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Virtual Currency Technology and Challenges

How to see the virtual currency in the early days? The “virtual currency” represented by Bitcoin is drawing worldwide attention. However, there remain technical and social issues to be solved. It is difficult to say that it has been widely evaluated positively because it can be used as a means of illegal remittance and partly due to problems such as bankruptcy of exchanges. On the other hand, the technology related to virtual currencies has been steadily progressing step by step, and it is expected that the legal system will be further improved in the future, so there is a possibility that it will become a major trend in the future.

Why cfd trader getting attention? Associate Professor Hitoshi Okada, who has been researching electronic money since 1995 as a researcher of information systems and has been engaged in research on electronic commerce that cannot be covered by existing legal systems, said, “The environment surrounding virtual currencies is It’s similar to the dawn of the Internet around 1995.” We will ask Associate Professor Okada about the problems and issues of virtual currencies, and the technologies and mechanisms that support them.

Risks surrounding virtual currency

Okawara In Japan, the image surrounding Bitcoin seems to be preceded by the image that it is dangerous before the correct understanding of what virtual currency is. Is virtual currency dangerous?

If you discuss it in the big idea of Okada virtual currency, you will make a mistake in that conclusion. The first point is how much risk the technology itself has. And the other is how much danger exists in exchanges that handle virtual currencies, current systems and rules. Rarely, you will require to look at risk from these two perspectives. Regarding the former, there is no issuer in decentralized virtual currencies such as Bitcoin, and there is no proof of the nation, so the mechanism is significantly different from previous currencies, and some people feel uneasy there. There may be many.

Taking Okawara Bitcoin as an example, transactions are protected by cryptographic technology in which all participants have two special keys, an individual (secret) key and one public key. Furthermore, unlike centrally managed electronic money, by using a method called “blockchain” (see P6-7 for details), it is a mechanism to ensure the correctness of payment information by recording all participants. In that respect, an environment is in place where users can secure their own bitcoins as long as the private key is not destroyed or lost. Even in the case of Mt.Gox, if the security as an exchange was secured and the access control from within the company was strong, such an incident would not have occurred.

Okada: In that respect, the issue that should be addressed now is not the mechanism and technical issues of the virtual currency itself, but the latter of the above two viewpoints of risk, the technical issues of exchanges, and management of those issues. It is a system that does. Banking can only be performed by companies authorized by the Banking Law, but there is no regulation on virtual currency. It is reported that the FSA has begun to consider moving the exchange to a license system or registration system, but it is also necessary to support a reliable exchange system institutionally by such a mechanism.

In June this year, the Financial Activities Working Group (FATF), an international organization that regulates money laundering, sought to tighten regulations on virtual currencies and recommended introducing a license system for exchanges.

When using a license system or registration system, it must be based on the characteristics of virtual currency. As an extension of the existing banking law, it is not enough to authorize on the premise that you have know-how in the financial industry. Since virtual currencies are assumed to operate in the ICT environment, it is essential to have a sufficient knowledge and know-how of ICT and realize a secure environment. In that sense, we believe that information security audits will play a more important role in the spread of virtual currencies.

Will virtual currency become popular?

Okawara At present, virtual currency is still used only by some people called early adopters. Will virtual currency spread in Japan?