What is RBI Digital Rupee?
Bitcoin and blockchain technology have sparked interest in a society where cash is no longer necessary and digital currencies are prevalent. Governments and central banks worldwide are exploring the idea of introducing their own digital currencies.
In India, this digital currency is called the Digital Rupee, which falls under the category of Central Bank Digital Currency (CBDC). As explained on the Reserve Bank of India’s website, CBDC is a digital currency issued by the central bank. In simple terms, the CBDC will be a digital form of the Indian rupee. When the Reserve Bank of India starts circulating the digital rupee, everyday individuals like you and me will be able to use it just like the regular rupee. This means that digital rupees can be utilized for various transactions, including NEFT, IMPS, and digital wallets. It can be used for both wholesale and retail transactions.
In summary, the Digital Rupee is a digital version of the Indian rupee that will function similarly to physical currency, allowing people to engage in digital transactions using methods like NEFT, IMPS, and digital wallets
Digital Curreny Vs Cryptocurrenty
The blockchain is like a secure ledger that keeps track of transactions and who owns what. It’s used for Bitcoin and many other cryptocurrencies. Unlike traditional banks or governments, it doesn’t need a central authority to work. On the other hand, the digital rupee is a type of currency that is controlled by a central bank. It’s different from private cryptocurrencies like Bitcoin and Ethereum. The digital rupee will be accepted as legal tender, which means it can be used to pay for things. But Bitcoin and other cryptocurrencies are considered “virtual assets” and are not accepted as legal tender.
Why Digital Currency ?
The Reserve Bank of India (RBI) took the decision to create a digital version of the Indian rupee. This decision was made because India wants to keep up with the trend of virtual currencies. The RBI has been worried about private cryptocurrencies being used for illegal activities like money laundering, terrorism financing, and tax evasion. By creating its own digital currency, the RBI aims to address these concerns. The Finance Minister, Nirmala Sitharaman, believes that introducing a central bank digital currency will benefit the digital economy and make currency management cheaper and more efficient.