There are several cultural and economic factors that are driving adoption of cryptocurrencies in Japan, seemingly far ahead of countries like the U.S. It’s important to make the distinction between consumer adoption of crypto vs. technology development and funding, as the greatest ICO investment and # of startups is significantly higher in the US and Europe.
Tokyo is not a startup hub (yet) like Silicon Valley or Tel Aviv and VC investment is also comparatively low to these more well-known entrepreneurial centers, so it’s not surprising that Japan isn’t leading the way in terms of blockchain innovation.
Crypto adoption, though, is a different story. Japan is really on the forefront of adopting cryptocurrencies. The nation’s largest electronics retailer accepts bitcoin, companies like GMO have started to give employees the option to receive bitcoin as part of their monthly salaries, and banks are steadily adopting Ripple’s technology.
Here are some of the key drivers for this adoption.
Japanese people love gambling
Pachinko parlors are massive, techno-blasting, neon-plastered gambling centers that you can find throughout Japan. There are 12 thousand of them in Japan and they’re an unflattering yet well-known part of the culture, particularly among the “salary man” class, which makes up a majority of employees in Japan.
Japanese people realized they could make money off of what is essentially a new form of gambling, all from the comfort of their own homes. One benefit crypto has over pachinko is that anyone can be an affiliate, meaning that when you get your friends to sign up for a crypto exchange, you can get paid up to 50% of the transaction fee for every trade they make. That’s a pretty good incentive if you ask me.
The country wants to innovate
Japan realizes that it is lagging behind in terms of innovation and global impact. Long gone are the days of Sony electronics and the beloved Honda Civic. The Japanese scare of the 80’s has been replaced by dominance of Apple, Google and Facebook, all US companies that now dominate Japan. A rising China is still the hotter topic and Japanese politicians are struggling to make the land of the rising sun “great again.”
Therefore any opportunity that presents itself to allow Japan to stand out as an innovator is quickly seized upon by the government. They even have a multi million dollar “Cool Japan Fund” for the purpose of making Japan seem…well, cool. If crypto is an area that can bring Japan more money and recognition as a leader in an industry, then hey, sounds like a great idea. That fits in pretty well with Prime Minister Abe’s plan to revitalize the economy.
Furthermore, the Mt. Gox hack where millions of dollars were stolen happened in Japan, so at the same time governments want to make sure consumers are protected. This has consequently created the positive effect of quick action for regulation in Japan and the adoption of bitcoin as legal tender.
Japan is a cash-based society
About 50% of Japanese people don’t have credit cards. It’s a cash-based society, which most travelers learn the hard way when they first visit the local ramen shop and grocery stores. There are several historical reasons for this, including the Japanese tendency to save money and avoid credit, historically high fees for merchants that de-incentivized credit card adoption, minimum $10 limits for credit card purchases, and a slow-moving banking industry, among others.
But it’s exactly because it is a cash society that there’s a big opportunity for othertypes of financial services. This big gap of non-credit card wielding consumers has allowed startups to fill the gap with online and mobile services that aren’t directly competing with credit cards. Cryptocurrencies fill part of this gap too.
There are likely other factors that are helping drive up adoption. Even with the Coincheck hack, this did little to effect public perception nor the price of the stolen cryptocurrency. As Japan’s legal system has clear guidelines and rules, the exchange is following due process of the law and I suspect the issue will do little to affect the perception of crypto to the Japanese consumer.