Three Large Japanese Banks Drop Plans to Create Peer-to-Peer Payment Network

Three large banks in Japan, players in the country’s “crowded” payments market, have decided to abandon a cooperative pilot undertaken in 2017 to create a peer-to-peer remittance network, Nikkei Asian Review (NAR) reports.

The three banks- Mizuho Financial GroupSumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group– will instead be working on their own individual ventures.

The banks were reportedly trialing a “blockchain” technology similar to the one used in Bitcoin to jointly create a network that would allow customers to send and receive payments to and from one another via phone and email messages.

The system reportedly would have tied a remittance currency virtual accounts with their customers’ regular currency deposit accounts.

But for reasons unstated in the NAR report:

“The cancellation was revealed in materials presented Tuesday by the Japanese Bankers Association — chaired by Mizuho Bank CEO Koji Fujiwara — to a Financial Services Agency public-private council on increasing the sophistication of the country’s payment environment.”

While a number of large firms, including IBM and Ripple, are continuing to pursue the building out of blockchain protocols for the purported streamlining of various types of payments, there are also many reports that corporate interest in blockchain is waning generally.

This may be because blockchains anything like the Bitcoin one are slow and expensive to secure- two features typically unsuitable in commercial payment networks.

Despite huge hype made possible by at least a thousand undeveloped firms raising millions for “blockchain” projects and then using much of that money to further hype token trading in open markets, very little successful innovation has resulted.

An investigation late last year by the Shanghai and Shenzhen stock exchanges of 23 of 80 listed companies claiming to have incorporated blockchain tech revealed that 13 of them, or about 57%,  “have not achieved..results (in) blockchain,” Sina reports.

Half of the companies that failed to deliver on their blockchain promises were accused of using the term “blockchain” in promotional materials purely to profit from hype surrounding the tech.

According to Sina, 56 (about 70%) of the 80 listed “blockchain” companies experienced a rise in the price of their stocks in 2018, making, “‘blockchain’…one of the few rising sectors in the two cities.”

Bitcoiners like Jimmy Song have warned for years that private enterprises typically only need encrypted standard (distributed) databases and not blockchains to accomplish company objectives of enhanced data security and delivery.

Other analysts experienced in “private blockchain” buildouts have made many of the same conclusions as Song.

Angus Champion de Crespigny, a former blockchain division head at Ernst & Young (EY), has gone public about his misgivings regarding the much-hyped potential of corporate blockchain.

De Crespiny has stated that he realized adapting a tech designed to “run automatically” without a single point of oversight (as the Bitcoin blockchain was designed to do) in a corporate environment was proving not only complex and costly, but also unnecessary:

“Once you can get all of those stakeholders together, you generally form some sort of trusted central entity anyway. If you managed to do that coordination, which is the difficult thing, there is technology that you can use that is far easier… Just a distributed database, which is faster.”

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