Japan's Guide To Cryptocurrency Investment: Getting Started

Japan has a strong relationship with cryptocurrency, with the yen accounting for 56.2% of bitcoin as of January 15th. There are several ways to invest in cryptocurrency in Japan, each with its own advantages and drawbacks. Bitflyer is the largest exchange in Japan, with over 2 million users and a straightforward user interface. It is highly liquid, making it easy to buy and sell using JPY, but it costs 800 yen to withdraw money. Binance, the largest crypto exchange in the world by trading volume, offers a wide variety of products and cryptocurrencies and even allows users to earn interest on their crypto. However, it does not support JPY bank transfers. Other options include Coincheck, which allows users to buy and sell cryptocurrencies for as little as 500 JPY, and Kraken, which has low liquidity on JPY exchanges.

Choose a crypto-trading platform

When choosing a crypto-trading platform, it is important to consider a few key factors. Firstly, it is recommended to use a locally registered exchange that accepts Japanese Yen (JPY) deposits and withdrawals. This ensures compliance with local regulations and avoids unnecessary foreign exchange fees. For example, bitFlyer is a popular choice in Japan as it is regulated by the Japan Financial Services Agency (JFSA) and offers a simple and user-friendly platform. Another option is Coincheck, which is one of Asia's biggest cryptocurrency exchanges and allows buying and selling with three forms of payment. Binance, while not regulated in Japan, is another widely-used platform that accepts users and payments from 191 countries.

When selecting a crypto-trading platform, it is also essential to consider security features such as two-factor authentication and cold storage of assets. Additionally, the platform should offer a user-friendly interface, a wide range of cryptocurrencies, and competitive fees. For instance, Bybit provides a diverse selection of assets, straightforward onboarding, and 24/7 customer support. Kraken is another well-known platform with advanced security measures and a user-friendly interface suitable for both beginner and advanced traders.

It is worth noting that some traditional brokerages, such as Robinhood and eToro, also offer cryptocurrency trading. However, it is crucial to research the security, fees, and range of services provided by each platform before making a decision.

Connect a payment method

To buy Bitcoin from a crypto exchange, you will need to connect a payment method. This can be done by transferring money from your bank account or using a credit or debit card. Some exchanges also accept payments via wire transfers, PayPal or Apple Pay. Venmo and PayPal allow you to buy BTC through whatever payment method you have linked in their apps. ACH bank transfers tend to be the easiest and cheapest way to transfer money to a crypto exchange or brokerage. Most exchanges charge notable fees for credit/debit card purchases as well as for wire transfers.

If you are in Japan, there are several trusted exchanges available for you to sign up for, including bitFlyer, Coincheck and Binance. These exchanges are considered to be beginner-friendly and offer multiple deposit methods and a variety of cryptocurrencies.

If you are looking to use a JCB card, a popular card payment provider in Japan, you can search for sellers willing to accept this payment method on LocalBitcoins.

You don't have to buy an entire Bitcoin

Bitcoin is divisible into 100,000,000 fractions, commonly referred to as "Sats". Most people new to Bitcoin start investing by buying a handful of Sats, or a small fraction of one Bitcoin. You can purchase a fraction of a Bitcoin by choosing the dollar amount you want to buy.

The price of one Bitcoin is often in the tens of thousands of dollars, and at the time of writing, is $59,414.00. This high price can be a psychological barrier for new investors, who may believe they need to fork over tens of thousands of dollars to buy a whole Bitcoin. This is not the case, and it is possible to buy a half, a quarter, or even a fraction of a percent of a Bitcoin.

Some exchanges and traditional brokers allow you to buy Bitcoin directly, while others only let you buy financial products based on Bitcoin's price, like Bitcoin futures products or shares of the Greyscale Bitcoin Trust. When you buy these types of Bitcoin-related financial products, you don't technically own any Bitcoin.

If you want to buy a fraction of a Bitcoin, you'll need to create an account on a crypto exchange, decide how much Bitcoin you want to buy, and make a purchase.

Store your Bitcoin safely

When it comes to storing your Bitcoin, safety and security are paramount. Here are some detailed instructions and best practices to ensure your Bitcoin is kept secure:

Understanding Wallets

First, it's important to understand the different types of wallets available for storing Bitcoin:

• Hot Wallets: These are wallets that are connected to the internet, making them convenient for frequent transactions. Examples include software wallets on smartphones or computers, and exchange wallets provided by crypto exchanges. While hot wallets offer ease of access, they are more susceptible to hacking attempts and cyber-attacks.
• Cold Wallets: Cold wallets are offline storage solutions, meaning they are not connected to the internet. This includes hardware wallets (such as USB-like devices) and paper wallets (printing your private and public keys on paper). Cold wallets are considered more secure for long-term storage as they are not vulnerable to online attacks.

Recommendations for Storing Bitcoin

• Use a Combination of Wallets: Depending on your needs, it's advisable to use a combination of hot and cold wallets. For example, you could use a hardware wallet for long-term cold storage and a mobile wallet for spending and transactions.
• Prioritize Security: When choosing a wallet, prioritize security over convenience. Cold storage methods, such as hardware wallets and paper wallets, offer the highest level of security for storing large amounts of Bitcoin.
• Backup Your Wallet and Seed Phrase: It is crucial to back up your Bitcoin wallet and seed phrase (recovery phrase) regularly. Store backups in multiple secure locations to prevent loss or theft.
• Use Strong Passwords and Two-Factor Authentication: Always use strong, unique passwords for your wallets and enable two-factor authentication for added security.
• Keep Software Up to Date: Regularly update your wallet software and operating system to patch security vulnerabilities and enhance the protection of your Bitcoins.
• Avoid Online Services for Key Generation: Never use an online service or generator to create private keys. These services may compromise your keys, leading to potential theft.
• Purchase Hardware Wallets Directly from Manufacturers: When buying a hardware wallet, purchase directly from the manufacturer's website rather than third-party retailers. This reduces the risk of tampering or receiving a compromised device.
• Be Wary of Custodial Wallets: Custodial wallets, where a third party manages your private keys, have been targeted by hackers. While they offer convenience, they sacrifice some level of control and security.
• Don't Store Large Amounts on Exchanges: While it's common to leave Bitcoin on the exchange where you purchased it, this is not recommended for large amounts or long-term storage. Exchanges are frequent targets for hackers, and you may lose your crypto if the exchange is compromised.
• Consider Multi-Signature Wallets: For added security, consider using multi-signature wallets, which require multiple keys from different people to sign a transaction. This makes it much harder for attackers to access your funds.
• Physical Security: Ensure your physical environment is secure. Do not store your seed phrase in a home safe or safe deposit box, as these can be targeted during robberies or natural disasters. Consider more creative hiding places, such as behind drywall or in a locked box buried underground.

Crypto wallets

Hot Wallets

Hot wallets are connected to the internet and are often available as a standalone product or as an add-on through popular crypto exchanges. They are highly convenient and can be accessed from anywhere with an internet connection. However, they are more vulnerable to hackers. Examples of hot wallets include:

• Online wallets: Keys are stored in an app or other software and are protected by two-step encryption.
• Mobile wallets: Can be downloaded to your mobile device, where you then store your keys in the mobile app.
• Desktop wallets: A program is downloaded to your computer, which is then used to store your keys.

Cold Wallets

Cold wallets are wallets that are not connected to the internet. They are deliberately designed to be hard to hack, and unless the wallet owner falls for some sort of phishing attack, hackers have no way of obtaining the owner’s keys remotely. Examples of cold wallets include:

• Hardware wallets: Keys are stored in a thumb drive device that is kept in a safe place and only connected to a computer when you want to use your crypto.
• Paper wallets: Keys are written on a physical medium like paper and stored in a safe place.

Some of the crypto wallets that are available in Japan include BitFlyer, Coincheck, and Quoine by Liquid.

Frequently asked questions