DIGITAL CURRENCY
The country’s government would accept digital currency, which is a sort of electronic money. It is different from your notes in that it can only be seen on a computer and does not physically enter your pocket, thus the terms “digital currency” and “virtual currency.” It debuted that year. You will be able to conduct digital currency transactions the same way you make cash transactions. The nation’s Central Bank is the one who issues it. Additionally, it appears on the central bank’s balance sheet for that nation. Its unique selling point is that it can be changed into the nation’s official currency. It is also known as the “Digital Rupee” in India.
Important points of digital currency:
1. This currency can be issued only by the Central Bank of the country. This digital currency will be in two ways, first retail, and second wholesale. Retail digital currency will be used by common citizens and companies, while wholesale digital currency will be used by financial institutions.
2. It will also be included in the balance sheet of the country’s central bank. The special thing about this digital currency will be that it can also be converted into sovereign currency and it will be the digital rupee of India.
3. There is no clear information about the use of digital currency yet. However according to the information received, it is believed that digital currency will be issued by RBI-Bank, after which you will get it.
4. After this, the person you want to pay, pays it with it, and it will reach his account directly. It will not have any kind of wallet and no bank account will be required. It will be used just like cash.
5. The only difference will be that it will work in digital form through technology. It will be an electronic form of cash. Unlike cryptocurrency, the value of the digital currency does not fluctuate in any way, whereas cryptocurrency fluctuates, an example of this is bitcoin.
6. You get to see many fluctuations in the value of Bitcoin. The digital currency is issued by the central government of the country, the same cryptocurrency uses blockchain technology.
7. Digital currency does not require encryption but requires all users to secure their digital wallets and banking apps with strong passwords and biometric authentication to reduce the chances of hacking and theft. The same applies to debit and credit cards, which are used to transact in digital currency
India’s Digital Currency:
India’s official digital currency is likely to be launched in early 2023. It will be similar to an electronic wallet operated by a private company but with a ‘government guarantee’ attached to it. Finance Minister Nirmala Sitharaman, while presenting the budget for the financial year 2022-23 on February 1, said that a central bank-backed ‘digital rupee’ would be introduced soon. As opposed to storing cash like in the case of Dig the Ital Rupee, you would have digital money on your phone that is stored with the central bank and can be transferred to any business from there. Government backing for it is complete.
When money is transferred to the e-wallet of a company, the ‘credit’ risk of that company is also attached to this money. Apart from this, these companies also charge fees.
Benefits of digital currency:
- No bank account is needed in which digital currency.
- Faster transactions and less expensive than printing notes.
- Offline transactions will be possible.There will be no illegal transactions.
- Every digital rupee would be closely monitored by the government.
- The government will be able to control the currency in the market properly.
Difference between cryptocurrency and digital currency:
The digital rupee is inspired by cryptocurrencies like bitcoin but with central bank regulations. That is, bitcoin is unregulated while digital currency is issued by the central bank. Cryptocurrencies are managed by a computer algorithm. Whereas digital currency is regulated by the authority.
The digital rupee is recognized by the government. Along with this, the digital rupee will also be included in the balance sheet of the central bank and it can be converted into the sovereign currency of the country. It is proposed that digital currency in the country should be kept in the definition of banknote. For this, RBI has proposed to amend the law.
Cryptocurrency |
Digital currency
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| 1. A cryptocurrency is a kind of encrypted value storage. Cryptocurrencies are developed using cutting-edge blockchain technology and are privately held. Most nations have not yet regulated cryptocurrencies. However, the central bank oversees digital currency. |
1. Digital currency is essentially an electronic form of government-issued currency whereas cryptocurrency is a store of value, secured by encryption. Cryptocurrencies are called digital assets whereas digital currency is not a digital asset.
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| 2. Cryptocurrencies are protected by strong encryption and to trade in crypto, users must have a bank account, from which they buy cryptocurrency of the respective value online in exchange for digital currency. |
2. Digital currency does not require encryption but requires all users to secure their digital wallets and banking apps with strong passwords and biometric authentication to reduce the chances of hacking and theft. The same applies to debit and credit cards, which are used to transact in digital currency.
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