Bitcoin, the world’s most popular cryptocurrency, has enjoyed a surge in interest and popularity in the world. There is even a Japanese word for it: “mou”. Some describe this as the moodiness of bitcoin. It shows how they think about themselves when holding bitcoins.
The following are my conjectures for its popularity in the world.
1. Overview of Virtual Currency
The virtual currency has long been recognized as a payment instrument in the world. That includes e-money, game coins, prepaid cards, etc. Some store real money equivalent for their sale items at Amazon or Yahoo Auction. All these are virtual currencies. This environment allowed the introduction of bitcoin, another virtual currency.
2. Fear of Fiat Currency
Japanese are very sensitive to the state of their economy, especially the financial market. They experienced inflation during the ’70s and 80’s so they started investing in foreign currencies after the world became rich enough. The most famous one was the yen-dollar exchange rate moved by Mr. Soros when he forced the Bank of Japan to open the first intervention. Since then, the Japanese have been keeping their savings in foreign currency or gold. The global financial crisis made them even more sensitive to the state of their economy. Many still remember vividly how they lost half of their asset value within a year thanks to the subprime mortgage fiasco. They started reevaluating their investment in foreign currency, gold, and bitcoins.You can visit https://bitcoinup.io/.
3. Negative Yield on Financial Assets
One of the most important factors for interest in bitcoin is the “negative yield curve” on Japanese savings. It means that fewer people can make money by keeping their money in the bank account when they pay taxes. The last time when people enjoyed a return on their money was around 10 years ago. It’s less than 0% now and people don’t know how much the return would be in the future. For bitcoin, it is a 21st-century digital asset with no physical form and unlimited supply so they feel good about it compared to the risk-averse Japanese investment culture.
4. Distrust of Central Bank
The biggest distrust is toward the central bank which has been criticised for its ineffective monetary policy. So bitcoin is seen as a good alternative to a fiat currency because it limits money supply and regulates itself by market mechanism without intervention from any human agency including creator J.Sathoshi.
5. Wish of New Investment Niche in Post-Fiat Era
I think we can start to see a post-fiat era in which the world’s currencies and bonds will be evaluated based on their credit and yield. So people would like to try something new that doesn’t fit traditional financial analysis tools such as valuation criteria of earnings, P/E ratio, or discounted cash flow.
6. Government Regulation Policy as the Key to Long-Term Stability
There is one thing that makes Japanese investors confident about bitcoin’s long-term value. It has been recognized and regulated by the world and some other countries so far. This means they can profit from its trade and settlement even if the currency itself becomes useless. If Japan fully recognizes bitcoin as a payment method, it will help many to recoup their loss.
7. Investor’s Risk Tolerance
Bitcoin is not subject to any government, policy, or regulation yet so there are no authority figures protecting your asset. On the other hand, you cannot make money by saving your bitcoin-like stock certificates in your bank account. You need to actively seek opportunities like foreign currency trading, bitcoin mining, or start-up investment. It’s riskier but you can get a better return if your analysis is right. The world’s investors are familiar with this kind of risk since they have gone through a bubble economy before. They think it’s one way to make their life worth living and find joy.
8. Coming Change in Society
It is said that bitcoin and digital currency will change the way we use money and how we share our assets, information, and services with others. This means existing government and financial institutions will be replaced by new social communities which don’t need them anymore. It’s just like what R.Kelly said in his song”replacement players for the game I love”. It seems like Japan is leading the change of society through its bitcoin regulation.
9. Trust of Mt.Gox & Bic Camera Accepting Bitcoin as Payment Method
Japanese consumers began to trust bitcoin because the two biggest companies in the world accepted it as a payment method after Mt.Gox and Bic Camera did so in May and July 2014, respectively. It somehow helped Japan to take one step forward toward becoming the capital of the bitcoin market.
10. Low-Income Population (Households) Shopping Using Smartphones
The Japanese economy has been struggling for years and especially after the Lehman shock in 2008. This problem has affected the vulnerability of Japanese people in the lower-income populations (households) who spend 30% of their income on food and other daily necessities.
