Japan's leading banking groups are pouring money into the country’s largest Bitcoin exchange, BitFlyer. The experiment they are about to perform means a lot for the global financial services market.
The $1.75 mln funding comes from Mizuho Financial Group, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Dai-ichi Life Insurance, a part of Dai-ichi Life Holdings.
The aim is to use the exchange’s digital currency know-how to better secure and make international wire transfers cheaper particularly for remittance purpose, reports Nikkei Asian Review. Working with BitFlyer in this aspect is expected to make wiring money become available around the clock, instead of customers being confined to ATM hours.
Taking on remittances
Most of the problems the initiative tends to address are universal in nature and it could be handy for any banking institution in Asia, Africa, Europe and elsewhere to use. It could also be extended for use in remittances.
According to the World Bank, addressing the high cost of sending remittances at the global, country and municipality levels has been a major challenge and how the right approaches are used to tackle it at the country level varies depending on specific challenges faced by each country.
Bitcoin’s introduction into this aspect in Japan could mean the start of a Bitcoin-banking revolution which could break beyond imagination. The successful outcome of the trial with BitFlyer will likely prove critics of the digital currency wrong. It may also draw financial institutions that have been skeptical about Bitcoin to rethink their respective strategies and seek ways to replicate the system.
Biggest global market
Japan is a huge market for Bitcoin. It has even gotten bigger following the recent series of regulatory measures introduced in parts of China. The country is now deemed to be above the US and China as the highest-volume country for Bitcoin trading in the world.
Globally, several startups have been working to improve on how to solve the problem facing the traditional money-transfer method dominated by the likes of Western Union, Moneygram, and RIA, which account for more than 25 percent of the world’s annual remittance volume.
Some startups in Africa such as Bitpesa have been building Bitcoin alternatives though they still have to go through the banks. What becomes of this foremost experiment will reflect globally as the nascent Bitcoin industry produces more players like Payphil, Sentbe and SCI.
Last year, Bitcoin startups and investors revealed that 20 percent of remittances from the Philippines to South Korea are processed using Bitcoin.