Yes, it's happening! India is about to launch its own cryptocurrency. On February 1, 2022, while announcing the Union Budget for 2022-23, Union Finance Minister Nirmala Sitharaman affirmed that India is all set to launch its own centralized digital currency in the financial year of 2022-23. The crypto or 'Digital Rupee' will be based on blockchain technology and is aiming to rival top decentralized cryptocurrencies like Bitcoin, Ethereum, and others.
This crypto might prove to be a big blow for Bitcoin since it is one of the most popular and trusted cryptocurrency for Indian investors. They consider BTC as the 'digital gold'. According to reports, volumes of rupee trading in Bitcoin have exploded in 2021 with over 2,500 Indians investing and trading Bitcoin on a daily basis. Some estimates revealed that the rupee-denominated Bitcoin trades generated the third-highest volumes of profits after investments through the American dollar and Yen. Bitcoin trading volumes went off the roof in the Indian crypto market in 2021.
In the speech, Sitharaman said that India's new digital currency will be backed by the Reserve Bank of India (RBI). She also confirmed that this coin will be designed to be affordable and make the country's digital financial and currency management landscape more manageable. RBI is already working on implementing this strategy, which could begin in 2022 itself. The coin is supposed to minimize or reduce the country's dependence on the older cash system.
The Digital Rupee is supposed to be based on blockchain technology to rival the most trusted cryptocurrency of India, i.e., Bitcoin. The Government has not yet declared if the coin will be mined or not, or even if it is, will it be legal or not. But India is not the first country to adopt cryptocurrency for its economic and financial infrastructure. Earlier, it was El Salvador. The UK and US government institutions have also been testing the use of cryptos for different businesses and cities. Centralized digital currencies will definitely have a separate impact on the decentralized crypto market.
Unlike Bitcoin, which is built on blockchain technology that allows investors and traders to remain anonymous, the official cryptocurrency of India will be backed by the government and monitored by RBI. This makes the Digital Rupee as good as physical currencies for payments and transactions.
Cryptocurrencies like Bitcoin do not have any inherent value, they are volatile and can pose huge threats to the investors with their sudden dives in value or for other external factors. This makes Digital Rupee more attractive for investors who are looking for more security in crypto investments. Finance Minister Sitharaman also revealed that virtual digital assets will be taxed at 30%. At the end of the day, investor preferences and choices will decide the winner of this battle between Digital Rupee and Bitcoin.
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