Digital rupee: Benefits and risks

The Reserve Bank of India (RBI) has been cautious about “private virtual currencies” like Bitcoin and Ethereum because of the challenges they pose for regulation and security [16]. However, there's been a recent change in trend with the introduction of the Digital Rupee, a RBI backed digital currency [17]. This Digitalized version of rupee aims to induce the advantages of cryptocurrencies and side by side making sure the stability of legal tender.

The Digital Rupee aims to revolutionize Indian payment system by reducing all sorts of dependency on physical cash and promoting digital transactions [20]. This change from offline to online currency can possibly reduce the costs related with printing, storing, and transporting physical currency [5]. Moreover, it has the potential to extend financial services to unbanked societies by the option of accessible digital wallets [13].

However, like two sides of a coin, these benefits also have some challenges. Cybersecurity threats, privacy issues, and the need for robust technology and legal frameworks has to be addressed for the Digital Rupee to succeed. Overcoming these problems is imperative so that all citizens of India can access this technology.

Overall, the Digital Rupee signifies a major step forward for India's financial system. By fostering financial inclusion, improving efficiency, and combatting illicit activities, there is a possibility that the digital rupee can improve the financial landscape of India.