Mizuho, a large integrated retail and corporate bank under the Mizuho Financial Group, conducted tests for its virtual currency. The currency was developed in collaboration with IBM of Japan to bring down expenditures for money transfers. Mizuho revealed the tests were successful.
A published report from Nikkei said the three month-long testing utilized a mobile app in which one unit of the crypto-currency was equal to one Japanese Yen. It replicated fiat cash in value for the experiment. The app-focused assessment was tested for a daily activity which was a group dinner bash.
They used the application to compute the amount owned by each of those who attended the party (meals and drinks) in the virtual currency. The application was also tested to determine if one individual can pay the whole bill with the digital currency of Mizuho. The software test also took in additional functionalities like alerting group members as to the amount they owed.
The testing situation is important in providing understanding regarding the plans of Mizuho to put into operation a reasonable unveiling of its virtual currency in the future. It is a regular scenario that involves numerous participants on a bank-regulated Blockchain. Said testing did not identify any issues although the Bank perceives user privacy as a principal concern. Mizuho must find a way to protect user information if it decides to employ services with the use of Blockchain.
It will use the Blockchain expertise of IBM for this venture and use codes from the Hyperledger Project spearheaded by Linux Foundation. Mizuho performed several successful payment trials with the Blockchain early this year. It resulted in same-day payments (securities transactions) as well as tamper-proof outcome.
Synonymous with Blockchain
The Mizuho Financial Group is fast becoming identical with the Blockchain platform. Last February, it formed a partnership with Cognizant to look at the possibility of record-keeping functions on the Blockchain. Four months later, Mizuho announced its collaboration with IBM for the digital currency settlement. Cognizant Technology Solutions Corporation is a United States multinational corporation providing the following services:
- Traditional Information Technology
- Information Security
- Information Technology Outsourcing
- IT Consulting
- Business Processing Outsourcing
Mizuho Financial Group is aggressive in testing Blockchain Technology. It wants to find out the potential of establishing instant exchanges of digital currencies by way of this new team-up. The responsibility of IBM is to use its open-source code which was put in the Hyperledger venture. Delivery of more efficient customer service is required in the financial sector. Mizuho is checking out Blockchain, Watson Analytics and other unidentified technologies to attain this objective. These financial entities need centralized systems that they can control any time if the banking system will be digitized.
IBM Bluemix Garage is providing assistance to Mizuho in this matter. This is a cloud platform as a service provider (PaaS) developed by IBM and supports various programming languages/services. Bluemix is anchored on the Cloud Foundry open-technology and operates on Soft Layer infrastructure. The act of merging IBM’s Blockchain services with experience in payments can lead to the creation of new Blockchain apps. IBM is very interested in playing a prominent role in the digital revolution that many banks are pursuing globally.
There has been a lot of focus on the use of crypto-currencies. Yet, this approach must not be confused with the use of Bitcoin or Ethereum. Virtual currencies are issued and regulated by banks any time. Mizuho Financial Group will not likely issue its own digital currency any time soon.
Bank of Tokyo Mitsubishi UFJ
The proprietary testing performed by Mizuho Financial Group is almost completely similar to the experiment made by its competitor Bank of Tokyo-Mitsubishi MUFJ. This banking institution disclosed its plan for a crypto-currency in February of 2016. Tests were confirmed in the middle of the current year. The Bank of Tokyo’s single MUFJ coin is equivalent to one JPY. It will allow users to withdraw cash for their bank accounts through an application. The app will ensure that fiat cash is converted to the virtual coin token.
Bank of Tokyo-Mitsubishi MUFJ is projected to start issuing MUFJ coins publicly by the autumn of 2017. It may even set up ATM machines so users can swap MUFJ coins into paper money in the spring of 2018. If this roadmap is realized, the biggest bank of Japan can become the first to issues its own virtual currency worldwide. This is only speculation although these two banks may be among the three primary banking corporations in this country to launch a Blockchain Pilot for local money transfers.
This was developed in cooperation with BitFlyer, the biggest Bitcoin exchange in Japan. Said banks found out that money transfers through Blockchain were faster compared to the present conventional inter-bank wire technique. It is capable of 1, 400 transactions per second compared to the 1,500 of Blockchain per second.
What is Next for Mizuho and IBM
While Mizuho and IBM concentrate on their efforts, it is quite clear this will turn out as a private Blockchain solution for deployment. The primary reason is banks cannot maintain control over this. The centralized approach enables them to issue their own crypto-currencies. Will this be considered as another innovation in financial technology? Majority of banking transactions are currently using digital formats. There is no innovation yet since all that is done is to make use of different basic technology. This could be another bank strategy to join this Blockchain fad. Or is it a fad after all? Does it mean that banks and bankers are really getting comfortable with this new technology just like the case of Bank of Tokyo and Mizuho?
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