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Central Bank Digital Currency

Discussion on CBDC

The Reserve Bank of India recently told that it has been working towards a phased implementation strategy central bank digital currency (CBDC). While the move has been welcomed by industry stakeholders, a few statements made by RBI have stoked concerns regarding the future of virtual currencies (VCs) such as bitcoin, ether and dogecoin.

 

What is CBDC?

  • CDBCs are digital currencies issued by a central bank, and generally  it is on a digital form of the nation’s existing fiat currency such as the rupee.


  • CBDCs are desirable not just for the benefits they create in payments systems, but also might be necessary to protect the general public in an environment of volatile private VCs

 

What is cryptocurrency?

  •  It is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.
  • It is Discovered by Japanese Satoshi Nakamoto he developed bitcoin and blockchain by 2010.
  • It is decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth is beyond restriction and confiscation.

 

What is Blockchain?

  • Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, and cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

 

Source: Mint and output by RamanIAS

Keywords
Topic GS-3: Indian Economy, Effects of Liberalization on the Economy, Science and Technology- Developments and their Applications and Effects in Everyday Life.