Nirmala Sitharman, the Finance Minister, revealed on Tuesday that the government will soon develop a digital rupee based on blockchain and other technology. The RBI will release the digital rupee, which will be available in 2022-2023.
Sitharaman remarked during the Budget 2022 session in the Parliament, “In addition, digital money would result in a more efficient and cost-effective currency management system. As a result, it is suggested that the Reserve Bank of India produce digital rupees utilizing blockchain and other technology beginning in 2022 and 2023.”
SEE ALSO: Budget 2022: Digital Rupee Using Blockchain Will Be Issued Soon By RBI, Says FM Nirmala Sitharaman
But what Is Digital Rupee?
Central bank digital currencies (CBDCs) are digital versions of legal money established by a country’s central bank. CBDCs are digital, which is the sole difference between them and regular cash or fiat currency. CBDCs, like all other fiat currencies, will be backed by central reserves, unlike other cryptocurrencies that are decentralized financial tokens.
The digital rupee will be a digital depiction of an Indian rupee supported by the Reserve Bank of India (RBI). India isn’t the only country attempting to use digital legal tender. Various central banks throughout the world are experimenting with initiatives such as the digital dollar, e-yuan, and digital euro.
How is it different from other Cryptocurrencies?
Well, unlike Bitcoin, which is a cryptocurrency based on blockchain technology that allows users to stay anonymous, the RBI will endorse the official digital money. For all transactions, the digital rupee is equivalent to a physical rupee. The value of a digital rupee will be the same as the value of a real rupee.
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“With the government’s support and infrastructure, CBDC adoption will improve and make it easier for consumers to utilize Polytrade. People will be able to utilize digital currencies more easily as a result of this advancement, much as UPI made it simpler to use digital currency. We anticipate that the government will continue to promote and encourage digital currencies in the foreseeable future,” Polytrade’s CEO, Piyush Gupta started as per the reports.