In Japan, there are various ways that you can pay for stuff. There is of course the good old fashion way of paying for purchases using cash, then there are credit cards (which tend to be more limited to the bigger retailers), or there are also methods like the Suica card which can be used to purchase small items like snacks, drinks, newspapers, and more.
However in a report from the Financial Times (paywall; via MIT Technology Review), Japan’s banks are working on developing their own digital currency called J Coin that is meant to be a replacement for cash. It is said to be backed by the country’s central bank and they are aiming to have it launched in time for the 2020 Tokyo Olympics as a means to streamline the country’s financial system.
At the moment cash is still king in Japan and very much so with an estimated 70% of all financial transactions being made in cash. However there are costs associated with cash, such as transportation of all these coins and notes, plus cash is harder to regulate, which is why using a digital currency allows the government to get a better idea of how the money is moved around, which in turn does create some privacy problems as we’re sure that sometimes not everyone wants their purchases to be known, for whatever reason.
J Coin is expected to be valued the same as the Japanese yen exchanged at a one-to-one rate, meaning that people changing their cash into J Coin won’t lose anything in the process. Whether or not this system will be accepted by the Japanese public remains to be seen, but we have seen how some Japanese retailers are open to the idea of digital currency, like with Bic Camera who has started to accept Bitcoin as payment.
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