With time, cryptocurrencies are gaining the attention of individuals as well as financial institutions. Previously, the reputed financial institutions justified that; the decentralized management of finance can create disruptions in the economic system. As there will be no track of financial transaction over cryptocurrencies, there are high chances that, it may also raise the risks and threats of black money as illegal standards of money.
But now, the same financial institutions are effectively adopting the modules of Blockchain technology. It is like, the central banks understood the new era of virtual money, and thus started accepting the culture of Digital currencies. Recently, Japan’s largest financial institution – Mitsubishi UFJ financial group, announced the release of its cryptocurrency by March 2018. As you know that, Japan has always supported the Digital Culture of Technology, this announcement was pretty obvious.
Since the introduction of Blockchain technology, Japan showed its keen interest towards the cryptocurrencies. In 2016, the leading financial institutions of Japan tested the feasibility of cryptocurrencies. Though the results were not announced publically, still the rumours indicated a positive sign for the cryptocurrencies. Again in 2017, MUFG tied up with GDX, the cryptocurrency exchange run by Coinbase, to initiate the online publication of cryptocurrencies.
Rise of cryptocurrencies in Japan
After setting all the regulations efficiently, the MUFG is now all set to introduce the cryptocurrencies by March 2018. The official announcement also stated that the digital currencies would have parity with the Yen, to understand the reactions of users. Again, the cryptocurrencies will be first rolled out to the financial sector employees only.
Well, this might be a testing strategy by the financial institution. The transactions will mainly include the transfer of money or shopping. As it is a testing strategy, the transactions will be restricted to the employees only. It is predicted that it may lower the expenses of employees, as compared to the expenses with credit cards.
To handle the transactions efficiently, the users have to create a cryptocurrency wallet first. With this wallet structure, it will be easy to keep track of transactions internally. Thus, the risks of decentralization are highly reduced. Apart from MUFG, Mizuho Financial Group, also announced the introduction of cryptocurrency J-coin, for Tokyo Olympics 2020.
Again, earlier in 2017, Japan decided to legalize the payment method of Bitcoin, under the Payment Services Act. In past weeks, the Bitcoin trading volume by currency has increased up to 46 to 47 percent. There is no doubt that, the leading investors and exchanges in Japan are playing a vital role in developing the cryptocurrency culture on Japan’s economic system. Thus, Japan is all set to interact with the cryptocurrency transactions in 2018.
How Cryptocurrency found a way out in Japan?
Previously in 2016, Japan represented only 1 percent of Bitcoin trading volume, and it was like, cryptocurrency was all away from Japan’s economy. But in last few months, the Bitcoin trading volume has increased rapidly, and it is now ten times the previous volume. Even on some days, it is observed that Japan alone represented half of the Bitcoin trading volume.
These statistics indicate that, how fast is Japan adopting the culture of Blockchain technology. Well, one of the most important reasons for this sudden rise in Cryptocurrency is Government regulations in China. When liquidity in China stagnated, the Japan market exploded severely.
The Chinese investors started investing in the Japanese Bitcoin market, and thus the global currency market also grew significantly. The tight government regulations over Yuan attracted the investors and businessmen to invest in Bitcoins. As the digital currencies are less volatile and more accessible as compared to Yuan, it was probably the best option for the investors to opt for cryptocurrencies.
Again, the Banks of Japan started to react negatively to the increasing demand for cryptocurrencies, which led to high rates. Thus, it gave another reason to the investors to adopt the decentralized digital currencies. So, in this way, the culture of cryptocurrency got highlighted in Japan’s economy. And today, the largest financial institution of Japan is all set to develop its cryptocurrency.
Why the Banks changed their perceptions regarding cryptocurrencies?
The transactions in Bank are reflected in a conventional Banking system, where the central Banks regulates all the operations and controls. You can also say that Central Banks are the guardians of official money. With the development of Cryptocurrencies, the central Banks started to lose control over the money supply.
In such situations, the Central Banks defined cryptocurrency as a form of financial terrorism. But apart from complaining, the banks also realized the changes in near future. They understood that the digital currencies are not dependant on any factor and thus reflect high financial stability. Because of better financial stability, some banks started to adopt the Blockchain technology without making any delay.
Even some banks like European Central Bank, Bank of Japan, And Dutch Central Bank implemented the trails internally. The People’s Bank of China also created its virtual coin to study the behaviour of cryptocurrencies. So, it is like, the leading Central Banks in the world are planning some serious moves towards cryptocurrency shortly.
How can the Banks ensure good benefits with Cryptocurrencies?
It is said that Bitcoin transactions are not safe because of the digital platform, and can be easily hacked. But since its introduction, Bitcoin has not been hacked or cracked even once. So, it is recommended to forget all those distractions and to focus on its benefits. If the Banks initiates the transaction of their cryptocurrencies, then it will bring them a pool of advantages. Below here, some well – defined advantages have been discussed.
- Everything has now got its presence on the digital platform. Thus, it is obvious that currencies will also get their presence over the Digital transactions. Indeed, that is how cryptocurrencies will rule the financial transactions. If the Banks implements cryptocurrencies in their day-to-day operations, then it will be easy for them to manage the frequency and value of the market.
- With the adoption of cryptocurrencies, it is feasible to reduce the operation as well as labour costs. As the cryptocurrencies are designed and developed with Blockchain technology, they do not have any physical presence. This can save good money and can help the financial institutions to focus more on the digital currency transactions.
- The conventional currencies are highly associated with risks like laundering, scheming, insecurity and others. You cannot ensure proper security with the present currency and money. But, as cryptocurrencies are digital money, no one can steal them or can use them without prior permission. It is like; they are highly secured in the digital world. This will help the banks to ensure proper security and investment returns to the clients.
- With cryptocurrency transactions, the Banks can earn the good trust of the clients. As compared to the present currency model, it will be easier to manage the transactions with digital currencies. Again, all the transactions can be effectively reviewed by both clients and Banks. So, the unnecessary confusions will be reduced, and thus the clients will restore their trust on the Banks.
- Now, the banks have their currency. Thus they can scale up to international transactions. This will greatly help the banks in managing the expansions. Thus, the overall revenue and productivity of banks can be improved.
Well, these are some of the important benefits which the banks will experience after adopting the cryptocurrency transactions. But now the question is how the banks will adopt the cryptocurrency? Is it feasible to replace the present currency model with cryptocurrency model? To know more about this, just go through the below mentioned facts.
How can Banks adopt the cryptocurrency?
Some financial institutes claimed that the present status of the world economy would not allow adopting the cryptocurrency module, while others just described the below two methods for adoption.
- Introduction of Digital currency
Just like the present currency, the banks need to introduce the Digital payment method. Once the digital currencies are introduced, they need to attract the clients to transact with the cryptocurrencies. So, the clients can easily send and receive digital money in their linked account. The banks can even create their cryptocurrencies with customized regulations as per the country’s economy.
- Improving the existing banking system
The banks need to design flow for the digital currencies. They need to develop mobile wallets, online portals, minimal transaction charges, ease of sending and receiving money etc. in order to attract the clients. Once the clients are set with the new currency structure, the banks can effectively introduce the cryptocurrencies.
So, from all these above discussions, it is cleared that, cryptocurrencies are the ultimate future of the economy. No matter, the banks will show high reluctance in accepting the Blockchain technology, but ultimately, that is the only option left with the Banks. And probably, this is the reason, why the largest financial institution of Japan, adopted the cryptocurrencies.