The Reserve Bank of India (RBI) has introduced a new digital version of the Indian rupee, called the e-rupee. The e-rupee is a digital version of the physical rupee and is intended to be used for digital transactions.
On Dec 1 2022, the RBI has announced start of the first phase of the retail e-rupee pilot for retail customers in four cities- Delhi, Mumbai, Bengaluru and Bhubaneshwar.
The users will be able to use e-Rupee through a digital wallet offered by a bank and store the wallet on mobile phones and other devices.
The transactions can be person to person, or to a merchant through QR codes
Advantages of e-rupee:
Increased security: Digital transactions using the e-rupee will be more secure than physical transactions as they will be protected by advanced encryption and digital signature technologies.
Convenience: Digital transactions will be faster and more convenient than physical transactions as they will not require the exchange of physical cash.
Increased efficiency: Digital transactions will also increase the efficiency of financial transactions as they will not require the use of intermediaries such as banks and financial institutions.
Access to finance: Digital transactions will also provide access to financial services to those who are currently unbanked or underbanked.
Disadvantages of e-rupee:
Dependence on technology: The success of the e-rupee depends on the availability and reliability of technology. If the technology fails, the e-rupee will not be usable.
Risk of hacking: Digital transactions are vulnerable to hacking and cyber attacks. The e-rupee will also be vulnerable to these risks.
Risk of fraud: The e-rupee will also be vulnerable to fraud as digital transactions can be easily manipulated.
Lack of acceptance: The e-rupee may not be accepted by all merchants and businesses. This could limit its utility.
How e-rupee is different than Bitcoin?
Legal Tender: Bitcoin is a decentralized digital currency, while the e-rupee is a digital version of the Indian rupee and is considered legal tender.
Government control: Bitcoin is not controlled by any government or central authority, while the e-rupee is controlled by the RBI.
Volatility: The value of Bitcoin is highly volatile, while the value of the e-rupee will be stable as it is pegged to the value of the physical rupee.
Regulation: Bitcoin is not regulated, while the e-rupee will be regulated by the RBI.
In conclusion, the e-rupee is a digital version of the Indian rupee, intended for digital transactions. It offers increased security, convenience, and efficiency, but also has its own set of drawbacks. The e-rupee is controlled by the Indian government and is considered legal tender, while Bitcoin is decentralized and not controlled by any government. The e-rupee is also less volatile than Bitcoin.