Recent news items on CBDC (Central Bank Digital Currency) would have intrigued the uninitiated. Let's begin with Digital currency, which has been around for over a decade, yet it still remains a mystery to many. Even as more and more people are becoming aware of digital currency, there is still a lot of confusion and uncertainty surrounding it. That leads to the basic question as to “What is digital currency?”
Digital currency is an electronic form of payment that is based on a technology called blockchain. Blockchain is a secure and distributed ledger system, which allows users to make transactions without the need for a central authority.
Digital currency works differently than traditional money. It is not backed by any government or central bank, nor is it printed like paper money. Instead, it is created electronically and can be used to purchase goods and services, just like regular money. The main difference is that digital currency is not regulated or controlled by any government or bank. This makes it a great tool for people who want to make payments internationally without the hassle of dealing with exchange rates or other restrictions.
In addition to its ease of use, digital currency also offers a number of advantages over traditional currency. Transactions on the blockchain are fast and secure, and fees are generally much lower than those associated with traditional payment methods. Furthermore, digital currency can be used for cross-border payments, which eliminates the need to use multiple currencies and exchange rates.
Despite its advantages, digital currency still has a long way to go before it is universally accepted. For example, many governments have yet to recognize digital currency as a legitimate form of payment. This means that businesses and individuals may be reluctant to adopt it due to legal or regulatory uncertainty.
The Reserve Bank of India (RBI) had on October 7, 2022, issued a concept note on Central Bank Digital Currency (CBDC) which is available at https://go.johnsonodakkal.com/rbi-cbdc
In order to demystify digital currency and help it gain wider acceptance, more education is needed. As more people become aware of the benefits of digital currency, they will be more likely to embrace it as a legitimate form of payment. Furthermore, governments and financial institutions will be more likely to recognize it if they understand how it works and the advantages it offers.
Digital currency is still a relatively new concept and has a long way to go before it is universally accepted. However, as more people become educated about its benefits, it is likely that digital currency will become more and more commonplace. With its potential to revolutionize the way we make payments, digital currency holds great promise for the future.