Digital currency is an electronic form of currency that can be used for safe and convenient transactions. In recent years, digital currency has become a popular option for many people, as it is seen as a more secure and convenient alternative to traditional forms of payment. The Reserve Bank of India (RBI) has now introduced a digital currency, which is a legal tender in India. This move is seen as a way to promote the use of digital currency in the country and to make it a more mainstream form of payment.

One of the main reasons why the Reserve Bank of India (RBI) introduced digital currency is to promote its use in the country. The government of India wants to reach millions of unbanked citizens and get them into formal financial system. Digital currency is seen as a more secure and convenient alternative to traditional forms of payment, such as cash or cheques.

By making digital currency a legal tender in India, the RBI is hoping to make it a more mainstream form of payment. This move could also help to reduce the amount of cash in circulation, which would reduce the cost of printing and distributing currency. RBI wants the Indian economy to be less dependent on cash. Although UPI transactions are on the rise, cash has not lost its popularity in India.

The demand for cash is going up. Several banks are concerned about growing usage of crypto currencies. Use of dollar dominated crypto currencies is against country’s sovereign interest. Another reason to introduce digital rupee is to bring blockchain and web3 technologies to banking. RBI will explore these technologies for different functions and goals, like ensuring regulation and security.

The biggest advantage of blockchain is making things real-time. RBI stated that e-currency will strengthen the Indian economy will make the payment systems more efficient. It will also lower the transaction costs for banks and quicker settlement of trade. Successful deployment of e-currency can boost India’s GDP, which is very promising for a better future of Indian economy.