Sunday, February 5, 2023

How Big is Bitcoin in Japan? Hype Versus Reality

How Big is Bitcoin in Japan? Hype Versus Reality

You’ve probably heard a lot about the promise of bitcoin in Japan. Some of it is true, but there’s also a lot of hyperbole, expectation and plain old hype. When you go exploring at street level, you find some challenges and unexpected surprises.

Also read: Amazon Cash Lets Customers Shop Online Without Credit Cards

A group from Chinese bitcoin company BitKan recently visited Tokyo on a mission part promotional and part fact-finding. BitKan, which has an app and escrow service designed to facilitate OTC (over-the-counter) bitcoin trading between individuals, needed to see whether people in Japan were actually using bitcoin. And if so, then who and how?

Why Does Attention Keep Turning Back to Japan?

New regulations which further legitimize bitcoin use came into effect in Japan at the beginning of this month. While stopping short of recognizing bitcoin as an official currency, they introduce new consumer protections and audit requirements for exchanges. This is likely to prompt an uptick in trading activity in a country that already loves FX.

One of Japan’s biggest brick-and-mortar retailers, Bic Camera, announced it would trial bitcoin payments at two flagship stores in Tokyo. If successful, it could see a flurry of other retailers embracing digital currency.

Eyes also turned towards Japan again after the Chinese government placed new restrictions on bitcoin exchanges there. If Asian traders couldn’t reliably withdraw funds from Chinese exchanges, would they look to the next-biggest market?

Add all this to the fact that the Japanese government has always seemed particularly tolerant of Bitcoin technology. Despite the Mt. Gox disaster that damaged bitcoin’s reputation early on, the government has never sought to restrict activity.

Many Japanese Bitcoiners Are Actually Chinese

The first surprising fact that BitKan learned in Tokyo is that Chinese expats are a significant part of the community. Most prominent is the Japan-based exchange BTCBox, founded by Chinese expat David Zhang.

BitKan’s Sandy Liang told BitsOnline that her team were surprised to find that several large and regular bitcoin traders in Japan were actually Chinese.

“Price fluctuations mean there’s often a difference between the prices in Chinese and Japanese markets,” she said. “Depending on where it is this week, if you’re able to trade in both countries there’s opportunities for arbitrage.”

BitKan’s model is a perfect fit for Japan’s new regulation, she said. As a P2P trading platform the company never holds customers’ funds. Similar to a service like Uber, users use the mobile app to find other individuals they want to do business with, and trade directly. BitKan just makes sure both parties are satisfied with the trade before releasing the funds to parties.

What’s Bitcoin Use Like on the Street in Japan?

Coinmap shows bitcoin-accepting businesses all over Japan, and around 50 in the Tokyo area. But outside of FX trading, is the local bitcoin economy really so active?

Liang said it wasn’t as easy to use bitcoin in Tokyo as she and her team had expected. Some listed venues rejected bitcoin payment altogether, while others said it was rare for customers to ask.

“The bartender at Hacker’s Bar in Roppongi told us he gets maybe one request to pay in bitcoin per month,” she said. “In a couple of other places it was difficult for us as tourists to ask, as none of the staff could speak anything other than Japanese. This happened at one sushi restaurant listed on Coinmap.”

Bitcoin-accepting businesses could probably attract more bitcoin customers by putting up more signs and stickers advertising the option, she added. During the team’s visit, they spoke to investor and evangelist Roger Ver at his Tokyo office, and also to a lawyer who consulted bitcoin companies on compliance with Japan’s new digital currency regulations.

There were a few other hurdles: Family Mart convenience stores said they couldn’t accept bitcoin as payment, and an attempt to pay with bitcoin at a Mexican restaurant failed due to a problem with the restaurant’s payment system.

Bitcoin Japan bitflyer Kano
bitFlyer CEO Yuzo Kano appears in Japan Forbes magazine

Awareness Still Higher than Actual Use

BitKan Ruby Chen Tokyo Japan
Ruby Chen of BitKan, in Tokyo

The BitKan team did find one curious case: a kimono rental store for tourists in the Asakusa historic district.

“The guy who worked there was actually Chinese, and said he’d had the BitKan app on his phone for two or three years. He used to own some bitcoins but sold them off after the Gox affair.”

“He’s been monitoring the price ever since. He always wanted to jump back in but the price keeps going higher and higher. Now he’s waiting to see whether it crashes hard again, for the chance to buy some again.”

In Tokyo and elsewhere around the world, bitcoin curiosity remains far higher than actual usage. Perhaps it’s price movements, security concerns or just a need to know more about the technology. BitKan’s experience showed that awareness is increasing, but bitcoin still remains highly experimental.

That situations presents some hurdles to jump, but also plenty of opportunities for businesses who get the formula right.

Do you see Japan as a promising market for Bitcoin? Let’s year your thoughts in the comments.

Images via BitKan, Akemi Miyashita

This article is sponsored by BitKan. BitKan provides up-to-date and accurate information regarding the bitcoin price, Bitcoin related news, and bitcoin mining statistics. BitKan also has an over-the-counter bitcoin exchange, where traders can arrange direct transactions with each other in a peer-to-peer manner.

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