Introduction
Few countries have their digital currency and in this digital age, every country should use digital currency. Indians have a bitcoin craze nowadays, but as we all know that bitcoin and other cryptocurrencies have some major issues. So keeping this thing in mind Government of India has shown interest in Digital currency in India.
Many Indians are investing in cryptocurrencies because cryptocurrencies are worth investing in.
To see all these conditions, the Indian government was planning to bring it’s a digital currency for the past few years.
Finally, that day came, in the union budget 2022-23 our respected finance minister Nirmala Sitharaman has announced that the Central Bank Digital Currency or Digital rupee will be launched in the financial year 2022-23.
Along with it, to reduce the dependence on cryptocurrencies Nirmala Sitharaman announced to put 30% tax on the profits of cryptocurrencies in India.
In this article, we will analyze digital currency in every aspect.
What is India’s digital currency
The rupee is the traditional currency of India. You can just understand digital currency as the digital form of the Rupee.
You can store it in the digital wallet. The digital rupee can not be stored in a simple wallet.
RBI (Reserve Bank of India) will circulate it like the traditional rupee to the common people.
Digital currency will be based on the blockchain system. Blockchain is a system that holds all the financial information in the blocks.
Difference between the India’s digital currency and crypto currency
There are no fundamental differences between India’s digital currency and cryptocurrency.
These both are digital assets and can be stored in the digital wallet but the difference is that most cryptocurrencies are illegal in most of the countries that’s why governments of respective countries put taxes on the profits of cryptocurrencies, while India’s digital currency will be backed by the government of India that means they can be used like traditional rupee without any tax or other restrictions.
Why do we need digital currency?
The world is growing at a fast-paced speed. Most of the richer people are gaining advantages by investing in foreign digital currencies.
People think that cryptocurrencies are safer to invest in and gain big advantages as it has a digital wallet so you don’t have to stand in the long ATM lines for crediting or debiting big amounts.
In this busy world, none have time to stand in the long ATM lines. Considering all these things, the government of India has announced the launching of digital currency in India, which will be safely transferred through digital wallets.
Disadvantages of digital currency
Everything has advantages and disadvantages. There may be the following disadvantages of digital currency;-
- It is a digital currency that means spammers and hackers can easily hack your accounts and can empty your wallet.
- RBI and government will track all of your transactions that might be a question mark on the right to privacy of the people.
- RBI will issue digital currency directly to the people that means the importance of the banks will be decreased.
Problems to establish the digital currency in India
There are the following problems that the Indian government may face to the establishment of the digital currency in India;-
- To learn about the digital currency in the rural areas.
- To assure the people that your privacy is safe.
- To make aware of digital currency in the rural areas of India.
- Due to the direct contact of RBI to the people, the bank does not have enough money to lend.
- There will be a high risk of security leaks.
- The online fraud cases will be flooded.
- The government of India has to make any arrangements to prevent or least the cases of security leaks and online scams or hacks.
Conclusion
Before launching the digital currency, the government should make some arrangements such as, make aware of digital currency to Indian rural people, establishing some promising software that can prevent security leaks, online fraud and even hacks.
As well as the government has to make the people understand that the government or RBI will not breach their privacy and security otherwise many cases of right to privacy may be filed in the supreme court against the government.