Japan's Mizuho Bank develops bank digital currency and works with IBM to test blockchain instant settlement

Japanese banking giant Mizuho Financial Group and tech giant IBM have announced a partnership to jointly test the use of blockchain technology in virtual currency settlements, using the same open source code that IBM provided to the Linux Foundation-led Hyperledger project.

Mizuho is a well-known Japanese banking group. The bank’s efforts in blockchain are very noteworthy. It previously worked with consulting firm Cognizant to create a blockchain solution for record keeping, and now it has announced a new blockchain project with technology giant IBM.

In a recent partnership announcement, Mizuho revealed that they will conduct a blockchain test with IBM to use the technology for instant exchange of virtual currencies.

Masahiko Katou, a senior technical staff member at the bank, said:

“By integrating blockchain technology into virtual currency settlement, Mizuho will explore how payments can be exchanged instantly.”

He also said the pilot could eventually lead to "new types of financial services" based on blockchain technology.

Mizuho has used IBM technology before, such as its enterprise platform Watson, and this time, IBM will provide source code to the project, the same code that IBM provides to the open source project Hyperledger.

Mizuho revealed a three-month blockchain trial in March 2016. The trial was conducted in partnership with technology company Fujitsu and successfully achieved same-day settlement and tamper-proof results.

While the details of the ‘cryptocurrency’ settlement mentioned above are not very clear, it seems that the currency may be a bank-issued token rather than a well-known cryptocurrency such as Bitcoin or Ethereum. In addition, it is almost certain that the settlement process will use a permissioned private ledger.

Mizuho’s announcement of a cryptocurrency blockchain test comes at a time when Japan’s largest bank, Tokyo-Mitsubishi UFJ, recently confirmed its own blockchain-based cryptocurrency trial, MUFJ Coin. The MUFJ Coin will be exchanged 1:1 with the Japanese yen. The exchange rate for Mizuho’s digital currency may be the same.