Rise of Bitcoin and the token economy in Japan
When my co-founder and I started working on Counterparty and token economy in late 2014, the public perception of Bitcoin in Japan was still near at its worst level after the Mt. Gox incident which took place in Japan and the number of Bitcoin users here was still very small. It’s not surprising that the concept of Bitcoin 2.0 or tokens were basically non existent at the time.
That’s why, even though we were based in Tokyo, our initial plan was to start promoting our mobile Counterparty wallet in regions such as North America and Europe first, where Bitcoin and blockchain were more relevant.
Since then, things have changed quite significantly.
Not only are we seeing a massive growth of Bitcoin adoption and media coverage here but also Japan has turned into a very interesting place for Bitcoin 2.0 experiments and the token economy.
Bitcoin and blockchain adoption accelerating in Japan
Recently, a number of positive news articles relating to Bitcoin and blockchain has come out of Japan and some were covered by major Bitcoin media overseas as well.
Bitcoin trading volume increasing
The average daily bitcoin trading volume has been increasing steadily and it’s constantly over 50k btc/day among 7 major Bitcoin exchanges operating in Japan now.
Zaif, one of the major Japanese exchanges, recently recorded over 45k btc trading volume within 24 hours by itself and bitFlyer, who just about a week ago raised $27 million dollars in funding, boasts more than 150,000 registered users now.
Bitcoin payment becoming popular among merchants
In March, DMM.com, one of the most well-known online content platforms in Japan, started accepting bitcoin payment through coinceck’s processing service. There are now more than 1,000 merchants and online businesses that accept bitcoin in Japan and merchant adoption is accelerating by the day.
More legal clarity
Also, in February, Japanese regulators proposed a draft which defines cryptocurrencies such as Bitcoin as digital currencies rather than commodities and also suggested tax exemption. This has led to more confidence in cryptocurrency and blockchain among corporations as we well as traders and end-users.
All the above were covered in English-written Bitcoin media as well as being known by informed bitcoiners. But what’s more intriguing to us in some way and little known outside the community is that Japan is turning into a really unique experiment field for Bitcoin 2.0 applications especially for the token economy.
Token economy buzzing in Japan
As I stated at the beginning of this article, when we started working on Counterparty and tokens, virtually almost nobody in Japan knew what they were. But over time, as we kept working on our project, we started recognizing the change. People here began creating their own Counterparty tokens on the Bitcoin blockchain and testing for various use cases. Some even do so without any particular reasons. They just seem to enjoy using tokens and appreciate its potential.
Countless use cases for tokens
According to our estimate, IndieSquare Wallet is the most popular mobile token wallet in the world now and about half of our users are from Japan. This, of course, is because IndieSquare is based in Japan, but this is still quite remarkable considering the size of the Japanese Bitcoin space compared to other areas in the world.
And what’s more interesting is creative ways in which people use tokens.
One popular use case is to create a token for a blog or a website and use it as a way to encourage readers to engage more actively and create a community around the token. I, as for one, created a token called CNPCOIN for my own Bitcoin blog in Japanese and it’s become a key factor for expanding my reader base and at the same time content monetization.(I intend to write a separate article about this topic later)
Another use case is as a digital coupon. Some created a token to represent a coupon to receive their service at a discount rate. Also, some others used tokens as a proof of membership for their online groups to access control.
But possibly the most popular use case of tokens here is to create creative or funny named tokens with original token icon images and send them to each other as greetings and for communication(for example, when the bitcoin price goes up, they send each other special tokens to celebrate the event). This of course might not hold any significance or make much sense but the unexpected enthusiasm from the Japanese users surprised us. Around 100 people created Counterparty tokens for this purpose alone in our estimation.
It’s not just individuals who started experimenting with tokens here, but also Japanese companies start taking notice of tokens as of late.
Use of tokens as a promotion tool
Tokens are used not just by individuals but also by companies in Japan to promote their services.
One example would be, Zaif, the aforementioned exchange which had a record volume recently, started distributing their original Counterparty token, ZAIF, to its users, rewarding them based on their trading volumes as a promotional campaign. In fact, the record sales came right after the token promotion announcement and it has proven already that tokens can work well as a promotion tool for real businesses in some situations.
Also, collecting and paying with firms’ loyalty points is very common in Japan and some big companies are considering issuing their loyalty points as a token on the blockchain.
Tokens as game items
Lastly, Japan is one of the biggest markets for Spells of Genesis, the first mobile game to issue game items as Counterparty tokens.
It’s no secret Japan has been the country of gaming and the general interest for games is high. Thus the idea of blockchain games and tokenization of game items on the blockhcain are well-perceived among the community here and a lot of people are genuinely excited about it. Often, I have a difficulty explaining the significance of Bitcoin and blockchain to beginners but when I talk about tokenization of game items, people seems to quickly realize the benefits and potential. It just clicks with them.
There are already some Japanese game developers who are interested in integrating Counterparty in their games just like Spells of Genesis through IndieSquare’s game SDK. Other blockchain projects and game companies also started scrutinizing the potential of blockchain technology in gaming.
In conclusion
It is certainly a very exciting time in Japan right now as enthusiasm for Bitcoin and blockchain technology is growing by the day as I write this article. Increasing trading volume and the number of users, merchant adoption and advance in legal environments are all good indications.
But what excites us even more is Japan is suddenly turning into a some sort of Bitcoin2.0 haven beyond building Bitcoin 1.0 infrastructure.
Experts sometimes argue Bitcoin adoption will start from less industrial countries as they have more dire needs for it. Although I don’t necessarily disagree with it, we are witnessing that Japan provides a really fascinating case study for how Bitcoin2.0 applications in areas such as gaming and content creation can play an important role for Bitcoin adoption and realizing the true potential of blockchain technology.
IndieSquare is committed to keep building services which empower individuals and developers and continue to grow with this quickly emerging market and beyond.
(API documentation and more updates will come soon, so stay tuned!)
