Difference between digital currency and cryptocurrency
Union Finance Minister Nirmala Sitharaman presented the Union Budget today. There has been no change in the tax slab in the budget, due to which the middle class will definitely be disappointed. However, the corporate tax has been reduced from 18% to 15%. The government has also announced that 30 percent tax will be imposed on income from cryptocurrencies. Apart from this, 1 percent TDS will be levied on the transfer of virtual currency. It was said that if the virtual asset is given as a gift, then the tax will be paid by the person to whom the virtual asset is received as a gift. The biggest thing in all this was the introduction of the digital currency of the Indian government this year.
•What is Currency?
That form of money from which we can buy any product and service and which is backed by the government. It is called currency.
•What is Digital Currency?
This is the electronic form of the same cash that we use in everyday life. Just like you do cash transactions, you will also be able to do digital currency transactions. CBDCs work somewhat like cryptocurrencies (like bitcoin or ether). That is, it will work on blockchain technology. Now there are some advantages of blockchain technology that the government wants to use. Its first advantage is security. It is very difficult to trace physical currency. For this reason, black money circulates in the country's economy. Demonatization was an attempt to trace this black money. But through blockchain technology, the government can trace your transactions very easily. Because it is like a ledger where the record of every transaction is recorded with everyone. So privacy is also better than this.
•What is Cryptocurrency?
Cryptocurrency is a form of financial transaction that is virtual because you cannot see it, nor can you touch it. After all, why are we saying this? So let us tell you that its entire business is done through online medium only. Simply put, there is an intermediary for currency transactions in any country, like a central bank in India, but there is no intermediary in the business of Crypto. It is operated online by a network.
Cryptocurrencies are becoming popular all over the world and the number of people investing in it is increasing in India as well. It is also known as unregulated market. Cryptocurrency is such a way of investment that makes you rich in a moment, while at the same time makes it fall on the ground in a jiffy. But despite this, its popularity is increasing. Also, let us also tell you that the government is not responsible for any loss caused to those who invest in Crypto. Because it is not recognized by the government.
Difference between Digital Currency and Cryptcurrency
The concept of digital currency is not new. It comes from cryptocurrencies like bitcoin, which were launched in 2009. After this, from Ether, Dogecoin to fifty cryptocurrencies have been launched. Over the years, it has evolved as a new asset class in which people are investing. Private cryptocurrencies are issued by private people or companies. It does not monitor it. People are transacting anonymously, leading to the use of cryptocurrencies in terrorist incidents and illegal activities. They are not supported by any central bank. This currency is limited, due to which its value varies according to supply and demand.
But when you talk about digital rupee, it is being launched by the central bank i.e. Reserve Bank here. There is neither a quantity limit nor an issue of financial and monetary stability. One rupee coin and digital rupee have equal strength. But the monitoring of the digital rupee will be possible and who has how much money, it will be known to the Reserve Bank. However, Parin Lathia, AVP-Marketing at WazirX, one of India's largest cryptocurrency exchanges, says that the RBI's launch of a digital currency will not affect either bitcoin or cryptocurrencies. Cryptocurrency has become a kind of asset, which will continue to be traded around the world. India cannot lag behind in this.
Why the government needed to bring digital currency?
People's interest in bitcoin and its similar cryptocurrencies has increased. In such a situation, because the government could not regulate the cryptocurrency, it was necessary that the government should bring a regulated digital currency, so that on the one hand it would be convenient for the people, but the government could also keep an eye on whether the currency was not used in wrong activities.
Advantages and challenges of digital currency
Efficiency: It is less expensive. Transactions can also happen faster. In comparison, the printing cost of currency notes, the transaction cost is also high.
Financial Inclusion: One does not need a bank account for digital currency. It can also be offline.
Prevention of corruption: Government will keep an eye on digital currency. Tracking of digital rupee will be possible, which is not possible with cash.
Monetary Policy: How much and when to issue Digital Rupee will be in the hands of the Reserve Bank. The excess or shortage of money in the market can be managed.
Dependency on cache will be reduced to a great extent. The cost of printing and transportation of currency notes will be saved.
Terror Funding: Banning Cryptocurrencies Will Help To Stop Terror Funding
Transactions with digital currency will be completed soon
There will be tracking of currency, so that it cannot be hidden.
Difference between digital currency and digital payment
You must be feeling that digital transactions are being done through bank transfers, digital wallets or card payments, then how did digital currency become different? It is very important to understand that most digital payments work like cheques. You give instructions to the bank. He makes a payment or transaction of 'real' rupees from the amount deposited in your account. Many organizations, people are involved in every digital transaction, who complete this process. For example, if you made a payment with a credit card, did the other person get it immediately? No. Digital payment takes from a minute to 48 hours to reach the account of the front-end. That is, the payment is not instant, it has a process. When you talk about digital currency or digital rupee, you paid and the other person got it. That is its merit. The digital transaction happening now is the transfer of money deposited in a bank account. But CBDC is going to replace currency notes.
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