Against the Tide of Other Major World Powers, Japan Wants Nothing to Do With CBDCs.
Bitcoin and cash will always be more trusted than a CBDC...
It turns out that the Japanese simply don't need a digital version of their national currency. The island's financial cyberspace is already teeming with a plethora of optimized, cheap banking services and fintech tools.
Cash is also still popular in Japan, with 80% of all purchases made in cash last year. The government wants to increase that to 60% by 2025. However, the digital yen will not be part of the equation.
The private sector is better equipped to drive digitization
The Bank of Japan has simply realized that a so-called CBDC (Central Bank Digital Currency) is probably not the right way to proceed. There are two simple reasons for this:
Japanese people, especially the elderly, view cash as a safe legal tender with which to exchange value and consider it less risky than monetary values hosted exclusively online. The country is also aging dramatically due to a particularly low birth rate. Japan's population is shrinking by 500,000 people each year, which encourages the continued use of cash.
The private sector seems better equipped to provide the tools to digitize payments. Japan is doing well with its growing e-commerce, which is expected to account for about 11.9% of the country's retail sales by the end of 2022.
So why bother with a digital currency that nobody seems to want anyway?
CBDCs are not crypto
It is not just these two things that are weighing on CBDCs. These currencies also seem to have a bad reputation that they will have a hard time getting rid of.
First of all, CBDCs seem to be associated with cryptocurrencies by most media. A fatal mistake, since only a handful of central banks plan to use blockchain for these official digital currencies. Blockchain is the backbone of crypto and is supposed to make Bitcoin and co. the future of finance.
Most cryptocurrencies are fully centralized, despite what their founders claim on Twitter. The same will be true for CBDCs, where there will be a single node in the network: the central bank itself. Total control of currency issuance, wallets, and transaction history in the hands of a single institution? Nothing new compared to what currently exists, except that we must add in addition major problems in terms of privacy ...
Bitcoin, a truly decentralized cryptocurrency powered by a competing network of miners, will always gain more trust in the long run than a CBDC because of this awkward setup. Cash will always be more trusted because it has no digital ledger and will always be in your safe after the next natural disaster.
Central banks can't compete with that, and they don't need to.
The Bank of Japan knows this. Other institutions will likely realize this later, or continue to insist on a financial experiment that is doomed to turn into a nightmare scenario.
Some reading
A Scientific Study Confirms It: The Bitcoin Mining Industry Is Well Dispersed Around the World. Bitcoin opponents who dare to criticize the concentration of the Bitcoin mining industry should take the time to read this study. But, they probably won't.
Elizabeth II: From the British Empire to the Disunited Kingdom. She leaves the throne to Charles III who should take up multiple challenges.
New Disillusionment for Donald Trump — Truth Social’s IPO Seems Compromised. As always, Donald Trump cries conspiracy.
Ray Dalio Predicts a 20 to 25% Drop in the Stock Market. Here’s Why. The explanation is simple and is based on an average inflation scenario of 4.5% for the coming years.
Digital Euro: ECB chooses Amazon ... Bitcoin is still your best option. In the face of the public-private alliance to build a society of mass surveillance, Bitcoin will be your best weapon.