First, please tell us about the background to the launch of the Kaga City Web 3.0 Division.
Satoshi Yamauchi (hereinafter, Yamauchi): Kaga City is a small municipality with a population of about 62,000 people, and its biggest challenge is population decline, which has led to the city being designated as a municipality at risk of disappearing. As population decline has also created a negative chain reaction, Kaga City is promoting policies related to digitalization and smart cities in an effort to somehow escape from the category of cities at risk of disappearing. In this context, the introduction of advanced technology and human resource development are the two pillars of our growth strategy.
There are many different types of advanced technology, but we have used Estonia, an electronic nation, as a benchmark. Last year, we signed a sister city agreement with the Estonian city of Haapsalu. Kaga City is also exploring ways to realize Estonia's policies, and one of them is the existence of an electronic citizen card.
This electronic citizen card is called "e-Residency" and is an initiative to digitally organize related populations. This initiative utilizes blockchain, and having e-Residency will enable business in the EU. Kaga City also wants to advance this initiative, so we launched the "e-Kaga Citizen System."
In addition, the use of Web 3.0 was attracting attention in the world, so the idea of "distributing NFTs as citizen cards" came up, and that was our introduction to Web 3.0.
In the first place, Kaga City announced the "Blockchain City Declaration" in 2018, and has been focusing on blockchain among advanced technologies and trying and erroring to incorporate it into administration. In that sense, it was a natural progression to launch the e-Kaga Citizen System.
Estonia's e-Residency has an incentive in terms of starting a business, but Kaga City also wanted to accumulate industries from outside the city and create support projects for entrepreneurs who will start new industries and startups. The idea is that by focusing on entrepreneurs, we can create a related population.
In fact, Kaga City Web 3.0 Division is a general term for entrepreneur support projects. Therefore, one of its characteristics is that it is not actually a single division located in the city hall. Kaga City has been designated as a National Strategic Special Zone, so we want to create a business environment that is comparable to overseas and make it the easiest city in the world to do business in.
▶The newly launched Kaga Web 3 Division is not an actual division, but a collective name for entrepreneur support projects being carried out in the metaverse. This digital support environment, which also includes start-up support under the special measures of the National Strategic Special Zone, is the first of its kind in the country.
Please tell us about the features of Kaga City Web3 Division.
Yamauchi: Kaga City has a physical human resource development center called the Innovation Center, but the Kaga City Web3 Division was born from the idea of creating an environment where people can access it virtually without having to go there in person, and that's why we built it on the metaverse.
Various mechanisms are being created in this metaverse, including one called the "Startup One-Stop Center." The Startup One-Stop Center itself is one of the special measures of the National Strategic Special Zone, but it is a contact point where entrepreneurs can go through the procedures and consultations for starting a business in virtual space without having to suddenly visit Kaga City.
Kaga City also supports the special measures of the National Strategic Special Zone called the "Startup Visa." This is a special visa that allows foreigners to extend their residence status for up to one year and six months when starting a business, and you can also get advice on this at the Kaga City Web3 Division.
You can also obtain e-Kaga Citizen NFT at the Kaga City Web3 Division, and the fact that it is built in combination with the metaverse and NFT is also a key point. Furthermore, we believe that the scheme, which is linked to the special measures of the National Strategic Special Zones, is a unique feature that utilizes Web 3.0 and is not available in other local governments.
▶ Kaga City Web 3.0 Division also handles special measures in the National Strategic Special Zone, such as the "Startup One-Stop Center" and "Startup Visa." With a single point of contact in the metaverse space, support for starting a business will be more thorough.
While it feels groundbreaking to be deployed on the metaverse, it is likely that the number of users will be limited given the current situation. What are your thoughts on this?
Yamauchi: It is still in the development stage to say that Web 3.0 has taken root, and at this point in time, the number of users will inevitably be limited. We believe that there are barriers to entry for the metaverse as well, so Kaga City Web3 Division is making efforts to make it easy for anyone to access with a smartphone, rather than by wearing a VR headset. However, we see the fact that it is difficult to enter the metaverse unless you are familiar with wallets and the digital environment to acquire NFTs as a whole as a challenge.
On the other hand, one of the reasons for targeting entrepreneurs in this project is that we believe that being able to use these new technologies and tools will be one of the factors that will lead to the success of starting a business. In addition, Kaga City is also providing support and human resource development for those who find cutting-edge technologies such as blockchain and AI difficult to use.
Are the people currently participating in Kaga City Web3 Division entrepreneurs or people who have a certain level of enthusiasm for Web 3.0?
Yamauchi: This time, the purpose was not to create a centralized database, so there is no specific information or evidence on what kind of people are acquiring e-Kaga Citizen NFTs, but I get the feeling that many of them are digital natives and familiar with Web 3.0.
What do you think are the significance and benefits of using Web 3.0 technology in Kaga City?
Yamauchi: First of all, speaking only of blockchain, I think reverse innovation is likely to occur. For example, the use of stable coins and token technology in Africa can be said to be a typical example of reverse innovation. In the same way, I feel that blockchain has potential in Japan because it is local governments that can innovate more than urban areas. I think it is a ray of hope for regional revitalization.
On the other hand, when it comes to crypto assets and tokens, they are still speculative and commercial, so it is difficult for local governments to handle them. Although we need to be careful in these aspects, Kaga City would like to support services that utilize blockchain in the sense of supporting private companies to innovate. Of course, we will also enhance our support for the use of other cutting-edge technologies, not just blockchain.
What are the strengths of Kaga City that can be utilized in the Web 3.0 field?
Yamauchi: Kaga City is a municipality rich in tourism resources, and hot springs and sake are great assets. I feel that there is a big opportunity in terms of such real world assets (RWA), and I think that it is a point where Kaga City's strengths can be utilized. I would also like to support business operators who think that they can do something by utilizing our strengths, and I would like to work together with them to create business opportunities.
Please tell us about your plans and specific goals for future efforts using Web 3.0 technology.
Yamauchi: In the future, I would like to focus on how to expand the related population. Kaga City's related population and exchange population based on tourists is about 2 million people per year. And for e-Kaga Citizens, we have set a goal of creating a related population of 1 million people. The physical population of Kaga City is about 62,000, but we are aiming for this number from the perspective of aiming to become a government-designated city in the digital world by creating a related population of 1 million.
Looking at conventional NFT marketplaces, there are no projects that distribute 1 million NFTs these days, and we are aware that it will be difficult unless we create significant innovation. Also, rather than directly aiming to achieve our goal by issuing 1 million NFTs, we would like to combine various ideas to create business innovation and move towards our goal.
◉ Yamauchi Satoshi
Chief Digital Officer (CDO) and Director of Innovation Promotion Department, Kaga City.
Graduated from Keio University Graduate School (MBA, 2016) and Osaka Prefecture University (now Osaka Municipal University) Graduate School (Master of Engineering, 2011). Tokyo Electron Limited (2011-2014), Sony Corporation (now Sony Group Corporation) and Sony Semiconductor Solutions Corporation (2016-2021). Appointed CDO of Kaga City in September 2021. Also serves as Director of Innovation Promotion Department in April 2023.
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