The Future of Cryptocurrency In India: India Launching Its Very Own Digital Currency
Recently the Indian central government issued a statement that “in the upcoming winter session of the Parliament they will ban all private cryptocurrencies”, due to this news many crypto investors were shocked. However, With the decision to ban a few digital coins, the government also revealed plans to introduce an official digital currency. “The Reserve Bank of India (RBI) is expected to issue the digital coin that will be regulated by the central bank”- RBI. Moreover, revealing another big news is that, The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is also aiming to regulate cryptocurrencies in the country.
RBI further issued a statement that they will be using Blockchain, which is the underlying technology for the cryptocurrencies, and the government also aims to promote Blockchain technology for various use-cases.
India’s First Digital Currency
As the Indian government will be soon rolling out its own virtual currency, let’s see how this will be different from Bitcoin and Ethereum. The RBI is gearing for the introduction of CBDC(Central Bank Digital Currency) which they aim to roll out by the end of this year. Even with the rise of Bitcoin and Ethereum, many financial institutions are struggling with the idea of digital currencies that are recognized as part of the day-to-day financial system. The launch of the CBDC would mark history for India. The role of RBI is to support the banking system in the country and CBDC would be something that supports the banking systems or complements the existing frameworks.
What is CBDC(Central Bank Digital Currency)?
The term CBDC refers to the virtual form of fiat currency. It is an electronic record or digital token of a country’s official currency. As such, it is issued and regulated by the nation’s monetary authority or central bank. CBDC promotes financial inclusion and simplifies the implementation of monetary and fiscal policy.
How is CBDC different from Cryptocurrency?
The major difference between CBDC and cryptocurrency is that cryptocurrencies for instance Bitcoin are stored on a decentralized distributed ledger that is the Blockchain technology but CBDC is stored on an electronic record that is centralized and regulated. Secondly, cryptocurrencies are highly volatile and have no legal issuer whereas CBDC has RBI as its issuer.
To conclude, RBI Governor Mr. Das told the press that they were aiming to launch a CBDC as a mass-scale asset and he also stated that very few countries have even come close to the pilot stage of launching such an endeavor.
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