We often hear the news and updates about CBDC which is the short form of Central Bank Digital Currency. Its a digital form of fiat money that will be backed by the country. Now since the world is moving towards digitization so digital money is one of the important components that should also be upgraded.
Crypto is digital money but the majority of countries are not ready to accept it as currency and they want it to consider as an asset that is tradable. Its going to be the same that we apply with gold however we have gold in physical form too. Now we also have digital gold to trade but it will be backed by physical as well and this is what makes it a secure investment instrument. Likewise, more countries are starting to accept crypto as an asset and this is good for us since having crypto as currency might create a threat situation for countries however as a tradable asset is also a good to move. I did some research and study about CDBC in India to check if RBI (Reserve Bank of India) is planning to do something with it.
What is CDBC?
The digital rupee is a CBDC or central bank digital currency going to be issued and managed by the Reserve Bank of India in the near future. In simple words, it’s a digital fiat currency that would function the same way as the paper currency but will be issued and circulated through a digital distributed ledger.
So CDBC is digital money having the same value as fiat but its in digital form so its easy to use and even more secure. Many countries are already working on it and India is also on it already to have their own digital currency. Here I would like to mention that this digital currency is not crypto and it will not be volatile since it will be backed by Indian Rupee. There is a difference in cryptocurrency and Fiat Currency and CDBS is purely based on fiat and has no connection with crypto. It may be early to say but I expect that we should have the option to buy crypto using CDBC since its anyways a digital form of fiat.
The Digital Rupee will carry the same value and its going to be an easy option for people to spend virtually. We will have control over it and it will also eliminate the risk of losing it however I doubt that if hackers find a way to steal like they do with crypto.
RBI has already been working on it and they are in favor to have digital currency and infect RBI seems to be favorable for crypto as well. Be it crypto or digital fiat money, both are backed by technology and will offer the next level of online payment experience. There will certainly be a need for robust technology so that there is no threat of losing it and hopefully it will have a highly secure system so that hacking is not easily possible.
India has been promoting digital India and a cashless economy so having their CDBC will empower it and it will reduce the use of cash significantly. We know that using digital money is most easy but convenient too and having a cashless economy will empower the countries;' economy as well.
Some 81 countries representing over 90 percent of Global GDP are exploring CBDCs. Among them, 14 have tested pilots, 16 are in the development phase, and 32 have been in the research phase. As many as 14 major economies, including China and South Korea, have tested pilots. China is currently leading the race in CBDC
This is an impressive update for sure that 81 countries are already on it and 14 countries have already done the testing to move from the pilot phase. With the amount of action in this space its expect that we will have more countries joining the race and digital fiat money will be the new face of fiat currency.
With technology future is exciting and we can expect revolutionary innovation in the next few years since all this is so new and its would bring a new and wonderful payment experience with digital money / CDBC.
Thank you so much