In a novel approach to support its aging population, Yamakoshi, a secluded village in the Niigata mountains of Japan, has turned to non-fungible tokens (NFTs) to generate funds and engage a digital community. The initiative, named the Neo-Yamakoshi Village project, has attracted 1,700 "digital citizens" through the sale of NFTs, which have collectively raised over $423,000 since its launch in 2021.

The Nishikigoi NFT collection, named after the vibrant breed of koi carp, serves as both an identifier for Yamakoshi’s digital citizens and a governance token. These tokens allow holders to participate in the village's decentralized autonomous organization (DAO)-managed voting processes, effectively giving them a say in community decisions. According to the Japanese research and consulting firm Yuri Group, this experimental strategy could garner attention from other nations grappling with declining birth rates and aging populations.

The proceeds from the NFT sales have been funneled into various community initiatives, such as organizing a sports day for local schoolchildren. While the Nishikigoi tokens are free for residents physically located in Yamakoshi, digital community members must purchase them. As of June 26, the floor price for these NFTs was 0.0318 Ether (ETH), according to the NFT marketplace Magic Eden.

Despite its innovative approach, the Neo-Yamakoshi Village project faces several challenges. Educating older adults about the benefits and mechanics of the technology, including the DAO voting process, has proven difficult, resulting in low voter turnout. Additionally, overseas digital citizens have encountered language barriers, further complicating participation.

The project's potential success could have broader implications. The Yuri Group's report estimates that if the strategy is adopted by other villages, rural Japan could potentially raise around half a billion dollars while pioneering new social technologies with global appeal. This comes at a critical time, as a report by the Population Strategy Council in April indicated that 40% of Japan's 1,729 municipalities are at risk of disappearing due to declining birth rates.

Prime Minister Fumio Kishida’s administration recognizes the importance of Web3 technologies in achieving “Society 5.0,” a vision for a sustainable and advanced society integrating artificial intelligence, the Internet of Things, and big data. Reflecting this commitment, the ruling Liberal Democratic Party granted the Neo-Yamakoshi Village project 10 million yen (approximately $62,500) to test and implement Web3 tools.

However, the broader NFT market is facing headwinds. Global NFT trading volumes have seen significant drops in recent months, with sales volumes expected to close the second quarter of 2024 down 45%, according to CryptoSlam data. Additionally, NFT market capitalization, dominated by collectibles and avatars, fell 31.5% in the three months leading up to June 26, according to NFTGo data.

Despite these market challenges, there is optimism for the future of NFTs in Japan. Will Fee, a researcher at Yuri Group, told Cointelegraph that Japan's rich culture of anime, manga, and physical collectibles could lend itself well to NFT adoption. "The ‘digital citizens’ in the Yamakoshi metaverse also tend to use anime or more cartoonish avatars, which suggests that the more playful applications of the tech also have a shelf life alongside its socially impactful use cases," he said.

As Yamakoshi’s experiment unfolds, it may pave the way for other rural communities worldwide to explore innovative solutions for sustaining and revitalizing aging populations through digital engagement and new technologies.