A cryptocurrency is a digital or virtual token that uses strong cryptography to secure transactions. It is a decentralized digital asset that is stored on a distributed ledger, which is managed by consensus algorithms like proof of stake and proof of work.
Central Bank Digital Currency (CBDC) is the next phase of evolution of money, transcending into a digital only form with significant advantages over fiat currency. The Reserve Bank of India will launch the CBDC for India - ‘Digital Rupee’ in FY 2022-23. Many other countries are also exploring the implementation of CBDC.
Digital Rupee will be the digital form of the currency issued by the RBI and will be in lieu of the paper/metal currency issued. It is the same as currency and is exchangeable one-to-one with the currency. Only its form is different.
Subsidy disbursements and pre-programmed money
‘Fit for purpose ’ money used for social benefits, subsidies and other targeted payments in a country
CBDCs can be used for faster remittances i.e. cross border and domestic
CBDCs can be used for retail payments with payment instruments made available for payment transactions to be made via CBDC
Instant lending to MSMEs in India can be possible with the help of CBDC
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