Heisei Revolution? Japan building world's first crypto-government

In 1867, a major political reform swept Japan, triggered by the technological gap with the West, bringing enormous changes to the political, social, and economic landscape. It became known as the Meiji Restoration (明治維新). 150 years later, could another technological impetus sweep Japan through another reform of political, social, and economic landscape? The blockchain has proven its worth as a trustless global accountant for Bitcoin, and it may be the technology that would drive the world's first crypto-government. A few decades from now, they might call this the Heisei Revolution (平成維新).

The concept of e-government was first pioneered by the Baltic-Nordic former Soviet Republic of Estonia in 2001. As a geographically remote corner of planet Earth, Estonia bet all-in their economy on information communication technology (ICT) infrastructure, spearheaded by e-Estonia. It is now one of the most advanced ICT economies in the world, but more importantly, Estonians can file their taxes online in 5 minutes.

An e-government mostly describes the ICT-based user experience of conducting government business and interfacing with citizenry. A crypto-government takes it all one huge step forward: a robust and resilient ICT infrastructure that would streamline the operations of e-government, making life easier for both citizens and bureaucrats.

According to two report from Nikkei (日経), Japan is running some blockchain-based trial systems for consolidating property records and processing government tenders. These fiscal-year-long pilot projects will involve the Ministry of Internal Affairs and Communications of Japan (総務省), Ministry of Justice (法務省), the Ministry of Land, Infrastructure, Transport and Tourism (国土交通省), and over 1700 municipalities throughout Japan. The following fiscal years will see a bid to expand distributed ledger technology (DLT) to other e-government systems.

What does this mean for the Land of the Rising Sun?

Japan is one giant step closer to digital utopia of smart cities. The usual suspects of cost reduction and risk mitigation are the central themes of crypto-government. Human factors are a major risk to any technological system. After all, any government just one stupid or disgruntled employee away from a hack or leak. The benefits of less mistakes also contribute to cost reduction, beside the general reduction of paperwork in general. The more efficient a government can gather information, the better it can make decisions.

Much like its East Asian neighbours, Japanese society places a premium on building a stable, harmonious society where the needs of the collective outweigh the rights of the individual. However, Japanese are intensely private people. There are extreme cases of professionally evaporated people, Johatsu (蒸発), which would be a thing of the past if Japan builds a crypto-government. Although blockchains have features for promoting anonymity, they cannot provide total anonymity. The challenge ahead is to balance the rights of the individuals and the needs of the state.

Even Battousai would not be able to hide from a crypto-government.

What does this mean for crypto-land?

Did you notice that Nikkei uses the term distributed ledger technology (DLT) rather than blockchain? There are subtle and esoteric differences between DLT and a traditional blockchain, and depending on who you talk to, one is the subset of the other. The most important issue goes back to branding.

The term blockchain has been "tainted" by association with Bitcoin, which itself is associated with the "Decentralization Crypto-Jihad", the dark web, and the underground economy, i.e. the opposite of what governments want to be associated with. Blockchains have now been associated with speculation over new crypto-coins, also not something to be associated with. Governments hear "blockchain", think "bitcoin", and see anarchy; governments hear "DLT", hear "ledger", think "accountability", and see viability.

However, this is changing. Nothing like a big likeable brand like Japan giving it all a boost. Even the pseudonym Satoshi Nakamoto is Japanese. Crypto-government is a big step in legitimising the brand of blockchain.

What does this mean for crypto-economics?

Probably nothing . Japan is not the first contestant in the race to build a crypto-government. Dubai has allied with IBM. Japan is rumoured to be building on Microsoft infrastructure. As of now, no crypto-governments are created on Ethereum, and it'd be difficult to foresee a volatile platform hosting something thirsting for stability like a crypto-government.

One step back: what the heck is a crypto-government?

Bitcoin introduced the world's first crytpocurrency, a digital asset whose creation and transactions were governed by first principles in cryptograph. The backbone of the technology is the blockchain. Hence the prefix crypto- for all things related to blockchain. Ladies and gentlemen, the term crypto-government (and eventually cryptogovernment) was coined here first, no pun intended :)