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- Published: February 13, 2022 14:30
New Delhi: Reserve Bank of India’s (RBI) has started the work to launch a digital currency in India. The announcement by the RBI governor Shaktikanta Das has raised a question in mind – What is the difference between RBI’s digital rupee and cryptocurrency?
Earlier, Finance Minister Nirmala Sitharaman had informed about the RBI’s digital currency in her Budget 2022 speech.
Digital rupee to be issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy: FM Nirmala Sitharaman#Budget2022 pic.twitter.com/tUdj2DoZCR
— ANI (@ANI) February 1, 2022
However, Das on February 10 had confirmed that RBI digital rupee or the Central Bank Digital Currency (CBDC) will be launched in the year 2022-23.
In this article, we will try to explain to you the difference between digital currency and cryptocurrency.
The digital rupee of RBI will be the same as the physical cash we use in our daily lives. It means the digital version of physical cash or the Indian rupee. As it will be issued by RBI, one can say it is going to be sovereign-backed.
On the other hand, any cryptocurrencies available in the market such as Bitcoin, Ethereum are not backed by any government. It makes them a decentralised digital asset.
It is completely based on the free market, making it difficult for the government to control it. On the issue of its stability, the RBI governor said, ”Cryptocurrency is privately created & it is a threat to financial stability.”
He added that there will be no difference between Digital Rupee & the normal rupee.
Here is what the RBI governor said:
RBI Digital Rupee will be launched in the year 2022-23. We can’t predict a timeline for its release yet. There’ll be no difference between Digital Rupee & the normal rupee. Cryptocurrency is privately created & it is a threat to financial stability: RBI Governor Shaktikanta Das pic.twitter.com/sTFrsvl8j1
— ANI (@ANI) February 10, 2022
It is also said to be that the digital rupee can be used for the purchase of goods and services when issued by the Central Bank.
Will both RBI’s digital money and cryptocurrency be legal in India?
Cryptocurrency is reportedly never will be considered a legal tender in India. A day after the announcement of Nirmala Sitharaman, Finance Secretary TV Somanathan said, ”Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender, will not, will never become legal tender.”
Digital currency will be backed by RBI which will never be default. Money will be of RBI but the nature will be digital. Digital rupee issued by RBI will be a legal tender. Rest all aren’t legal tender,will not,will never become legal tender:Finance Secy TV Somanathan
(File pic) pic.twitter.com/Cko0e4753X
— ANI (@ANI) February 2, 2022