The way we do cash transactions, we will be able to do digital currency transactions as well. Digital currency ie e-rupee, which can be used like any normal note or currency. This will reduce transactions in cash.
Digital Currency: The pilot project of Digital Rupee in India was successfully released on 1 December 2022. The Reserve Bank of India (RBI) issued 1.71 crore digital rupees on 1 December. These digital rupees have been issued by the four banks (State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank) involved in the pilot project in Delhi, Mumbai, Bengaluru and Bhubaneswar in the first phase. Thereafter Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank will also be included in this. In its second phase, there is a plan to expand digital rupee to Ahmedabad, Guwahati, Gangtok, Hyderabad, Indore, Kochi, Lucknow, Shimla and Patna.
What is digital currency?
Central bank digital currency (CBDC) is an electronic form of cash. The way we do cash transactions, we will be able to do digital currency transactions as well. Digital currency ie e-rupee, which can be used like any normal note or currency. It can be transacted digitally. It works somewhat like cryptocurrency (Bitcoin).
What is the difference between cryptocurrency and digital currency?
Digital currency is essentially an electronic form of government-issued currency, while bitcoin is a store of value that is protected by encryption. Cryptocurrencies are called digital assets, in contrast to which digital currency is not a digital asset. These two are not really interchangeable.
Digital currency can be used in contactless transactions, such as paying electronically from a bank account to another. Digital currency is involved in all forms of online transactions.
Digital currencies are regulated by central banks, while cryptocurrencies are privately owned and not regulated by most countries.
How will digital currency work?
Digital currency will be like a digital token, which will be legally valid. All the forms of currency in India will have digital currency in the same unit. For example – Rs.5, Rs.10, Rs.50, Rs.100, or Rs.500. This digital currency will be issued by the banks. Which will also be used like a digital wallet. You can use digital currency for payment to anyone. This will be reflected in your account electronically and can also be exchanged for currency notes. E-Rupee will be used in the same way as we check our bank account balance or check mobile wallet in online transactions.
Purpose of bringing digital currency
After digital currency in the country, we will have little need to keep cash, or rather say that cash will not be needed at all. The aim of the government is also to make India cashless. The control of the digital rupee will be completely with the RBI.
How safe is digital currency?
Digital currency is considered more secure than bitcoin, as it is a country-issued currency. Which can also be kept in bank account, mobile phone in the form of electronic token, prepaid card and digital wallet.
benefits of digital currency
International Monetary Fund believes that digital currency can be a good option in case of any natural calamity, cash crunch, payment failure. Digital currency will give people more payment options. Economic crimes can be curbed with digital currency. This will promote transparency in digital transactions.
disadvantages of digital currency
A major disadvantage of Reserve Bank’s digital currency (e-rupee) can be that it will almost end the privacy related to money transactions. Most of the transactions in cash keep the identity a secret, while digital transactions will be monitored by the government. Digital currencies can also become a widespread problem in case of digital theft and network failure.
digital currency in the world
Not only India, almost half of the countries of the world are working on CBDC i.e. Central Bank Digital Currency. It has been released in the Bahamas in 2020 (first in the world). China is the first major economy to launch a CBDC pilot project (in the year 2020). Uruguay, Japan, Russia and South Korea are considering launching it. Work on this is also going on in America and United Kingdom.
Also read: What is Digital Rupee? How does this work?
what are the benefits and risks of uses of RBI digital currency
Story first published: Saturday, December 3, 2022, 15:07 [IST]