Bitcoin mania takes a firm hold in Japan
Known as “Miss Bitcoin” on Japanese social media, Mai Fujimoto says she invests all of her savings in the virtual currency that has proved a huge hit in Japan.
“I convert all my disposable income into cryptocurrency,” the 32-year-old says. “I’ve been doing this for nearly a year now. I convert all my savings into cryptocurrency instead of putting them in a bank.”
She is not alone in her enthusiasm. Bitcoin is recognised as legal tender in the world’s third-biggest economy and nearly one-third of global bitcoin transactions last month were denominated in yen, according to specialised website jpbitcoin.com.
This has led to analysts speculating that the famous Mrs Watanabe – shorthand for Japanese individual foreign exchange investors – is behind the frenzy that pushed the price of bitcoin up to nearly US$20,000 before dropping back. Firstly, unlike regional rivals China and South Korea, whose regulators have clamped down hard on the cryptocurrency, Japan has welcomed it.
Last April, Japan passed a law recognising bitcoin and other virtual currencies as legal tender – while also stressing the need for transparency and financial stability.
And there is little doubt that Japan’s global weight grew after China closed down bitcoin trading platforms last year.
Some Japanese businesses have started accepting payment in bitcoin and one firm said it would pay part of its employees’ salaries in the currency if they wish.
“The involvement of big companies, the sense of security derived from government approval and media exposure really brought in a whole new group of people to the market,” said Koji Higashi, a crypro-business commentator.
While Japanese are generally considered risk-averse, they are also well-versed in the complexities of market trading.
Analyst Mr Higashi thinks that the blanket domestic and international media coverage of the rise of bitcoin has prompted many Japanese to join the party.
“’Everyone else is doing it now and I heard they are making a lot of money,” he said.
“I am not sure if people are buying into bitcoin based on rational decision-making. It feels more of a short-term irrational mania to me,” he added.
Whatever the reason, “Miss Bitcoin” has been a convert since 2012. “At the time, I was working with children and creating an online donation platform. And for the first time, I learnt how expensive it is to send money abroad,” Ms Fujimoto said.
“So I was really impressed when I heard that I don’t have to go through banks if I use bitcoin payment.”
She snapped up her first bitcoin for ¥1,200 (Dh39) in 2012.
But cryptocurrency mania has not been all plain sailing.
In 2014, Tokyo exchange platform MtGox filed for bankruptcy, with chief executive Mark Karpeles saying it had lost nearly half a billion dollars’ worth of the digital currency in a possible theft.
And another factor may end up cooling the enthusiasm of individual investors – profits made from bitcoin trading are considered as “miscellaneous income” and subject to a higher tax rate of 55 per cent.
“Now, a lot of traders are struggling to calculate the amount to be taxed and I think there will be a lot of tax evasion scandals in the near future,” said Mr Higashi.