Bitcoin – Big In Japan

I spent the past week in Tokyo on behalf of Brave New Coin, meeting with various participants in the cryptocurrency industry – from exchanges to brokers, from industry bodies to information vendors, from connectivity providers to technology platforms. Given its share of Bitcoin trading volumes, and the legal developments currently in motion, Japan is now the focus of attention as it navigates towards a fully regulated and orderly cryptocurrency market.

Bitcoin is now accepted in Bic Camera stores in Japan (Photo: Rory Manchee – all rights reserved)

On my previous visit to Japan, I commented on the extent to which it was still a cash economy – even major museums and galleries don’t accept plastic, and my pre-paid foreign currency card issued by a major Australian bank was only accepted at a limited number of ATMs: 7-Eleven, and Japan Post. But according to expats I spoke to last week, this situation has changed over the past couple of years.

One of the reasons I was given as to why Japan is taking a lead in regulating cryptocurrencies is its previous perception of having a somewhat lax approach to money laundering. Part of this might be explained by the limited technical integration and interoperability with the global banking system (somewhat akin to Japan’s approach to telecoms, where in the past, it was impossible for overseas visitors to use their mobile phones on the domestic network).

In addition, as China has cracked down on most things crypto, so has Bitcoin trading activity shifted to Japan. This growth in Bitcoin trading volumes can also be linked to Japan’s passion for retail forex trading, now expanding into crypto.

Earlier this year, the Japanese government passed legislation that recognises bitcoin as a legal form of payment. (Note: this does not mean that bitcoin is legal tender – shops do not have to accept it; but if they choose to take it as payment for goods and services, then it is no different to paying in cash or by credit card when it comes to things like consumer rights, for example.)

Later this month, the main regulator, the FSA is expected to announce new regulations to govern cryptocurrency exchanges and brokers. Currently, exchanges that accept Yen deposits for cash trading of crypto must be licensed as payment institutions. By the end of March 2018, my understanding is that all exchanges and brokers must be fully licensed to operate – for both cash trading, and futures and margin trading. Anywhere between 20 and 50 exchanges have applied for a license.

Currently, participants in the “legacy” securities and futures industry are either registered with the JSDA or the FFA. Likewise, it is expected that the FSA will appoint a similar self-regulating entity to have official oversight of the cryptocurrency markets, under the overarching authority of the FSA. However, there are two rival blockchain and cryptocurrency industry associations that are vying for this role – which is where things become a little political. One group claims to represent the “pure” crypto world, whereas the other might be seen to represent more of the traditional market. No doubt the FSA would prefer not to have to choose…

Key considerations for the FSA are retail investor protection, and market stability. The total market cap of all cryptocurrencies is now around US$150bn. If we assume that 10% of these assets are held in Japan, when compared to the total capitalisation of the cryptocurrency exchanges themselves, this creates a significant risk for the FSA should there be a market collapse or a run on Yen-based crypto deposits.

Equally, the FSA does not want to stifle innovation in an area of financial services where Japan is keen to take the lead. For example, Japan has witnessed a couple of bitcoin-denominated corporate bonds (more like privately syndicated short-term commercial paper) that demonstrate an investor appetite for this new asset class.

Meanwhile, in preparation for this new regulatory environment, and in anticipation of the increased interest by major banks and asset managers, there is a project underway to create an institutional-strength order management platform connecting banks, brokers and exchanges. I also heard of offshore fund managers looking to launch a crypto-based ETF for distribution in Japan.

Finally, at the risk of blowing our own trumpet, Japan’s leading financial vendor, Quick is now quoting the Bitcoin Liquid Index (BLX) alongside other FX data it distributes from around the world:

 

NOTE: The comments above are made in a purely personal capacity, and do not purport to represent the views of Brave New Coin, its clients or any other organisations I work with. These comments are intended as opinion only and should not be construed as financial advice.

Next week: Tech, Travel and Tourism

 

 

Idea over Form – Gehry vs Ando

Frank Gehry and Tadao Ando are two of the most famous architects in the world. Each has a distinctive style: Gehry produces organic and free-flowing designs, incorporating unexpected shapes, angles and materials to produce logic-defying structures that appear to float above the ground; while Ando creates solid concrete structures, very much tied to the earth (even buried within it), but ultimately deriving their form from the elements of space and light that they encapsulate.

Frank Gehry: "I have a dream" (image sourced from Archilovers.com)

Frank Gehry: “I have an idea” (Image sourced from Archilovers.com)

During my trip to Japan in late 2015, I had the pleasure of seeing examples of both their work: Gehry’s giant fish in Kobe and a show based on his recent project for the Fondation Louis Vuitton; and Ando’s series of galleries and museums that form part of the Naoshima Art Island project (including the Ando museum itself). It all came together at a major retrospective of Gehry’s work, “I have an idea” which, fittingly, is showing at 21_21 Design Sight in Roppongi, a building designed by Ando.

Interior of 21_21 Design Site (Photo © Rory manchee, all rights reserved)

Tadao Ando: Interior of 21_21 Design Sight (Photo © Rory Manchee, all rights reserved)

Despite the differences in their work, there are strong similarities, even commonalities – for example, they have both pushed aesthetic boundaries, and both have developed significant signature styles. They are also highly attuned to the use of space, light and materials. Their work is never pure ornament, everything has a purpose, even if it is “only” to maximise light or enhance the use of space. And their goal is to create a connection between the function of the building and its use or purpose. It’s architecture as facilitator, because it prompts, even demands, a reaction from the occupants: inhabitants, students, patients, patrons, visitors, employees.

For me, a key difference is how they appear to solve the problem of designing unique solutions for site-specific locations, while maintaining their distinctive styles. In his own words, Gehry starts with “an idea”, and then explores, extends and extrapolates the idea until he ends up with a design solution that lends itself to the desired outcome. His ideas may originate from the client brief, but the buildings always impose themselves upon their location, because in spite of the organic forms, they appear out of context (but not out of step) with their natural surroundings.

Whereas Ando’s work only truly reveals itself once the internal space has been created, usually achieved by removing the earth, and burying or submerging the building in the ground. From some angles, a number of Ando’s buildings have no visible superstructure, suggesting the intention is for them to be subsumed, even absorbed by the landscape. A few of his designs only “exist” when you are deep inside them, or when the natural light is used to achieve a specific effect.

Despite Gehry’s random designs and the somewhat chaotic nature of the iterative modelling process, he is actually a thorough technician; his design methodology has resulted in numerous software programs and other digital applications that are licensed for commercial use. The idea is a vital starting point, but the final form is more important.

By contrast, Ando’s singular use of polished concrete suggests a cold or even clinical approach to his practice; in fact, he is more of a purist in his search of form, and actually strives to establish a connection with and respect for nature. One senses that the form is actually subservient to the idea, however perfect the physical outcome.

Of course, idea and form are equally important, so I think the goal is to achieve a balance (not necessarily harmony) between the two. Even better is the creative tension where one continuously questions and informs the other. The best architecture is never fully resolved, and always asks more of us, however often we see it; mediocre buildings simply get ignored, or taken for granted. (And hopefully, the bad designs never get built…)

Next week: Is this The Conversation we should be having?

A Music Buyer’s Guide to Japan (or Crate Digging in Kobe, Kyoto & Tokyo…)

For serious music collectors, Japan is like an oasis in a desert of digital downloads and streaming services. Not only does Japan still have bricks and mortar record shops, it also boasts a couple of well-known chain stores, in the guise of Tower Records and HMV, although both brands operate under local licenses totally unconnected with their original US and UK parent companies.

A Crate Diggers Paradise....

A Crate Diggers’ Paradise…. (Picture sourced from Facebook post)

On my recent tour of Japan, I spent several hours visiting some of the crate-digging hubs of Kobe, Kyoto and Tokyo. I barely scratched the surface, but still managed to come across some interesting finds.

“Big In Japan”

Whether it’s the country’s aging population, the love of tactile objects combined with a strong design aesthetic, or just that national obsession with detail and authenticity when it comes to pursuing hobbies and interests; whatever the reason, Japan has established a reputation for being a paradise for lovers of vinyl records, CDs and cassettes.

For collectors like myself, it seems like all the unwanted and discarded records from around the world have ended up in Japan’s second hand music shops to be (re)discovered and appreciated by audiophiles, hipsters and analogue enthusiasts.

Here is just a small glimpse of what dedicated music lovers and crate-diggers can experience in Japan.

Kobe

The Motoko market (a series of cramped arcades underneath the railway lines) has at least a dozen second-hand music stores stuffed with vinyl. A few of these shops specialise in particular genres, and some also sell new independent releases. What they all have in common are over-stacked racks and heaving shelf units shoved close together, forcing shoppers to crab-walk very carefully between piles of records, at considerable risk of triggering a vinyl avalanche.

Some of the stores arrange their stock meticulously by type and artist, but not much help if you don’t read Japanese; others seemed to have given up cataloguing the stock, so if you are searching for a specific record, it’s like looking for a needle in a haystack.

At times, it felt like this was the end of the line for many of the items on display – if they can’t find a buyer here, there probably isn’t much hope for them anywhere. No doubt there is a lot of on-line trading behind the scenes, and prices were generally reasonable, so maybe the shops are more like warehouses open to the public?

Poring through some of the 70s vinyl was something of an education, as I came across albums I had never seen before, even though I worked in a second-hand record store in London in the late 80s. I resisted the temptation to buy some of the older Japanese pressings (especially at Wild Honey Pie), even though they have a reputation for superior sound quality, but I did pick up a Japanese edition of the first Y.M.O. album on CD at Freak Out Records.

Kyoto

Armed with a handy crate-digging map of Kyoto, I checked out several shops located near City Hall. Unlike their Kobe counterparts, these were neat and orderly boutiques, and were easy to browse. None of the stores are at street level, so navigation can be challenging. The map lists stores by genre and other specialisations, although some of the music categories can seem bewildering.

I spent most time at 100000t alonetoco (I think it means something like “100,000 tonnes of records”?), which has a good range of vinyl and CD, from classic rock to contemporary sounds, from soundtracks to electronica, plus books and other memorabilia. The owner stocks numerous Japan-only releases by independent US and UK artists, many of which are highly collectible. Speaking of which, I found an absolute bargain – a 1987 compilation CD of the 2nd and 3rd albums by The Pop Group, which was only released in Japan. Copies of this particular pressing are currently listed for sale online from A$145 – mine cost a mere 600 yen….

Also worth checking out is Prototype, which leans toward reggae, soul and funk.

Tokyo

Around the hip Tokyo suburb of Shimokitazawa are a cluster of hi-quality specialist stores, including Jet Set, which is also a label and distributor for local and international releases, mainly indie, techno, beats, ambient and electronica. There are a couple of branches of Dorama, a chain of second-hand CD stores (plus comics, magazines, graphic novels, games and DVDs). Well worth checking out, especially for promotional releases, box sets, jazz, classical, Japanese pop and electronica, and alternative international rock. I managed to find very cheap (less than 300 yen each) and long-deleted Japanese releases by United Future Organization and the late Susumu Yokota. For the latest independent Japanese releases, the Village Vanguard book store has an intriguing music section.

Further towards the city, in Shinjuku, is the institution known as Disk Union (and not Disc Union as my Australian guide-book spells it…). With 10 branches in the Shinjuku area alone (plus more than 20 others across Tokyo and in Osaka), it would probably take several days to check them all out. While they do stock selected new releases, the real attraction of browsing in Disk Union is the sheer breadth of second-hand, deleted and promotional items on sale. A case in point being the special Japanese edition of the recent David Bowie “Five Years” box set – looks wonderful but too rich for my wallet.

Finally, no trip to Tokyo is complete without a visit to Tower Records in Shibuya. This landmark, multi-storey superstore is constantly being upgraded, even though sales of physical albums are generally on the decline. It caters for most tastes, and many new releases are discounted, making it popular with locals and tourists alike. It’s great for finding the Japanese pressings of international CDs, as they usually feature additional music or limited editions not included in the European or US releases. There’s now even a section just for cassettes, both new releases and re-issues. On this occasion, I found a couple of very limited edition albums by Japan’s Silent Poets, both on sale at regular price, but which I’ve since found listed online for upwards of A$50 each…

Next week: Another weekend, another hacakathon

 

 

 

There’s an awful lot of coffee in Japan (but not much espresso…)

Living in Melbourne all these years, I have become spoilt when it comes to the choice and quality of coffee on offer in the numerous cafes and bars around the city. So when I go overseas, I can get withdrawal symptoms if I don’t get my morning doppio. And I don’t mean an over-priced and over-rated big brand product from a certain you-know-who-you-are multinational chain store. My recent experiences in Japan, which has the third largest coffee consumption by nation, revealed that espresso-style coffee is on the increase, but is competing with some entrenched coffee tastes.

Walter de Maria "Seen/Unseen Known/Unknown" (Photo: © Rory Manchee - all rights reserved)

Walter de Maria “Seen/Unseen Known/Unknown” (Photo: © Rory Manchee – all rights reserved)

On my recent trip to Japan, I not only found some excellent new espresso outlets, I also acquired a renewed respect for siphon and filter coffee, which are both great when they are done well. As anyone who has been to Japan will know, coffee (both hot and cold) frequently comes in a can, either from a vending machine or a convenience store. In cafes, the coffee is usually brewed, and however good the coffee beans, this style just doesn’t do it for me. Rarely have I seen a cafetière (“plunger”) or percolator in use, although iced drip coffee is something of a delicacy.

From three weeks of travel, here are some of the highlights:

In Tokyo’s Ginza district, there is the Renoir Coffee Room which has a certain appeal, if you like authentic retro (i.e., it’s probably the same decor since the 1970’s, without a hint of irony or post modernism). Certainly a favourite with an older clientele, presenting a genteel atmosphere (somewhat undermined by the popular smoking section) and a reminder of a slower, gentler time. In the absence of espresso, I had a standard filter or pour over coffee, and despite being a little on the weak side, it had just enough of a roasted flavour to compensate. Rating: 6/10

Over in hipsterish Ebisu, I was expecting to find loads of local coffee shops, packed with neo-beatniks, retro-hippies and proto-punks, and the constant hiss of espresso machines. Not to be – maybe it was too early in the afternoon, but there were few options. Marugo Deli is more of a juice bar and organic cafe, that also happens to serve espresso. It was a friendly place, nice atmosphere, but the coffee was nothing special. Rating: 6/10

Down in Himeji, after a challenging climb to the top of the castle on a hot day teeming with hundreds of other visitors, it was a welcome relief to escape into the cool, calm comfort of Hamamoto Coffee. Again, they don’t serve espresso, but they specialise in siphon coffee (something I probably haven’t had since I used to visit the former Martinos Coffee Lounge in Hong Kong’s Causeway Bay in the 1990s). Sitting at the counter meant that I got to see the whole process close up, as the bar tender kept several siphons going at the same time. It’s as much an art as working a good espresso machine, and makes for interesting entertainment. The coffee itself was bold, yet mellow at the same time – full-bodied but smooth with an almost zesty edge. HIghly recommended. Rating: 8.5/10

Wandering around Kyoto‘s hipster quarter close to Nijo Castle, I came across Cafe Bibliotic Hello! (quirky name, quirky building!!!) where it’s easy to while away the time browsing through the library of art books and sampling the excellent baked goods from the adjoining store. The espresso was a welcome bonus, and was the best I’d had up until then on this trip. Rating: 8.5/10

Outside Kyoto, in Saga-Arashiyama (near the bamboo forest), % Arabica has recently opened its second Kyoto coffee shop. Overlooking the river, this tiny cafe is really only a takeaway stand, but everything has been designed for maximum aesthetic effect. There’s clearly a personal statement being made here, almost verging on the pretentious/precious, but not surprisingly it is very popular with the passing visitors. And the coffee is also pretty good – full-roasted, robust, just enough acidity, and an excellent crema. Rating: 9.5/10

Back in Tokyo, nearing the end of my trip, I spent a day walking around the district of Kiyosumi-Shirakawa, visiting the numerous galleries, second-hand bookshops and the Kiyosumi Gardens. In 2014, the New Zealand-based Allpress Espresso roastery and cafe group opened a branch here, in a former timber warehouse. It’s an interesting space, and is bringing some serious competition to a rival coffee roaster nearby (which only serves filter coffee to its customers). However, not all the locals seem to have taken to espresso – after having the coffee menu explained to them, a number walked out without trying, looking somewhat confused. But for me, having an Antipodean barista was obviously a plus. Rating: 9/10

Finally, I tried a couple of other espresso bars on my stay in Shimo-Kitazawa, one of which was not much more than an espresso stand, offering good coffee (Rating: 7.5/10), but the service was very slow. I can’t remember the name, and I can’t find a website for it, but it was close to the west entrance to the railway station. This trendy neighbourhood has a number of well-regarded coffee shops, but sadly, I did not have enough time to visit many of them. Next trip, perhaps.

Next week: More #FinTech stuff