Digital Rupee – Indian Digital Currency
In the recent budget declaration, India’s Digital Currency ambition was declared by its finance minister Mrs. Nirmala Sitharaman. Ever since, many questions were raised by financial analysts and even common people – whether it is a cryptocurrency.
Even though India had imposed a 30% tax on all kinds of earnings from digital currency and online trading activities, it is not accepting or denying the crypto world. The latest information from reliable sources and media gives a picture that India is not introducing a cryptocurrency.
Cryptocurrency miners and traders can do the activities at their own risk. It is nothing to do with the government regulations. But the government is monitoring the activities and anyone who is making revenue is bound to pay tax. Similarly, those who are involved in the parallel economy and illegal fund transfer sort of activities are answerable to the country’s law.
Difference Between Digital Rupee and Cryptocurrency
The major difference between Digital Rupee and Cryptocurrency is its control system. Digital Rupee is having a Centralized system that is controlled by a Bank. But Cryptocurrency is having a decentralized control system – that means no one controls it.
Another major issue is that these currencies are not having any back support (sovereign) like physical currencies. It is just spreading and trading like anything. Valuation and appraisals are happening on speculations. It is having only a demand-based valuation.
India’s Digital Rupee is not a cryptocurrency. It is the digital form of Indian Rupee that is existing with physical shape and denominations. Digital Rupee need not be in multiple denominations. Even though, details are yet to attain. The major feature of the Digital Rupee is that it is not having any physical shape or size. It is only visible or felt in an electronic way. Unlike cryptocurrencies, the Indian Digital Rupee will have a backup for its value by the Government. Holding and Trading with Digital Rupee will not be risky as cryptos are. It will be the digital form of India’s physical Rupee.
Controlling Bank of Digital Rupee
To handle the digital segment of the Indian Rupee, the Indian government will be introducing a controlling bank under the Reserve Bank of India. The name of the bank will be Central Bank Digital Currency or CBDC.
India is not in favor of cryptocurrencies due to its accountability issues. In a way possible to stop the impact of cryptocurrencies or even to minimize the impact, India decided to launch a digital form of currency in 2023. The announcement was made in the budget of January 2022. The currency is named Digital Rupee.
Digital Rupee is not a cryptocurrency. Also, it is working on the principles of the blockchain transactions system. It will launch in the next year and the expected date is 1st April 2023. The preliminary work on the same has already begun. The major issue that the government foresees is Cyber Security and counterfeiting possibilities.
As it will be running on a blockchain system, security-wise not many improvements are not possible as per experts. Blockchain is the most trusted error-free transaction system available on earth. Also, parallel currencies are the worries that need to tackle mainly.
Digital Rupee – Indian Digital Currency