by Kenneth Schortgen Jr., The Daily Economist:
As major world currencies such as the Yen, Yuan, and Euro struggle to remain viable in an eroding global monetary system, some governments are slowly coming to accept the advent of alternative mediums of exchange that their citizens can use to protect their purchasing power.
Since 2009, dozens of central banks have embarked on a currency war following the 2008 global financial crisis in order to protect their economies and especially their exports. And ironically it was this same year that Bitcoin came onto the scene as the world’s first crypto-currency.
And over the past eight years governments have struggled with how to deal with a form of currency that they could not control, tax, or regulate, and Bitcoin inevitably followed the path laid out by Mahatma Gandhi when he used a non-violent method of rebellion to eventually secure India’s freedom from Britain.
“First they ignore you, then they laugh at you, then they fight you, then you win.”And on Feb. 9 we may have just seen the first real victory for Bitcoin acceptance in the mainstream as the Japanese government has officially decreed Bitcoin to now be considered as legal tender, and welcomed it for use by individuals and businesses.
Embracing cryptocurrency, Japan has a new law that will make bitcoins usable as legal tender. Companies hoping to deal in the new currency, however, must submit to a long list of regulations to ensure that the ‘coins’ are not being used for criminal activity. Among the regulations, a company is required to have at least $100,000 in reserve currency, report their activities to the government regularly, and undergo routine external audits by the Japanese National Tax Agency. Japanese companies wishing to use bitcoins will be expected to pay the equivalent of some $300,000 to adopt bitcoin, and there is no guarantee that they will receive a license, even if they abide by government edicts. The steep price tag will likely discourage smaller Japanese companies from adopting the cryptocurrency. The measures have been put in place, according to reports, to protect the rights of consumers, as bitcoins have been involved in several notorious scams. The most famous of these was the Mt. Gox scandal, in which a bitcoin exchange company was found to be artificially inflating their holdings. At its 2013 peak, Mt. Gox handled about 70 percent of bitcoin transactions in Japan, but the scandal shuttered them. – Sputnik News
There are of course many upsides and downsides to this new initiative by Japan embracing Bitcoin.