It is a sort of digital money, or rupee, that can be used in contactless transactions. Finance Minister Nirmala Sitharaman indicated that the Reserve Bank of India (RBI) would be launching its digital currency soon during the presentation of the Union Budget in 2022. 2023 is the target date for introducing a digital currency called "CBDC" from the Reserve Bank of India (RBI).
It is expected that the introduction of a central bank digital currency will have a major impact on the digital economy. In her Budget speech, Finance Minister Sushma Sitharaman remarked that "digital currency will also lead to a more efficient and cheaper currency management system."
The terms "cryptocurrency" and "digital currency" are often used interchangeably by the general public. As far as I can tell, yes. What's the difference between them?
Sovereign backing will consequently be provided by the digital rupee, which is a digital version of the physical cash issued by the RBI. Mihir Gandhi, Partner and Payments Transformation Leader, PwC India, said that cryptocurrencies, which are not backed by any government or central bank, can either be an asset class or a payment mechanism.
Digital rupees are distinct from other cryptocurrencies in that they'll be backed by the government. Second, the digital rupee will have the same value as holding a physical rupee equivalent because of government backing, according to Manoj Dalmia, founder and director of Proassetz Exchange.
According to this definition, CBDC is simply the digital representation of the legal currency used in the country and is not a privately owned currency.
Cryptocurrency is a blockchain-based, decentralized digital asset and method of exchange. However, its decentralised character, which does not require banks, financial institutions, or central agencies, has made it controversial. As a result, it is completely unaffected by the actions of the government. The free market determines its worth, and it is unrelated to any commodity. As a result, it has no inherent value, according to Archit Gupta, CEO and Founder of Clear.
As an alternative, RBI-issued Central Bank Digital Currency (CBDC) would be recognized as legal money in India. One-to-one currency exchanges are possible, he said. "It's the same as a fiat currency (government-issued money)."
When the country's central bank issues a currency, it is considered "legal tender" for the purchase of goods and services.
Similarity from Digital rupee to other cryptocurrencies like bitcoin, doge, Ethereum
According to Manoj Dalmia, if we go by the definition of cryptocurrency, it is the same as bitcoin because both employ Blockchain technology.
Digital rupee and cryptocurrency: what's the difference?
Cryptocurrency is decentralized, but the digital rupee produced by RBI is likely to be centralized in nature. Vinshu Gupta, Founder and Director, Nonceblox Blockchain Studio, explains that cryptocurrencies are decentralized and cannot be controlled by a single body.
In the near future, the digital rupee may be legal cash in India, but cryptocurrencies will not be accepted as legal tender. Shaktikanta Das, the governor of the Reserve Bank of India, stated on Thursday that cryptocurrencies pose a serious danger to the country's macroeconomic and financial stability. Individual investors should be aware that these have no underlying assets and at their own risk, the RBI's governor Shaktikanta Das has remarked.
In terms of the Digital Rupee's precise technical specifications, we don't yet know. However, the CBDC's digital rupee may be legal tender in India in the near future, whereas cryptocurrencies will not be considered legal tender in the near future. Instead of a decentralized blockchain, the CBDC can be on a private or permissioned blockchain. Banking and other financial organizations would host nodes in a permissioned blockchain network in order to enable transactions on behalf of their clients. When it comes to the permissioned blockchain "no one else would have the same position or access," says Sumit Gwalani, Co-Founder, Neobank Fi.
Private cryptocurrencies have been vehemently opposed by the RBI due to the potential impact they could have on financial stability.
Consider Ukraine's crisis intensifies recently, the price of bitcoin, ether, dogecoin and other cryptocurrencies fall.
Russia's President Vladimir Putin has chosen to carry out military operations in eastern Ukraine, which has led to a dip in cryptocurrency values. About 10% of the world's largest cryptocurrency was lost to $34,618. The total value of all cryptocurrencies is now $1.66 trillion, a decrease of 7.9 percent over the previous day.
Vladimir Putin's announcement that Russia will begin a military operation in Ukraine triggered a global financial crisis. For the first time since the Cold War began, Russian President Vladimir Putin has declared an offensive in Ukraine and warned other nations that interfering with Russian operations will bring about consequences they have never seen before.
According to Ukraine's Foreign Minister Dmytro Kuleba, the country's larger neighbor has "started a full-scale invasion of Ukraine" and that its towns are being attacked.
Coins tied to the Ethereum network and the second-largest cryptocurrency by market value, Ether, both fell roughly 10 percent to $2,373. Dogecoin's price decreased by over 13% to $0.11, while Shiba Inu's price dropped by over 10% to $0.000022. Solana, XRP, Terra, Avalanche, Stellar, Cardano, Polygon, Polkadot prices were all trading around 8-15 percent lower than their previous values.
As geopolitical tensions have risen, the claim that cryptocurrencies offer a safety net has been undermined by Bitcoin's ups and downs during the past few weeks. In contrast, gold, long considered a safe haven asset, rose to its highest level since the beginning of 2021 on Thursday.
On Sunday, Bitcoin fell below $40,000 and continued to decline as the Ukraine crisis worsened, contradicting the claim that cryptocurrencies are safe havens during times of geopolitical turbulence.