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It isn’t easy to analyze the history of cryptocurrency and blockchain without eventually bumping into Japan, Satoshi Nakamoto, and the birth of bitcoin as well as the first blockchain in the land of the rising sun.
The futuristic mindset is well-ingrained in Japanese culture. Historically, Japanese people have been more accepting of technological novelties than citizens of most other countries. Japanese Inventors and entrepreneurs have been experimenting with various technologies to satisfy the consumer’s appetite for innovation.
Due to how cryptocurrency works, it’s closely related to the technology brought by the third industrial revolution. Japan has played a prominent role to date, with its great prowess in fields such as computer science, robotics, and cryptography giving them an edge.
Japan’s Role in the Early Days of Cryptocurrency
Japan and cryptocurrency have been closely related since the latter’s infancy, as the Japanese were quick to give cryptocurrency a chance and among the first to start mining it. Let’s take a look at these two points.
Recognizing the Potential of Crypto
Because of technological liberalism and the constant experimentation with new technology in Japan, its citizens were among the first to predict the implications of a digital decentralized currency system and among the first to recognize its potential.
The First Crypto Mining Hubs
During the early days, Japan set itself as the crypto hub of the world, where many mined bitcoin despite it having virtually zero value. Also, the world’s biggest crypto exchange company back then, Mt. Gox, was a Japanese company through which millions of bitcoin transactions went.
Problems Faced in the Early Days
Like any novelty in the world, cryptocurrency (Bitcoin in particular) faced some issues in its early days, which helped strengthen its security.
The Mt. Gox Hack
In 2013 and 2014, Mt. Gox was the largest bitcoin exchange company globally, handling over 70% of bitcoin transactions worldwide.
But in February 2014, Mt. Gox suffered the worst hack in cryptocurrency’s history, where hackers infiltrated the Mt. Gox wallet and stole about 850,000 bitcoins, which was about 6% of the world’s bitcoin supply and valued at more than $450 million at the time, and nearly $50 billion in 2021.
The hack was a massive setback in the cryptocurrency community who relied on the security of blockchains. However, the problem wasn’t blockchains, in particular, but Mt. Gox’s security, which failed to keep hackers out and, as a result, let hackers have access to the private keys of millions of hot wallets and even some of Mt. Gox’s own funds.
Mt. Gox unsuccessfully tried to recover the stolen bitcoins, only finding back about a fifth of them. The incident and Mt. Gox’s response shocked Japanese investors and caused bitcoin to decline in value by 36%.
Subsequent Legislation of Crypto
After Mt. Gox lost such a large sum of their money and consumers’ money, you might expect the Japanese government to shut down crypto exchange companies or even block cryptocurrency entirely, but they didn’t. Instead, they imposed measures to protect the consumer.
In 2016, Japan recognized cryptocurrency as a form of money, and although they don’t consider it a legal tender (because a central bank does not issue it), they do recognize its purchasing power. The Japanese Financial Services Agency assumed control over cryptocurrency regulation in Japan.
Japan’s Future in Cryptocurrency and Blockchain Adoption
Japan has played a significant role throughout the history of cryptocurrency and blockchain. And given the country’s positive stance on digital blockchain-based currency, the interest in cryptocurrency among its populace, and the high adoption rates, it’s reasonable to assume that Japan will continue being the epicenter of cryptocurrency in the world for a while.
The future isn’t far away and examples of this can be seen throughout the country, from the Japanese Central Bank beginning to test a digital currency to Japanese citizens being able to access Bitcoin casinos that are based overseas. The options are seemingly endless.
Evidently, Japan remains among the most progressive countries in cryptocurrency, and the government support continues to grow.