Future of Digital Currency In India

The world’s going so fast. Remember watching movies where people robbed crores and crores and walked away with them in cases and boxes? It felt so good to feel so much money, right? Today though, you do not have to feel the money to feel rich. It is all at the tip of your fingers. Not speaking of heists or robberies – but in general, little do we ever see physical cash – do we? Digital money has come to the forefront.

Moreover, there are more people that enjoy the benefits of this digital money. So, let’s see what the future holds for digital currency and how it is going to turn the tables.

What is Digital Currency?

Any currency that is only accessible in an electronic form is referred to as digital currency. Most countries’ financial systems now use electronic representations of currencies. In the United States, for example, actual US currency accounts for just around one-tenth of the total money supply; the remainder is stored in various bank deposits in electronic form.

Digital currency differs from electronic cash in most Americans’ bank accounts in that it never assumes physical form. You could go to an ATM instantly and convert an electronic record of your cash holdings into tangible money. Digital cash, on the other hand, never assumes physical form. It is always stored in computer networks and exchanged digitally.

Digital Currency All Over the Country

Digital transactions nowadays leave an audit trail and a trace. Every time a debit or credit card is swiped, information about the cardholder’s identity, purchases, and location is revealed. Another distinction between cash and digital transactions is that with cash, settlement occurs at the time of the transaction. It is, in other words, a “delivery-versus-payment” arrangement.

Payments are made in today’s digital transactions like RTGS (RTGS full form – Real Time Gross Settlement); however, at the time of settlement, which occurs with a time lag following the transaction. One of the greatest motivators for a client to continue using cash is the preference for a delivery-versus-payment situation in which the buyer does not part with the payment until there is a guarantee of delivery.

Of course, continuing to maintain real, paper-based cash in circulation while a digital currency is in use does not fit with most future ideas. That is why the Reserve Bank’s planned digital money is both significant and unique. Down the article, you will find features of RTGS and other digital currencies in various segments.

The Future of Digital Currency in Various Segments

a) Retail

India’s retail payments system has become more complex, dynamic, and extensive in recent years. Several payment system operators, wallet businesses, and providers to operators and card companies are included in the broad payment space. As clients have more options, these businesses have become more profitable.

The Reserve Bank has aided the industry’s growth via its Real Time Gross Settlement system, which ensures cash transfers for big amounts within seconds, and its National Electronic Funds Transfer system, which is used for retail transfers. Then there’s UPI, or the Unified Payments Interface, which is a real-time payment system that allows interbank peer-to-peer and person-to-merchant transactions to take place.

The QR-code-based system was built by the National Payments Corporation of India, an umbrella entity created by the RBI and the Indian Banks’ Association to operate retail payments and settlement systems.

b) Money Velocity

Depending on the aim of the transaction, funds can now be moved digitally in a variety of methods in India. Indeed – one of the most exciting characteristics of the payment system’s digitization and the advent of genuine digital currency is that the speedier movement of money that digitization stimulates is tremendously beneficial to the Indian economy. Velocity of money in the market, or the rate at which it circulates, is a measure of an economy’s vitality. The higher the velocity, the faster the economy grows.

If India’s goal is to become a powerhouse with a large GDP, the faster money moves, the better, and digitalization is the way to get there. Newer digital forms that are safe, secure, convenient, and simple to use will propel India forward. The central bank of India’s upcoming digital currency will be a significant step in that direction.

c) Money and Crypto

To begin, central bank digital currency (CBDC) will differ from Bitcoin, Ethereum, and other cryptocurrencies, which are not equal to sovereign currencies in most countries, including India, because they are not permitted means of payment and lack legal support. A central bank digital currency, unlike a private digital currency, can be used to balance payment obligations with certainty.

Second, there is no agreement on who owns or how many private digital currencies (assets?) are in circulation. The origins of Bitcoin, Ethereum, Ripple, and other cryptocurrencies are unknown. As a result – there is no guarantee that the value kept in the form of a private digital currency will necessarily be paid and that it is a stable value at all times.

In contrast, a digital currency issued by a central bank is often backed by a sovereign nation. Even when something does go wrong, such as a failure in the IT system or some unanticipated event, the holder of that bank’s currency, whether in physical or digital form, has trust that the value of that currency will be available to him at all times.

The Reserve Bank of India has not yet defined the term “cryptocurrency,” but I believe it will define today’s private cryptocurrencies as a share of stock. The term would also include new crypto goods like non fungible tokens.

What are the Pros of Digital Currency Today?

  • Transactions are completed more quickly with digital currency. A complex web of actors makes up the current financial system. In some cases, such as with a fully decentralized digital ledger system, two parties can transact business directly without the involvement of a bank or financial institution. This avoids payment settling times that can take days or even weeks in the past.
  • There are security concerns with physical money. With digital currency, the risk of theft, forgery, and the requirement for physical storage at a bank can be decreased or eliminated.
  • Costs can be reduced by using digital currency. Transaction fees related to digital payments can be considerably lowered by eliminating some or all intermediaries. This is especially true given the significant expenses connected with cross-border money transfers.
  • Accounting and other recordkeeping are automated by digital currency technology, saving time and money for issuers, merchants, and regular users.


Though we say we are at the pinnacle of the digital era – we could never know; we might still be in the beginning stages of the development of the digital currency as we would never know what the future holds. So far, it has had a great effect on the economy and its people.

Related Articles

Back to top button