Since Bitcoin’s humble beginnings, the community have been waiting patiently for the day that the world’s first, permission-less, border-less and trust-less payment system becomes legal tender. That day has come and its impact has been monumental.
On 1 April 2017, Japan officially recognised bitcoin as legal tender. After an initial period of adjusting regulatory and accounting practices to accommodate digital currencies, we are seeing an huge inflow of Nikkei into bitcoin, pushing its price above all previous highs. Earlier this month, Japan accounted for over 50% of bitcoin’s global trading volumes, and still presently accounts for large percentage of activity.
It is clear that Japan is quickly, and aggressively, becoming the Bitcoin centre of the world, but why?
Severe financial strain
For more than two decades, Japan has experienced severe financial strain and stagnated economic growth, often referred to as the ‘Lost Score’. During this time wages dropped by 13%, the Nikkei crashed by more than 70% and Japan’s debt to GDP ratio hit 240% more than any other nation in the world.
They were desperate to find a way out.
As a nation known for technological innovation and adoption, it is not surprising that fintech has been a keen area of interest. Despite, since 2010 the local industry growing a far slower pace than their neighbours South Korea and other parts of East-Asia, Japan have now taken the ‘lead’ by passing laws and regulations to make it a favourable hub for companies and individuals alike to utilise and leverage bitcoin. This makes Japan the first nation to formally “open the doors” for bitcoin based businesses to flourish.
The BitLicense in New York was more of a step backwards than forwards, and the positive push in Zug, Switzerland was on a small and localised level. These example are still very good things for Bitcoin, especially at this early stage, but there was a massive void within the market that Japan have filled.
Japan spotted the gap in the market and a clear path from them to capitalise on a movement that is growing at unprecedented rates. Bitcoin can serve as a ladder for Japan to climb their way back to greatness and reinforce themselves as the pioneers of technology, a title they were at great danger of losing.
And now there is a new kid on the block
Economically speaking, Australia is an interesting nation. In contrast to Japan, their economy has grown fairly consistently for the last 25 years. They are one of the largest mixed-market economies in the world with detailed plans to expand into new markets and bolster their economy even further.
Historically, Bitcoin has had a tough time in Australia but over the past year a sea of change has been underway. Until recently, Australia’s laws considered digital currencies to be intangible property and not a monetary instrument. This resulted in double taxation being implemented on payments made in digital currencies. Effectively, by paying with bitcoin (or other digital currency) you would be charged the standard 10% goods and services tax (GST) as well as a further 10%.
This is changing.
In Australia’s 2017 Federal Budget, it was announced that the double taxation on digital currencies, such as bitcoin, would cease from July this year. As part of their “Fintech Forward” agenda, and to “make it easier for digital currency businesses to operate in Australia”, the Treasury announced that purchases of digital currencies will no longer be subject to double GST and “digital currencies to be treated just like money for GST purposes”.
This news has been met with elation from the many Bitcoin startups in Australia, as double taxation has heavily hindered them from blossoming to date. This is yet another example of extremely positive news for and the overall Bitcoin community now eagerly await implementation and anticipate Bitcoin flourishing in the area.
With both Japan and Australia changing their stances on bitcoin, it is quickly becoming a battle for the Pacific as countries vie for the ‘top spot’ in leading the way bitcoin adoption and usability.
Hat tip to Bitstocks