After a long time I had a mindful conversation on crypto or rather you may call it a discussion on digital currency. This weekend my nephew seems eager to learn a little bit of it, and I am happy to share my insight. He is a poltical PR by profession, and wanted to join #hive but his busy schedule and other commitments does not allow him open his hive account. Rightly so if he cannot give time or manage his own account then there is no need to open the account unnecessarily. During the conversation there were many instances where I felt that many people like him are completelly ignorant about the existence of digital currency. Infact, they are not aware of our own E-Rupee introduced by Reserve Bank of India. I think it is important to share the tokenised version of digital currency in India.
You heard it right, India too have it own digital currency known as E-Rupee, but still in the pilot phase. On December 1, 2022, the Reserve Bank of India rolled out the pilot phase of the Central Bank Digital Currency - CBDC in the form of a digital token. It was named as E-Rupee and denoted by e₹. It was not yet publicly launched and currently only few customers have been selected to be a part of the Closed User Group (CUG) in only a few locations in India.
People like my nephew who are not into crypto, have lots of doubt about the usage, about the transaction method and other things It is important to clear out some doubts and bring a clear picture about the digital currency. This is all what I shared with my nephew and hope, I made it clear as far as my understanding stands todsy.
Central bank digital currency (CBDC) are the digital currency issued and regulated by the central bank under the rules and regulation framework of the Government.
Any digital currency is a legal tender but in digital for. In our case the "Digital Rupee" represented by"e₹" is a legal tender, similar to physical currency. It is issued in digital form by the Reserve Bank of India.
e₹ can be used to carry out transactions or store value digitally in e-wallets. It is similar to the way in which physical currency notes can be used in physical form at different banks.
- An e-wallet is the digital representstion of the physicL wallet. This wallet is linked with the user bank account. The digitsl currency (e₹) can be held in an e₹ wallet issued by banks. This wallet can also be used to withdraw and deposit from our existing bank account.
- The digital currency is not mesnt to re0lace the existing, cash, debits card or credit cards. Reserve Bank of India states that e₹ is envisaged to provide an additional avenue of handling money to users in tokensised form.
UPI vs e₹
Many people assume e₹ as an alternate to UPI. However, both of them are complete opposite to each other. While e₹ is a form of money, a legal tender just like the physical currency. Whereas UPI is digital gateway of making payment or other fund transfer modes. e₹ is not limited to payments, it serves as the purpose of 'unit of account' having certain value.
The e₹ can only be transferred to any e-wallet. It can not be transfered to any bank account However, the digital currency e₹ can be redeemed directly from e-wallet to user linked bank account.
The digital currency is just like carrying cash or card in our wallet. The only difference, we have physical wallet for its carrying & safety, whereas in digital currency we have digital wallet in our mobile devices.
The e-wallet ensures complete safety of your account balances. It store the digital currency on the mobile devices with passwords or pin protection. Just like we have the bank mobile application.
There are no additional charges or fees for owning and maintaining the digital wallet. Also there are no minimum balance required for opening or maintaining the account.
There are a lot of myths associated with the digital currency. Now as India is slowly paving its way towards it acceptance, it is important people get more information on it. Else it will be rolled and no one take interest in it because of their ignorance. Hopefully, I managed to clarify a lot of doubts of my nephew. Let me know if you have any additional points to add on or #feedback to share.