Should I Use Digital Rupee?

While digital rupee has various benefits, some concerns have been raised about privacy and cybersecurity risks

To boost the digital ecosystem, the Reserve Bank of India (RBI) has introduced the Digital Rupee. It is essentially the digital version of the Indian Rupee. Many people confuse Digital Rupee with cryptocurrency, but that is not the case. The value of Digital Rupee does not change like cryptocurrency.

However, the blockchain technology used for Digital Rupee is similar to that of cryptocurrency. Blockchain is used to improve security, ensure auditability and enable faster transactions. Various banks in India allow their customers to use Digital Rupee. To know if you should use Digital Rupee or not, let us take a look at some of its key benefits.

Cost savings – When people use Digital Rupee, they are essentially helping reduce the government’s expenses. Such savings can be used for various development projects or welfare schemes, thereby benefitting the nation. Significant expenses are involved in printing of physical currency, its transportation, security and storage. That is why the government is promoting the use of Digital Currency over physical cash. With Digital Rupee, payments can be made directly to the beneficiary without the involvement of intermediaries. This is especially beneficial for cross-border payments.

Works with digital wallets, UPI – You do not need any new apps or tools to use Digital Rupee. It is compatible with existing digital wallets and UPI platform. You can transfer Digital Rupee to any mobile number of QR Code. Another great advantage of Digital Rupee is that it can be used without a bank account. This makes it really useful for folks who may not have a bank account. Payments done in Digital Rupee are settled instantly, which is another key benefit for users.

Secure transactions – Transactions done in Digital Rupee are managed via blockchain technology. This is something similar to the process used for cryptocurrency. It implies that transactions in Digital Rupee are a lot more secure. Digital Rupee is thus highly resistant to fraud and scams. It is traceable, something that makes it harder for fraudsters to steal Digital Rupee. With Digital Rupee, the chances of black money and money laundering are also reduced significantly. Digital Rupee also helps in curbing illicit activities.

Environmental benefits – If you care about the environment, you can contribute by using Digital Rupee. Physical cash has a significant carbon footprint, which needs to be reduced. It can be achieved by increasing the use of Digital Rupee.

Challenges with Digital Rupee

While Digital Rupee has many benefits, it is not being used on a mass scale. Lack of awareness is one of the key factors. Moreover, there are no major financial incentives being offered to use Digital Rupee. Some experts have also raised privacy concerns, since the transactions made using Digital Rupee are traceable. Another challenge is the requirement to have a mobile device and internet connection, which may not be available to everyone.

Some experts have also pointed out to cybersecurity risks, even when blockchain is being used. That is because no system is 100% safe and secure. Another factor is that existing digital transaction platforms such as UPI are already highly efficient and widely used. This reduces the need to use Digital Rupee. But hopefully, more people are expected to use Digital Rupee in the future.