan is considered as one of the most progressive in the world today. The country has effectively legalized Bitcoin, the 8% consumption tax has been eliminated, while more and more retailers announce they start accepting cryptocurrency. Will this ultimately pave the way to broader acceptance?
M.T.: We had the ability to pay with Bitcoin for a lot of things for many years now, but if we speak about average consumers, I don’t think they have a lot of Bitcoins. As I said before, people tend to buy Bitcoin not use it as currency, instead they hold it thinking the price will go up. You don’t buy Apple shares and then go to Bic Camera to buy gadgets and stuff with these shares.
Besides, most stores have certain limits, something like one thousand dollars per transaction, and you can’t even buy a decent camera with that amount. I think it’s more like the way for companies want to be closer to technologies, but it is also a good training ground for the accounting so that you see how you do this with cryptocurrencies. Many companies still don’t know how to report this.
FL: And Soramitsu is not on the list of companies that work with Bitcoin…
M.T.: No, we work with fiat money even though we have to deal with blockchain technology. Bitcoin is an interesting space that I try to follow, and there are other new exciting projects which I always look at even if I don’t invest. I want to see what innovations they are working on, and whether they solve the need that we have. There are several unsolved problems in the blockchain space, so it’s important to follow things.
And of course we also work on our own project and have our own philosophy. That’s what Hyperledger Iroha is about: try to keep things simple while doing complex things in a concise way. And I think we are doing some innovative stuff, both locally in Japan and on global scale. And we have a lot of fun doing what we do.
Makoto Takemiya was interviewed by Andrew Asmakov