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India is to use Digital Rupee a Smart Currency means Central Bank Digital Currency (CBDC)

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India is to use Digital Rupee a Smart Currency means Central Bank Digital Currency (CBDC)

Digital Rupee: Today is the information age in which the whole life of all of us is changing because technology is changing. That’s why now our way of transacting money is also changing.

The Reserve Bank of India has started the pilot project of Digital Rupee from 1st November.

This is India’s first Central Bank Digital Currency (CBDC) which is being called Digital Rupee, through this testing money transactions will be done in government securities.

The continuous development of technology has given a digital form to the traditional form of money transactions.

Now the world is moving towards cashless economy. In such a situation, India also does not want to be left behind.

The Reserve Bank of India (RBI) has launched pilot projects of Digital Rupee for the wholesale sector and the first pilot projects of Digital Rupee in the retail sector are planned to be launched within a month at selected locations.

In February 2022, Finance Minister Nirmala had announced the introduction of digital currency in her budget speech. According to RBI, nine banks have been identified for participation in the wholesale segment pilot project.

These nine banks are :-
State Bank of India, Bank Of Baroda, Union Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank are HSBC Bank.

Many countries want to use digital currency, but only a few countries have been successful in moving beyond the pilot stage of developing their own digital currency.

What is Digital Rupee?

According to the Reserve Bank of India, CBDC is a legal currency issued by the central bank in digital form, which is similar to paper currency and can be exchanged with paper currency if required.
We can understand it in simple words that Digital Currency (CBDC) or Digital Rupee are currency notes in digital form issued by RBI.
Digital Rupee is money converted into electronic form which can be used for contactless transactions.
Digital currency in India will be of two types, Wholesale CBDC (CBDC-W) and Retail CBDC (CBDC-R),
Wholesale CBDC will be used by select financial institutions only while retail CBDC will be used by all

Digital Rupee a Smart Currency

Advantages of Digital Rupee

Now Indian people also do a large number of digital transactions, so CBDC will have many benefits in future.
Minister of State for Finance Pankaj Choudhary had told the Lok Sabha last year, “Digital Rupee will have many benefits. This will reduce the dependence on cash and at the same time make the CBDC strong, reliable, regulated and a legitimate means of payment.
When Digital Rupee will be used in the country, then the need to keep cash with you will reduce and you will not need to keep more money in your traditional wallet.
People will be able to keep digital currency in their mobile wallet which can also be easily converted into cash.

more controlled money transactions

Since the transaction of this digital currency will take place only within the network authorized by the government, therefore digital currency will have more control over the money coming in and out of the country and being an Indian digital currency, the transaction cost will also be reduced.

The use of digital currency will get rid of the problem of counterfeit currency and at the same time there will be no cost of printing paper notes.
Since Digital Rupee is a digital currency, it will never be damaged.

more secure money transactions

Digital Rupee is based on Blockchain technology, payment is faster in Blockchain technology, due to which the transaction of Digital Rupee is secure and it is very difficult to break into its transactions, CBDC is more secure than any other traditional digital transactions,

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What is the difference between Cryptocurrency and Digital Rupee

Cryptocurrency and Central Bank Digital Currency- The main difference between Digital Rupee is that Digital Rupee will work completely under government control and it is a government backed legal currency.

While cryptocurrency is a private currency, it is not monitored by the government of any country, nor does the central bank have any control over it.

The rate of cryptocurrency keeps on fluctuating while on the other hand digital currency is the digital form of Indian currency, so its rate keeps fluctuating.
Cryptocurrency cannot be converted into cash currency but digital currency can be converted into cash.

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