It has been reported that most funds circulated within Japan involve paper bills and metal coins. This reality has alienated the world’s third-largest economy from its neighbor countries China and South Korea, where “cashless” digital cost schemes are commonplace, in addition to the West – where credit score and debit playing cards are way more widespread.

In August, Shinzo Abe – Prime Minister of Japan announced that businesses would receive tax incentives if they decided to go cashless. This attempt has been deemed as one of the prudent management schemes from the government to efficiently raise the country’s cashless payment rate to 40% by 2025, according to Nikkei Asian Review.

Introducing crypto-cash

Japan’s financial system needs improvement in order to handle hundreds of thousands of transactions carried out by foreign visitors descending on Tokyo for the Olympics. Mitsubishi UFJ Financial Group (MUFG) – one of the largest banks in the world, has announced its partnership with Akamai, an American-based internet company to construct a blockchain-based payment network in time for the Olympics.

The payment system reportedly processed more than one million transactions per second during the test. Each transaction was confirmed within no more than two seconds. The team involved also claimed the system could eventually reach its full capacity of approximately 10 million transactions per second if things go according to plan. This number by comparability overshadows that of Visa’s credit card network, which handles a number of thousand transactions per second.

The system is designed to serve several payment needs, from automated freeway tolls to payment-card swipes to in-app purchases. If they pull it off, this may be the fastest and most efficient consumer payment network to date that can handle all kinds of payments, from automated highway tolls to payment-card swipes to in-app purchases.

MUFG isn’t the only player in the market. Mizuho Financial Group – a large holding company, has also been reported to be working on a blockchain-based project dubbed “J-Coin” and plans to release its own digital currency for retail payments in March 2019. SBI Holdings – a big financial-services firm, also announces the development of its native token, also for retail payments, called S Coin.

It is estimated that the Japanese cryptocurrency market has become Asia’s biggest market since China clamped down on trading in 2017. Analysts at Deutsche Bank have gone even further and concluded that Japanese retail investors were a big reason why Bitcoin’s price shot up to almost $20,000 in late 2017.