While crypto is growing gradually despite the fact that few countries are not in favor of it. Crypto as of now is like - either you love or hate but you can not ignore it and this current situation is surely the same. While the many talks about crypto are going on and similarly CDBC is also could another thing that is being considered by many countries. India is already on the list of countries working to bring their digital fiat currency and the US is also working on it. Probably we can see the digital version of USD this or maybe next year that's 2023.
Many people believe that digital currency which is also known as CDBC is the same as a cryptocurrency but this is not the case. Both are in digital form but have a different mechanism and use case. while the crypto is decentralized but this digital currency will be controlled by the government. So the major difference in both is in form of controllership and this is surely one of the parts that can't be ignored.
The digital currency only has features that are similar to actual currency, so India's digital currency refers to a digital rupee, and the same is true for the dollar, which can be available in digital format. It can be used to purchase goods and services.
If we talk about the use case of digital currency or CDBC then it remains the same and the way we use fiat in physical form. The value of fiat is not volatile like crypto but so anything that we hold in this will carry the same value however while converting to another currency there may be some value variation. In the case of crypto, we know that it's highly volatile and because of this value will keep on fluctuating.
It's likely to happen that in this year 2022 India might launch its CDBC and if there would be an option to buy crypto using this then I believe it will make the crypto trade transactions easy and fast. Digital currency is legal tender so we can use it for any purpose wherever fiat can be used and with the digital existence, it will also be easy to use. With CDBC government will save a lot on the admin expenses and distribution which is a cost-effective solution.
In the 21st century, things are getting transformed into digital form and CDBC is a method to bring fiat in digital. Crypto is already digital and has no physical existence but still growing and similarly, we can expect the same with CDBC as well. Crypto is not legal tender and it has a long way to go even there are many countries that are not ready to make crypto legal tender because they are treating crypto as a threat to their fiat currency.
Basically, I believe that both are good for us and even if the govt has different policies for both and having both available will bring more convenience for us. I would love to use digital currency to buy crypto however I expect that the Indian govt should not make the transaction expensive. Since they have already put in a big rate of tax on crypto so having a transaction fee will not be a good move. The world needs a more crypto-friendly environment and policies so that things can be easier for people in the crypto space.
Thank you so much
Stay Safe
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Hi Reeta. I heard Indian government totally banned Bitcoin again, can you clarify this pls
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Hi @mistakili This is not true. There is no such update by the govt here and as of now only higher tax is a problem. Effective first april everyone has to pay 30% flat tax on crypto income and this is high but there is nothing like banning crypto here in India.