100 million yen in real estate can be exchanged instantly, just like “Pokéka”!　Digital Currency” to be launched by Japan Post Holdings to bring about a financial revolution.

Fees are drastically reduced!　Overseas remittances in an “instant”!

Electronic money, such as Suica and PayPay, has become an indispensable infrastructure in our daily lives. However, the “next” revolution has already begun in the financial world. That is “digital currency.

If you’re thinking, “Is this just another shady virtual currency story?” you are mistaken.

It was the Japan Post Bank that set this trend in motion. The bank’s announcement last September that it was considering “tokenized deposits” utilizing blockchain technology suggests that this technology will become a “lifestyle infrastructure” that is distinctly different from the speculative use of Bitcoin.

What exactly differentiates it from the electronic money and crypto assets that are already in widespread use and whose prices fluctuate wildly? We take a closer look at the true nature of “digital currency,” which will dramatically change bank transfers, real estate transactions, and the contents of our wallets.

Monex and crypto asset analyst Masamichi Matsushima describes the benefits of a society in which digital currency is put to practical use.

Bank transfers in Japan are convenient, but overseas remittances are a different story. Currently, it takes a lot of time and effort, and the number of days it takes to receive the money and the handling fees are ridiculous. There may still be a limited number of individuals who make frequent global transactions, but once digital currency becomes a reality, overseas remittances will be just as instantaneous and inexpensive as domestic remittances.

In the existing banking system, when sending cash from Bank A to Bank B, consumers only see the front side, such as a smartphone, but behind the scenes, multiple businesses are involved, costing huge amounts of money and time.

According to Yuki Fukumoto, head of the financial research office at Nissay Research Institute, even with electronic money such as Suica, behind the scenes, payment processing is carried out through bank accounts among businesses, which incurs both costs and time.

Digital currencies, on the other hand, dramatically simplify this “back-end processing” digitally. As a result, immediate settlement is possible and commissions are low.

Real estate worth 100 million yen can be done with a “poker” feel.

The innovation of digital currency is not limited to mere convenience of money transfer.

In the future, not only bank deposits, but also stocks, bonds, real estate, and even assets such as Pokémon cards, which are traded at high prices, will be instantly exchanged on a common digital ledger (blockchain).

For example, a person with ¥100 million worth of stocks wants to buy ¥100 million worth of real estate. Currently, selling shares requires time and commissions, and purchasing real estate also requires complicated procedures.

In a world where digital currency is introduced, however, these transactions will be handled on a common digital ledger, and the exchange (transaction) will be completed in an instant and at a low fee. In the future, even the tedious process of changing the registration of real estate may be completed instantly on the system.

Mr. Matsushima predicts this “tokenized” future as follows.

Currently, each asset must be managed separately: deposits are handled by banks, stocks by securities firms, and real estate by management companies such as ……. But in the future, all of these will be managed by “tokenized” systems. In the future, however, all of these may be consolidated on the blockchain as ‘tokens. Once on the same ledger (blockchain), different assets can be traded directly on the data.

Mr. Fukumoto of Nissay Research Institute similarly points out that the spread of digital currencies “will expand the handling of valuable assets, such as paintings.

Security” that is definitely different from Bitcoin

The question that arises here is, “What makes e-CNY different from bitcoin and other crypto assets (virtual currencies)?” The similarity between Bitcoin and other crypto assets (virtual currencies) is that they both have a “security” function.

The common point between the two is the use of “blockchain” technology to record transactions. Blockchain is a mechanism that compresses and converts transaction data using a cryptographic technique called a “hash function” and links them together like a chain. It is virtually impossible to tamper with the data because even the slightest alteration of past data will result in the loss of backward and forward consistency. This high level of security is the foundation of digital currency.

However, there is a crucial difference. However, there is a decisive difference: the existence of an “underlying asset.

Crypto assets (Bitcoin, etc.): Since there is no underlying asset, the price fluctuates wildly, making it difficult to use as a means of payment for purchases.

Digital currency: The value is stable because there is an asset backing it, such as a bank deposit.

Currently, central banks such as the Bank of Japan are working to introduce this type of currency, and private companies are also developing digital currencies called “stable coins” that are backed by deposits and other assets. Japan Post Bank’s initiative is also an attempt to convert deposits into digital assets (tokens).

Suica and PASMO are “prepaid” and, in principle, do not allow cash refunds. In contrast, digital currency is a means of value exchange that can be “converted back to cash” in the same way as bank deposits.

It is difficult for consumers to see changes in the “other side” of the payment process. However, if the full-scale introduction of digital currencies dramatically lowers costs for financial institutions and businesses, we consumers should benefit greatly in the form of lower fees and new services.

The day may not be far off when the changing form of “money” will fundamentally overturn the way real estate, high-value products, and daily settlements are handled.