Japanese banking giant Mizuho has tested its digital currency developed in partnership with IBM Japan to reduce costs of money transfers, a report has revealed.
The Mizuho Financial Group-IBM partnership announced earlier this year has seen successful testing of digital currency developed by the bank and the technology giant.
According to a report Nikkei today, the three-month-long test saw trials use a mobile application wherein a single unit of Mizuho’s digital currency is equivalent to a single Japanese yen, essentially replicating fiat cash in value for the trial.
The app-centric trial was put to test for a simple, everyday occasion – a group dinner party. The app was used to calculate the amount owed by each member of the dinner party toward meals and drinks, in the digital currency. Further, the app was also tested to check if a single person could pay the entire bill with Mizuho’s digital token equivalent of cash. Software testing also included additional functionalities such as alerting members of the group to the amount they owe and more.
The testing environment is notable in providing insight into just how Mizuho is planning to implement a plausible rollout of its digital currency in the future, in a routine, everyday scenario involving multiple participants on a blockchain controlled by the bank.
The tests did not throw up any problems, according to the report, but Mizuho still sees user privacy as a concern. Safeguarding its user’s information on a common ledger will be key if the bank is to implement services using the digital currency.
Mizuho is tapping into IBM’s blockchain expertise for the digital currency experiment, using code from the Linux Foundation-led open-source Hyperledger project.
The bank had also performed successful payment settlement trials over a blockchain earlier this year, resulting in tamper-proof results and same-day settlements of securities transactions.
Mizuho’s proprietary digital currency tests are almost entirely similar to that of its competitor and Japan’s biggest bank, the Bank of Tokyo-Mitsubishi UFJ, which revealed its plan for a digital currency as in February 2016.
With tests confirmed in mid-2016, the bank’s unit of a single “MUFJ Coin” is also equal to one Japanese yen and will enable users to withdraw money from their bank accounts via an app which will see fiat cash converted to the digital coin token. The bank is speculated to publicly issue MUFJ Coins in autumn 2017 and is even primed to install ATM machines that will enable users to swap MUFG coins to paper cash, in spring 2018. If the roadmap pans out, Japan’s largest bank could become the first in the world to issue its own digital currency.
While it’s merely speculation at this point. the two banks are likely to be a part of three major Japanese banking corporations to conduct a blockchain pilot for domestic money transfers. Developed in partnership with bitFlyer, Japan’s largest bitcoin exchange, the banks discovered that money transfers over a blockchain were faster than the existing, traditional interbank wire system, which is capable of a peak 1,400 transactions/second. The blockchain test scaled 1,500 tns/sec.
Images from Shutterstock.