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Japan's Local Government Digital Currencies: Vulnerabilities to Phishing Scams

2024-11-21

Digital currencies issued by local governments in Japan have become a hotbed for phishing scams. These scams take advantage of reward programs and have exposed significant vulnerabilities in the system. The Japan Times has been closely following these cases and the subsequent calls for stronger security measures.

Uncover the Hidden Dangers of Japan's Local Digital Currencies

Osaka's Fraud Case: A Closer Look

Police in Osaka recently made a significant arrest. Seven Vietnamese nationals were accused of using stolen credit card information to fraudulently obtain "machikane points," a regional digital currency used in Toyonaka City. These suspects exploited the currency's premium reward system, which offered up to ¥2,500 (around $345) for purchases of ¥50,000 (~$6,900). By using the same credit card across multiple accounts, they managed to amass nearly half a million dollars in fraudulent premiums in just two days. Investigators suspect the involvement of additional individuals, highlighting the widespread nature of this problem.This case is not an isolated incident. Similar scams have surfaced elsewhere, such as in Kumagaya, Saitama Prefecture, where the local Kuma Pay currency was targeted. Nationwide, several municipalities have reported incidents, although some have been reluctant to disclose details. This shows the need for greater transparency and cooperation in addressing these issues.The popularity of digital regional currencies, designed to boost local economies, has surged in recent years. According to data from Senshu University, the number of municipalities issuing such currencies jumped from 32 in 2019 to 219 in 2023. However, experts warn that phishing groups "tend to target newly introduced digital currencies." This highlights the need for municipalities to be vigilant and take proactive measures to protect their citizens and their economies.Authorities are urging municipalities to strengthen identity verification protocols and limit the use of credit cards to those registered under the purchaser's name. While these measures are important, some officials argue that phishing-related theft is difficult to prevent entirely. This highlights the complexity of the issue and the need for a multi-faceted approach to addressing phishing scams in the digital currency space.

Saitama's Kuma Pay Currency: Under Attack

In Kumagaya, Saitama Prefecture, the local Kuma Pay currency became a target for phishing scams. The modus operandi was similar to that in Osaka, with fraudsters using stolen credit card information to obtain rewards. This shows that phishing groups are not limited to specific regions or currencies and are constantly on the lookout for new opportunities.The surge in the popularity of digital regional currencies has also led to an increase in the number of phishing attempts. As more municipalities issue these currencies, the risk of fraud also increases. This highlights the need for municipalities to work together and share information to combat phishing scams effectively.Authorities are working hard to address these issues, but the battle against phishing scams in the digital currency space is far from over. There is a need for continuous education and awareness campaigns to help citizens protect themselves from these scams. Additionally, technological solutions need to be developed to enhance security and prevent fraud.In conclusion, the issue of phishing scams in Japan's local government digital currencies is a serious one that requires the attention and cooperation of all stakeholders. By strengthening security measures and working together, we can help protect our local economies and citizens from the harmful effects of phishing scams.

UBS has taken a significant step in the financial world by rolling out UBS Digital Cash, a blockchain-based system designed specifically for commercial and institutional customers. This innovative payment solution aims to revolutionize the way transactions are conducted, offering enhanced efficiency and security.

Unlock the Potential of Blockchain in Payments

Enhanced Efficiency through Blockchain Technology

The Swiss bank's UBS Digital Cash system leverages blockchain technology to eliminate the need for traditional intermediaries. Smart contracts, embedded directly into the code, ensure compliance checks are carried out automatically. This not only increases operational efficiency but also addresses the long-standing inefficiencies in cross-border payments. By automating processes such as clearing, settlement, and fund transfers, UBS offers real-time payments that bypass regulatory intermediaries, reducing costs and delays. For example, in traditional systems, the settlement and transfer of funds could take hours or even days. With UBS Digital Cash, this happens in near real-time, providing corporate and institutional clients with a clear picture of their current liquidity.

Transparent and Immutable Blockchain Ledger

One of the major benefits of UBS Digital Cash is the transparent and immutable nature of the blockchain ledger. Once transaction data is recorded, it becomes extremely difficult to change, enhancing system integrity even in the face of potential cyberattacks. Each entry in the ledger contains information about all previous entries, and the maintenance of the ledger is decentralized. This makes fraudulent activity much more difficult, as there is no central point of control. Greater transparency generates greater trust in the system, which is crucial when moving large sums of money around the world.

Impact on Banks and Financial Institutions

This innovation is most impactful for banks and financial institutions. They are subject to strict liquidity constraints that limit their lending capacity. By increasing liquidity through UBS Digital Cash, banks' willingness and ability to lend are enhanced. Although UBS is a large bank and may not have a significant impact on macroeconomic variables on its own, if other financial institutions follow suit and invest in this technology, it could lead to an effective increase in the money supply. GlobalData's Payment Instrument Analytics shows that the volume of instant payments in Switzerland has risen 21-fold over the last five years, and the total value of instant payments transactions is forecast to increase from $2bn in 2019 to $376bn in 2028. This indicates the high value consumers and businesses place on the efficiency benefits of these payment channels.

Potential Unintended Consequences

While UBS Digital Cash holds great promise, it also presents potential unintended consequences. These include inflationary pressures, increased economic activity, and increased levels of bank risk. In the coming years, governments and central banks will need to carefully consider fiscal and monetary policies to address these effects. Additionally, regulation around this new technology needs to be strengthened. Although identity and legitimacy checks are in place before institutions are granted access to the private blockchain, transactions are not subject to the same level of scrutiny as traditional payment channels. The transparency of the blockchain mitigates the likelihood of fraud, but suspicious or irregular transactions can still occur. UBS Digital Cash exemplifies the transformative potential of blockchain in monetizing payments, but its success and broader adoption depend on addressing these regulatory gaps and managing systemic risks.

If it seems everyone is buzzing about bitcoin these days, you’re on the right track. This digital currency has been making waves, reaching record highs and coming close to $100,000 last week. Since its launch in 2009, bitcoin has been at the forefront of the cryptocurrency world, operating independently without the need for banks to verify transactions.

Unlock the Mysteries of Bitcoin and Its Impact

What is ‘Doge’?

Explaining the meme and cryptocurrency after Elon Musk’s appointment to D.O.G.E. is crucial. Dogecoin, with its unique story, has gained significant attention. It started as a joke but has now become a legitimate part of the cryptocurrency landscape. Elon Musk’s support played a major role in its rise. As a result, it has a dedicated community and a certain allure. People are fascinated by its potential and how it fits into the broader cryptocurrency ecosystem.

Dogecoin operates on a blockchain similar to bitcoin but has its own characteristics. Its value has seen significant fluctuations over the years, but it remains a popular choice among cryptocurrency enthusiasts. The meme aspect has also contributed to its popularity, making it more than just a digital asset.

What is bitcoin?

Bitcoin is a digital asset that was launched in 2009 by an unknown person or group known as Satoshi Nakamoto. It has a cap of 21 million tokens, and currently, about 19 million have been released. In April, bitcoin underwent a halving, which reduces the rate of new bitcoin creation. This has led to increased demand as the cap approaches.

A bitcoin is worth around $98,000 currently, but fractional shares are common. NerdWallet notes that you can own a part of each coin. Bitcoin is created through the work of crypto miners who validate transactions on the decentralized blockchain network. This network acts as a digital ledger, preventing fraud and ensuring the integrity of the currency.

Cryptocurrency: Legislation likely coming under Trump administration, ex-SEC chief says

Trump’s interest in bitcoin has had a significant impact on its climb. Earlier this year, the U.S. Securities and Exchange Commission voted to allow the sale of bitcoin-based exchange-traded funds (ETFs) to the public. This allowed more investors to get involved in bitcoin in a way similar to investing in stocks, bypassing crypto exchanges.

The potential for regulatory changes under the Trump administration has added an extra layer of excitement to the cryptocurrency market. Investors are closely watching to see how these developments will shape the future of bitcoin and other digital assets.

How does bitcoin work?

Just like the dollar, bitcoin can be used as currency, but it exists in the virtual world and is not controlled by banks or governments. While a whole bitcoin is priced at nearly $100,000, you can own partial shares. The smallest share, called a Satoshi, is equal to a hundred millionth of one bitcoin.

You can buy bitcoin on various platforms such as Binance.US, online stockbrokers like Fidelity and E-Trade, and trading apps like Robinhood. If you buy on a crypto exchange, you’ll need to create a crypto wallet to hold your bitcoin. If you invest in the approved bitcoin ETFs, your online broker will hold it in your brokerage account like any other investment.

What can I buy with bitcoin?

Pretty much anything can be bought with bitcoin. For example, you can get a bitcoin debit card and load it with your cryptocurrency holdings. This can be used just like a regular debit card. Many companies now accept cryptocurrency for purchases, including AT&T, Microsoft, Rolex, Time Inc., and Tesla.

You can even buy “art” with bitcoin. That banana duct-taped to a wall that sold for $6.2 million was purchased using crypto. The versatility of bitcoin as a payment method is expanding, and more businesses are realizing its potential.

What concerns are there about bitcoin and cryptocurrencies?

Back in 2018, investment guru Warren Buffett predicted a bad ending for cryptocurrencies like bitcoin. His stance has remained relatively unchanged. However, the surge in bitcoin’s valuation has led many to believe that the cryptocurrency has arrived.

Anthony Scaramucci has said Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood has predicted it will hit $1.48 million by 2030. But crypto exchanges can fail, as seen with the 2022 bankruptcy of the FTX cryptocurrency exchange, where customers lost $8 billion. Founder Sam Bankman-Fried was sentenced to 25 years in prison.

Bitcoin values dipped after the FTX incident but have since rebounded. Supporters argue that as more people invest in bitcoin and other cryptocurrencies, they become more stable. Volatility is seen as both an advantage and a disadvantage. It offers the potential for future earnings but can be risky for those seeking stable investments.

Fidelity Investments warns that bitcoin and crypto are highly volatile and may be more susceptible to market manipulation than securities. Crypto holders do not have the same regulatory protections as registered securities, and the future regulatory environment is uncertain. It’s important to approach bitcoin investment with caution and only invest what you can afford to lose.