While the rest of the globe is on pace to grasp this technology in hopes that it could transform financial markets, Japan is lacking specialized technicians to develop their own blockchain industry. 

Japan Risks Falling Behind

Japan has a shortage of developers and programmers that specialize in blockchain technology solutions, according to Reuters. Meanwhile, legacy financial institutions such as banks, brokers and trade finance operators within the region hope they can obtain the ability to leverage distributed ledgers to better their economic markets.

Chief Executive Hiroshi Shimo of Consensus Base is developing a blockchain platform for Japan’s second-biggest brokerage house, Daiwa Securities Group Inc. Shimo details to Reuters that this is a significant issue for institutions residing in mainland Japan. Shimo, the sole blockchain expert for Daiwa, explains the technology is so new and because of this there really isn’t many people who can work with these protocols saying:

“At the moment, there just aren’t any technicians in Japan.— There was nobody who could do it inside the company or at the big IT firms,”

Blockchain technology could cut costs within the worldwide financial markets by 20 billion by the year 2021 according to the multinational consultancy firm Accenture. This has prompted many Japanese financial firms to want to get in on this innovation. But the shortage of talented specialists may impede the country from gaining ground among regions such as London, California, New York, Toronto, and others.

Japanese Executive Director, Pascal Hideki Hamonic, a fintech recruiter for Descartes Search, LLC, says distributed ledger technology positions average two candidates in contrast to ten for other software projects. Hamonic tells Reuters:

It’s difficult to recruit blockchain engineers, there just aren’t enough of them.

The country also has just a small amount of blockchain ventures when compared to other regions around the world. There are 167 fintech startups registered with Japan Venture Research, and the U.S. has roughly 3,300 according to CB Insights accounts. Among Japan’s fintech startups, there are only 20 blockchain-related businesses, says Chief Executive Yasunori Sugii of fintech firm Currency Port, with the U.S. touting 130. Out of the $1.2 USD billion invested in distributed ledger startups worldwide Japan only accounted for $66 million, comprising ten deals since 2014.

Yet Bitcoin is Thriving

There may be a shortage of distributed ledger engineers in Japan but the country’s Bitcoin trading has grown exponentially. In July, Japanese Bitcoin volume had surpassed trading volume in China according to BitFlyer and Coinmarketcap.com. BitFlyer CFO, Midori Kanemitsu, said volumes increased due to zero-fee campaigns and ultimately competition between leading Japanese exchanges.

Many are baffled that the world’s third-largest economy is lacking when it comes to blockchain engineers. While others believe the country will be just fine when it comes to the global blockchain race. Chief Executive Takao Asayama of blockchain firm Tech Bureau Corp is confident about Japan’s prospects, and he believes blockchain will save Japanese institutions a bundle.

“There will be a paradigm shift in terms of banks’ cost structures,” says Asayama. “With blockchain, fees consumers are charged by foreign banks will get much lower.”