Vivid News 24: From November 1, the Reserve Bank of India will test the market for digital currency. There has been an uproar before. If digital currency replaces traditional cash in future financial transactions in India, only time will tell.
But at the moment, the bigger question that is revolving in the minds of the common people is whether digital currency and cryptocurrency are the same. How are they one if one? And if it is different, which case is different? This is because, as the majority of citizens do not have much idea about cryptocurrencies like digital currencies, many are confusing their differences.
So, to clear that doubt, it is better to say first that digital currency and cryptocurrency are not the same. Because the Reserve Bank of India has introduced digital currency in the market. Financial transactions that are possible through conventional cash are also possible through this digital currency.
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However, since digital currency is a virtual asset, its use is relatively easy, and fast. Digital currency is being used experimentally, primarily in large-scale transactions. Later, the Reserve Bank will also pilot digital currency for retail transactions.
The Reserve Bank has roped in Union Bank of India, State Bank of India, Bank of Baroda, HDFC, ICICI, Kotak Mahindra, Yes Bank, IDFC First Bank, and HSBC with this digital currency initiative for wholesale transactions on an experimental basis.
Their cryptocurrency is not regulated by any central bank. Crypto is not part of any state’s economic infrastructure. Crypto has its own ‘proprietary algorithm’. Better to say, digital currency is centrally controlled. There, crypto is a decentralized economic infrastructure.
The value of a digital currency is determined through a negotiated decision between the central bank and the government of that country. There is no such regulatory body for crypto.
Purpose of digital currency launch
Reserve Bank of India has experimentally introduced digital currency to counter the growing popularity of cryptocurrencies. At the same time, the government has set a target to digitize financial transactions through this. With digital currency, customers can stay connected through seamless payment systems. Direct payment transactions from Indian customers will save both cost and time. And the transaction process will be more transparent.
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