India’s New Digital Currency Will Be Launched Soon. How it differs from Bitcoin
The Reserve Bank of India (RBI) is planning for the progressive adoption of the CBDC (Digital Currency Central Bank), which is expected to be completed by the end of this year, in phases. Numerous financial organizations all around the globe were grappling with the idea of an officially recognized digital currency that could be used as a part of the day-to-day financial system before Bitcoin and other cryptocurrencies rose to prominence recently.
The CBDC’s creation would be a historic first for India, as it was the organization that pioneered the country’s digital currency. A central bank, such as the Reserve Bank of India, is primarily concerned with sustaining the country’s financial systems, rather than operating as a traditional bank. It functions as a sort of governing body. As a result, the CBDC would be able to help the financial system or even improve the current infrastructure.
Governor Shaktikanta Das of the Reserve Bank of India stated in an interview with CNBC that the Reserve Bank of India may begin its first digital currency tracking initiatives as early as December. This might indicate that it is simply the first of numerous sorts of digital currencies that will be introduced to the market in the future. According to Das in the CNBC interview, “we are extremely cautious since this is a new product, not just for RBI, but also for the worldwide market.”
What exactly is a Central Bank Digital Currency?
Digital money is, at its core, a digital or virtual currency that is issued by the central bank in the form of a certificate of appointment. It has characteristics that are similar to those of modern digital/fiat money. What’s more, it’s a legally recognized currency that serves to fund the operations of a legitimate financial institution.
It may also be exchanged for fiat cash in a one-to-one fashion. The sole difference between it and private digital currencies such as Bitcoin and Ether is that it has a different physical form. It’s as simple as digitalizing your money, and the value remains the same in the process.
What makes it different from cryptocurrency?
Cryptocurrencies, such as Bitcoin, have a significant distinction in that they are more like commodities than the actual worth of money in a monetary system, according to this definition. Consider the following example: one Bitcoin is not equal to one rupee. To get Bitcoin, you must first invest in it and then purchase it with money, and here is where the biggest difference is found.
Another important consideration is that cryptocurrency is extremely volatile and does not have a legal issuer, but the RBI is the issuer for the digital bank, which indicates that the central bank’s digital currency may be considered money in every meaning of the word.
What is the Indian government’s position on the Central Bank’s digital currency?
Das stated that the Reserve Bank of India (RBI) wished to establish the central bank’s digital currency as a mass digital asset. The Reserve Bank of India (RBI) released a letter stating that the central bank’s digital currency and the interest it has as an asset are universal, but only a small number of countries have even reached the pilot stage of launching such a program.
One of the reasons for the digital shift is that the Reserve Bank of India is increasingly relying on traditional paper money. Furthermore, we are living in an era of sustainable development, and digital media is quickly emerging as the only viable long-term alternative.
The government is also attempting to meet the public’s demand for digital currencies, which has increased significantly in recent years. This would help to mitigate the negative consequences of conducting business in private currencies that are not regulated by the present financial system.