The rise in bitcoin, as well as other cryptocurrencies, is forcing financial establishments across the globe to look into digital currencies. This is the reason Central Bank has begun to think about introducing its cryptocurrency. Cryptocurrency is a hot topic for debate in the world of finance during turbulent times. Several nations are currently working on plans to develop their cryptocurrency.
India is also part of this list. It is included in the Reserve Bank of India (RBI) is preparing for the gradual introduction of the Central Bank Digital Currency (CBDC). RBI plans to launch the currency before the end of the year. The rise of Bitcoin and other cryptocurrencies is forcing financial establishments all over the globe to think about digital currencies. This is why the Central Bank of Canada has begun to plan to introduce its cryptocurrency.
The announcement of the CBDC (central bank digital currency) program for the trial of digital currency before December 2021 will be a landmark for India. The primary goal of a central institution like RBI is to help support the banking system in India, not merely acting as the traditional bank.
In an interview in a conversation with CNBC, Reserve Bank Governor Shaktikanta Das said that in December 2021 an experiment on digital currency will be launched. If the trial proves successful, then India’s digital currency will be released on a massive scale.
What’s the main difference between cryptocurrency and digital currency?
Central bank digital currency is digital, or a virtual currency, issued by the central bank in the form of tender. It operates similarly to fiat and digital currencies. It is also an officially recognized currency. Digital currency is accepted by the government of the nation that issues its central bank.
Digital currency can be used to make contactless transactions. For instance, when you transfer funds directly from your banking account into a friend’s or use an app for payment for your phone. If you take this cash from an ATM and then changed it into cash. However, bitcoin and other cryptocurrencies don’t have any physical format.
It is not possible to touch it. It is not centralized, and therefore not controlled by the government. The cryptocurrency is stored in an electronic wallet. Digital currency doesn’t fluctuate as cryptocurrencies do.
What is it that means for the government to develop their crypto?
In the last month of this month, this month RBI as well as The Finance Ministry have said that they’ll be looking at making laws to govern India’s digital currency and the regulation of it. However, the process of introducing the country’s digital currency to the market is not difficult. The government only has to declare legal tender to any transaction that can be utilized by the citizens of India.
The Union Minister of Finance Nirmala Sirtharaman has clarified that the government doesn’t intend to completely ban cryptocurrency. The government is trying to ensure the security of blockchain technology that is based on cryptocurrency. Experts agree that the issue of digital legal tender can be a challenge.
Why is it used in cybercrime?
The biggest drawback has to do with the fact it’s a virtual currency, and this can be an extremely risky investment. There is also the possibility of using this currency to support illegal uses, for example, distribution of drugs or trading in weapons. There is always the risk of cyber attacks on it. It’s a virtual currency; therefore illegal transactions can be carried out using it.
Many people want to stay away from the authorities. The government can be compromised. The stolen credit and debit cards can be purchased, and they could be used to encourage terrorist actions. This is why the government would like to regulate the use of credit cards.
The situation with Cryptocurrencies in different countries
Gaurav claims that the mining of cryptocurrency is prohibited in some countries such as China as well as Thailand. When China implemented the ban on bitcoin mining, bitcoin prices decreased dramatically. Then it was banned in China. been outlawed in Thailand too. Thailand’s Thai Securities and Exchange Commission (SEC) has banned cryptocurrency as well as non-fungible currencies (NFTs) in light of concerns about gambling in excess. The most significant work is taking place in Russia, to manage cryptocurrency There are warehouses of 50-50 square feet in which cryptocurrency businesses are handled by supercomputers. More recently, two countries El Salvador and Ukraine have legalized cryptocurrencies in their country and many countries are already working on it.