In its latest move, the government of India announced that a cryptocurrency bill would be tabled in the upcoming winter session of the Indian Parliament. The bill’s aims are to put a stop to all private cryptocurrencies in the country and lay the foundations for the creation of the Reserve Bank of India’s official digital currency. But what’s the difference between RBI’s digital currency and Bitcoin?
The RBI’s digital currency will be a CBDC or central bank digital currency, something that’s radically different from a cryptocurrency, despite both being digital. A cryptocurrency is a private virtual currency without any intrinsic value, which is why it’s problematic. The other issues surrounding private cryptocurrencies involve the inability to track cryptocurrency transactions and the lack of regulations. The Indian government, along with several other governments around the world, believe that these issues may be exploited by malicious individuals and collectives for purposes such as terror financing and money laundering.
On the other hand, the RBI’s digital currency will be supportive of the existing banking framework in India and be in sync with the Rupee (India’s official currency). It’s a stark contrast to the financial system that’s now in place in El Salvador, the first country in the world to regulate a cryptocurrency. In El Salvador, Bitcoin and the USD are functioning as parallel economies. So far, El Salvador’s economy hasn’t suffered too much as a result of Bitcoin’s legalization. However, experts predict that in the future, the country is going to face a tough time managing the parallel economies