Bank of Japan has announced it will begin experimenting with a digital currency.

[roberthays]

So it looks like Japan are taking their initial approach seriously and have started their experiments with a digital Yen as noted here: https://cointelegraph.com/news/bank-of-japan-will-begin-experimenting-with-a-digital-yen

It's great to see and it'll also mean more studies on Cryptocurrencies and funding for projects. A push for digital currency will arguably only accelerate Bitcoin's adoption.

[mk4]

A quote from the article: "BoJ is considering whether or not to use blockchain for the CBDC."

If they end up not using a blockchain(though I'm definitely not saying that they should), how is it going to be different than the current fiat system? It's not like the Japanese Yen isn't already digital in the first place? Am I missing something here?

[Lucius]

It's not like the Japanese Yen isn't already digital in the first place? Am I missing something here?

In a way, yes, if you mean the money you pay in digital form (via bank card or internet banking), but central bank digital currency (CBDC) is a whole new level of digital money that should replace paper and coin money. As you can read in the article, the CBDC would be issued and fully controlled by the central bank (in this case Bank Of Japan), but the challenges facing the central bank are "universal access and resilience" in the sense that everyone should have access to digital money, and a 2018 survey says only 65% of Japanese have a smartphone.

Of course, there is also the issue of stability and security of such a system, because if there is a power/internet outage, people cannot use such money. I don't even want to think about all the abuses that are possible if we take into account the centralized digital system that can be hacked at any time. It is practically impossible to counterfeit Bitcoin because its network is decentralized, but I would not bet that it will not be possible to counterfeit CBDC.

[DoubleEdgeEX]

Every country on the planet with an own currency will sooner or later have to deal with this topic, if they want it or not. The main challenge will be the crypto-forex solution, like interoperability of digitalized currencies or if they use some Forex Exchange like approach.

[Reid]

Yes, it is great to see that countries like Japan are stepping up when it comes to a higher technology of transactions.
But we need to remember it is not Bitcoin which will be on the front. It is still their own currency just digitized.

The fact with the said country is already accepting bitcoin in most of their merchants is a good move.
But creating this one will lose supporters and usage of bitcoin. Right?

[dunfida]

So it looks like Japan are taking their initial approach seriously and have started their experiments with a digital Yen as noted here: https://cointelegraph.com/news/bank-of-japan-will-begin-experimenting-with-a-digital-yen

It's great to see and it'll also mean more studies on Cryptocurrencies and funding for projects. A push for digital currency will arguably only accelerate Bitcoin's adoption.

Digital yen = eFiat . They can use blockchain or not depending on their decision and if ever they would tend to do so, i dont see a reason why it would accelerate bitcoins adoption.

Im already anticipating that not only Japan is considering about digital currency but its no surprise that this is just like the typical stuff.They did just switch up
but they are all just the same.

Banks would never collaborate or deal with crypto but rather they do create their own.

[iRaMMuS34]

It's not crypto in it's fundamental sense anyway, I can't see how this will change things for the better in any way or people

[gentlemand]

A push for digital currency will arguably only accelerate Bitcoin's adoption.

Not really. Most currencies already are 98% digital or more.

The only place where it will make people think is how nightmarish a fully controllable currency will turn out to be. The current set up is a weird mash up of new and old. One that can be surveilled, blocked, rescinded, inflated, bailed in or out and more with nowhere to escape to is going to be a rude wake up call.

[hatshepsut93]

A quote from the article: "BoJ is considering whether or not to use blockchain for the CBDC."

If they end up not using a blockchain(though I'm definitely not saying that they should), how is it going to be different than the current fiat system? It's not like the Japanese Yen isn't already digital in the first place? Am I missing something here?

Blockchain or not doesn't make a difference, it will be 100% centralized and controlled by the government either way. Which only means that it's better to use a traditional database rather than blockchain for performance reasons.

As I understand digital currencies, they just mean that the government, instead of banks and private companies, will own the network, so that they won't have to issue orders for freezing accounts, transactions history and so on. In this case it's a step towards less freedom.

[figmentofmyass]

A quote from the article: "BoJ is considering whether or not to use blockchain for the CBDC."

If they end up not using a blockchain(though I'm definitely not saying that they should), how is it going to be different than the current fiat system?

whether or not they use a blockchain, it's no different than the current fiat system. a CBDC just allows the central bank to remove banks as middlemen by giving people direct accounts with the central bank. this gives the central bank much better economic data and control over the currency, and in cases of economic stimulus and entitlements (like direct stimulus payments and unemployment benefits) money could be transmitted much more efficiently than through traditional bureaucratic methods.

a slew of european central banks are now experimenting with their own CBDC too. i think the pandemic and subsequent inability to effectively get cash to the population was a wake up call for them. they don't want the kinds of economic shocks we saw in march/april again. they want better control over the flow of money.

[Rengga Jati]

That's right, it looks like Japan will indeed test and experiment with digital currency Yen (CBDC), especially from a technical perspective. At present some countries are doing the same thing. especially China has done it and Japan might not be able to catch up with it for now.

It's great to see and it'll also mean more studies on Cryptocurrencies and funding for projects. A push for digital currency will arguably only accelerate Bitcoin's adoption.

However, The BoJ itself has not yet determined whether they will use blockchain technology or not. Remember, the digital currency does not mean cryptocurrency. The BoJ is still considering the centralized or decentralized system that must be used.
Let's read the statement below:

“Both centralized and decentralized types have pros and cons. […] In the case of massive transactions for retail use cases in advanced countries, it is better to adopt the centralized type. [...] In the case where the amount of transaction is limited and resilience and future possibility are prioritized, there is room to consider the decentralized type.”

[avikz]

So it looks like Japan are taking their initial approach seriously and have started their experiments with a digital Yen as noted here: https://cointelegraph.com/news/bank-of-japan-will-begin-experimenting-with-a-digital-yen

It's great to see and it'll also mean more studies on Cryptocurrencies and funding for projects. A push for digital currency will arguably only accelerate Bitcoin's adoption.

I am not sure how a push for digital currencies will increase the adoption of bitcoin in any way, especially in Japan! They are the first ever country in the world to legalize bitcoin, provided license to bitcoin exchanges. If that didn't help in adoption, digital yan won't!

Don't mix digital currencies with bitcoin. Both are structured in a different way. Having blockchain technology as a core doesn't really mean they are all same! Bitcoin is not controlled by any authority and digital currencies are just digital representation of fiat currency and controlled by a central bank. Don't mix them and definitely don't hope that it will help in bitcoin adoption!

[Lorence.xD]

Yes, it is great to see that countries like Japan are stepping up when it comes to a higher technology of transactions.
But we need to remember it is not Bitcoin which will be on the front. It is still their own currency just digitized.

The fact that they are experimenting whether there is a feasibility in using cryptocurrency in Japan is a good thing because this country is gettingleft behind by many countries in regards to technological advancement, remember when Japan is the pinnacle of technology, with their current status they are on a plateau and I am really happy that they are going to test new technology.

[BTC_1]

           It would have no positive or negative impact on bitcoin adoption. CBDC(Central Bank Digital Currency) is just a digital form of a fiat currency.
           Actually traditional banking authorities have continuously failed in competing with the gradual growth of crypto currencies adoption globally.People mostly prefer Cryptos due to their decentralized nature and easy usage.
          So in order to make their fiat currencies to be used more, they have decided to release CBDC.
         China has recently checked its yen in digital form in some cities and now it's Japan's turn.

[figmentofmyass]

I am not sure how a push for digital currencies will increase the adoption of bitcoin in any way, especially in Japan! They are the first ever country in the world to legalize bitcoin, provided license to bitcoin exchanges. If that didn't help in adoption, digital yan won't!

barry silbert (of grayscale/GBTC) disagrees. https://cointelegraph.com/news/central-bank-digital-currencies-are-good-for-bitcoin-barry-silbert-says

“So at one point of the future we might have 80 different CBDCs. And if that happens, it would trigger a tremendous amount of investment in operators of financial systems where essentially every financial institution would then have to be able to safely store and transact CBDCs and, guess what, if they actually build that infrastructure, that same infrastructure could be used for non-central bank digital currencies like Bitcoin.”

he has a point. CBDCs require infrastructure that could be extended to cryptocurrency. it would therefore be attractive for banks and brokers to begin offering cryptocurrency services to generate commissions, interest, etc.

i also see CBDCs---especially if blockchain-based---as having better potential for frictionless interaction between fiat and cryptocurrencies than current online banking systems.

[hatshepsut93]

he has a point. CBDCs require infrastructure that could be extended to cryptocurrency. it would therefore be attractive for banks and brokers to begin offering cryptocurrency services to generate commissions, interest, etc.

i also see CBDCs---especially if blockchain-based---as having better potential for frictionless interaction between fiat and cryptocurrencies than current online banking systems.

Sounds like such a big stretch to me - first there needs to be a big infrastructure around these digital currencies, which might not happen if they will flop, then it's actually not guaranteed that they will be easily compatible with crypto, especially if these digital currencies will be closer to banking networks, and then the last big "if" is that the companies might simply choose not to deal with crypto for some reasons.

[figmentofmyass]

he has a point. CBDCs require infrastructure that could be extended to cryptocurrency. it would therefore be attractive for banks and brokers to begin offering cryptocurrency services to generate commissions, interest, etc.

i also see CBDCs---especially if blockchain-based---as having better potential for frictionless interaction between fiat and cryptocurrencies than current online banking systems.

Sounds like such a big stretch to me - first there needs to be a big infrastructure around these digital currencies, which might not happen if they will flop

i'm obviously talking about what happens if they don't flop, so that's not the most interesting objection.

a half dozen european countries, china, japan, and the USA are all looking into CBDCs. there is clearly a lot of momentum behind the idea, partly because the coronavirus pandemic has revealed weaknesses in the banking system re the ability of banks and bureaucracies to meet immediate liquidity needs. sure the idea might flop, but there are good reasons to believe it won't.

then it's actually not guaranteed that they will be easily compatible with crypto, especially if these digital currencies will be closer to banking networks

compatibility isn't required for what silbert is talking about. it would just be the ultimate ideal, so that CBDCs could eventually be traded against cryptocurrencies using decentralized protocols.

CBDCs are not like banking networks since they allow users to sidestep banks entirely. for example, it should be much easier to find p2p bitcoin liquidity if everyone has fed accounts instead of dozens of different banks and e-money services.

and then the last big "if" is that the companies might simply choose not to deal with crypto for some reasons.

doesn't that apply today? what does that have to do with CBDCs?

on the other hand if CBDCs do catch on then banks, merchants, brokers, etc will need to support them. that will in turn create new incentives to support cryptocurrencies, as stated above. will every company in the world integrate crypto? of course not, but that's not the point.

[davis196]

So it looks like Japan are taking their initial approach seriously and have started their experiments with a digital Yen as noted here: https://cointelegraph.com/news/bank-of-japan-will-begin-experimenting-with-a-digital-yen

It's great to see and it'll also mean more studies on Cryptocurrencies and funding for projects. A push for digital currency will arguably only accelerate Bitcoin's adoption.

A digital currency doesn't mean cryptocurrency.This CBDC most likely won't be a cryptocurrency,so it's totally wrong to assume that it will somehow boost the adoption of Bitcoin or funding for crypto projects.
Always remember that central banks are enemies of Bitcoin and the cryptocurrency world.Whatever they do,they will do it to destroy decentralized cryptocurrencies and replace them with a centralized digital currency.They might use blockchain technology to achieve their goals,but that doesn't mean that they will ever adopt cryptocurrencies.

[hd49728]

Digital currency from government will be centralized in hands of governments and centralization is never a core value of blockchain and cryptocurrency. Governments, with the fast growth and success of bitcoin, blockchain technology, and cryptocurrency, want to find easier ways to release as many fiats as possible (in value) in as shortest period of time as possible (in a blink of eyes). They also very want to reduce the costs of money printing to as lowest cost as possible.

All of goals can be achieved easily by launching government-controlled digital currency. Cost of money printing will be minimized. They won't need paper, monetary printing factories, less staffs to operate factories and more contributors to save costs. Coding, entering the code lines and minting new batch of digital currencies for their nations.

Hilariously to say about the transparency when a digital currency is launched by governments. Will normal people be allowed to trace all transactions and retrieve all details for their research aims? I doubt that governments will allow citizens doing so. It will destroys their secret rights (for governments) and might cause many troubles for them.