Difference between e-rupee and cryptocurrency
Prime Minister Narendra Modi has recently launched a new digital payment mode which is named e-RUPI. This digital currency or e-rupee primarily aims to ensure that the monetary benefits of government directly reach citizens in a ‘leak-proof’ manner.
Although the e-rupee is a basic term the combination of the terms 'digital' and 'currency' has led many people to speculate this currency as a new form of 'cryptocurrency'.
Well, financial experts have discarded all such theories and advised avoiding any comparison between these two terms.
So let's dive into the article below to find out what is the difference between e-rupee and Cryptocurrency.
E-rupee Or digital currency is basically the electronic form of money that can be easily used in various contactless transactions. So the Central Bank Digital Currency (CBDC) or shortly termed as e-rupee is a digital form of rupee which is issued by a central bank.
According to RBI, the e-rupee is the legal tender that is issued by a central bank in a digital form. This digital currency is the same as a fiat currency and is also exchangeable one-to-one with the fiat currency. The form is only different.
In easier terms, cryptocurrency is basically decentralized money, which is free from any government or central bank’s chains. This digital form of currency relies on blockchain technology and uses cryptography to secure all transactions done by users making it impossible to counterfeit.
All cryptocurrencies are generally generated through a rigorous process which is called mining. The miners or users use computers with high-end GPUs or smartphones to solve various complex mathematical problems and puzzles to get these cryptocurrencies as a reward. It may take days and even months to mine crypto of your own.
Rather than mining, people can also buy those cryptocurrencies from any currency owners and exchange platforms like the stock market, and they can also sell them to other individuals, too.
These cryptocurrencies bought can be stored in digital wallets, which are either hot or cold. The hot wallet is connected to the internet. However, cold storage keeps your holdings offline.
Difference between e rupee and Cryptocurrency
The major difference between the e-rupee and Cryptocurrency is that the e-rupee Or CBDC is centralized which means it is controlled by RBI however Cryptocurrency is decentralized which means it is not linked to or regulated by any government.
Central Bank Digital Currency is a legal tender that can be kept in bank accounts where cryptocurrencies need to be stored in digital wallets.
CBDC is much safer when compared with Crypto because of the control of the government in this. On the other hand, Cryptocurrencies like Bitcoin, Ether, and others are generally used for the purpose of money laundering, tax invasion, and terror financing.
Along with this announcement, RBI has also declared that they are planning to launch within a month, another digital currency for the retail segment along with in dome select locations in closed user groups which comprised of customers and merchants within a month.
Unlike cryptocurrencies, digital currency isn’t a digital asset or a commodity or claims on commodities. So Cryptocurrencies have no issuer to issue them.
As per the RBI announcement, cryptocurrencies are not money which means they are certainly not currency as the word has come to be understood historically.
The primary aim of the introduction of the digital rupee is that the RBI expects to address problems associated with existing physical currencies, cryptocurrencies, and cross-border transactions.
Cross-border money transfer and converting money into foreign currency for use is tedious, overwhelming, and expensive.
With the launch of the digital rupee, RBI initiate the instant cross-border money transfer which is set to make bank cash management and turn operations more seamless.
