When it comes to blockchain, almost every country out there had the initial resistance and blanket bans. And india was not any different when it comes to the resistance. The past government prior to 2014 were extremely dense on technology adoption and they hated anything that made them think on tech.
However since 2014, there has been massive adoption drive going on. With the crypto and also through the digital payment gateways. The way adoption improved over the years you can see ow the rupee has managed to gain a lot over the years.
In this post, we take a look at how the Digital Rupee as a CBDC coming into the market and how the adoption is taking place.
What is Digital Rupee? How does it work?
Digital rupee is an blockchain based currency which is digital form of the cash. And it can be used between individuals, business and govt. And this is going to be a digital nature for the cash. This is issued by the govt and however the blockchain does not spy and keep track of the users. Which is the privacy focused feature of this CBDC compared to Chinese and Korean CBDC.
It is a digital currency and it does follow the smart contract and variety of the programmable triggers and so they can be used like ethereum type of the smart contracts and the features. It can be scanned and used like your UPI transactions and as of now the feature is yet to arrive in UPI apps but in future that would also change as well.
You can check the reference FAQ for the digital rupee here. Most of the questions that people have about it are answered here.
Obstacles towards the CBDC Adoption
Journey towrds the CBDC was not easy, in fact development of the CBDC was not easy as the govt prior to the 2014 had no interest into the CBDC and the blockchain. But that is changing. Polygon team has been in talks and partnership with the govt on the public facing projects and that is visible but there are issues too. So let's take a look at the obstacles.
CBDC itself is not tracking the users for the crypto in digital rupee on blockchain. However banks are developing the client apps for the blockchain so they are likely to track the CBDC usage and also the client usage under history which is a privacy concern on the banking side.
Going 100 percent digital can cause the issues related to the bank runs and the closure of the public facing systems. Which is not an easy thing to handle. Another thing is cybersecurity risk because the blockchain adoption is new for the govt and things are going very much slow as of now on security.
CBDC usage can create it's new Forex system and again the USD would thrive in that market too which is same old system in digital form dominating the USD affecting the market.
Check out challenges of the CBDCs that india is likely to face in this reference here.
CBDC and the Core Crypto HODLers
Digital rupee is just learning from the other digital native currency makers like china, korea, singapore and others. It is going to be evolving currency with the market changing the way crypto is taking shape in the world. So we have to understand how the changing stablecoin market is going to be also have some space for the CBDC of almost every country.
Core crypto users can continue to HODL their favorite currencies and the people who swap for the CBDC would continue to exist and we don't have to worry about the upcoming challenges that the CBDC may pose for banking and also the consumers in the chain.
India has come a long way from the blanket bans to adopting the CBDC and the variety of the public and private blockchains. Anything they do on the censorship from this point onwards is for the safety of nation rather than anti crypto approach. So Digital Rupee is going to make a lot of sense in upcoming times.