India moving a step closer to accepting digital assets
After all the red flags shown by the government in acceptance of the world trend of crypto and digital assets. Now, we can see a glimmer of hope when the Finance Minister on 1st February 2022 announced the introduction of the Digital Rupee governed by the RBI. RBI looking forward to launching Digital Rupee by 2022 and 2023.
Prime Minister Modi also shared his views stating that digital currency will boost the digital economy in the upcoming years, on top of that he also mentioned that RBI-backed CBDC will be looked after by the central bank and will be India’s fiat currency.
WHAT IS CBDC?
CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.
WHAT IS THE DIFFERENCE BETWEEN CBDC AND CRYPTOCURRENCY?
Central Bank Digital or Virtual Currency is simply a digital currency but nothing like private virtual currencies namely Bitcoin or Ethereum which have created this cliché called cryptocurrencies.
As per the RBI, private virtual currencies are at substantial odds with the historical concept of money because they are not commodities or have no intrinsic value.
The major and the most comprehensible difference is that the CBDC is centralized, whereas the cryptos are decentralized that represent nothing and have no issuer.
Also, digital assets such as cryptos and NFTs will be charged 30% of tax on transactions. That is simply a clever move that any transfer of this will attract 30% of tax.
Technology usage and Need of CBDC
CBDC will be powered by Blockchain technology on which most of the buzzing cryptos are built and managed.
With the diminishing usage of paper currency, there comes a need to publicize the electronic form of currency. By doing this it increases the efficiency in countries like India, Spain, and many more with heavy physical cash usage. Also, it will create a proxy option in place of private digital currencies.
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