We often confuse digital currency with digitized currency. The world is changing rapidly, evolving every day. And since the Covid-19 pandemic digitized money is being promoted to that, the spread of the virus can be contained. But what is the difference between these two currencies? Digitized currency is a legal tender that has a printed as well as a virtual copy. For example, take the money in your bank, you can either withdraw cash from an ATM or use the same to transfer it into online wallets. This is a digitized currency, whereas a digital currency is the one that has no printed version and only a virtual copy holding the same value. Though the supreme court in India recently removed the ban on cryptocurrency like bitcoin but declared that RBI won’t be using it and don’t consider it has a legal tender in the market. Bitcoin is a digital currency that has no physical form and only exists in digital form. Countries like China, which are fighting for being a world power, has opened to the idea of digital currency and have issued sovereign digital currency (SDC) in several states through the central bank. Their model was quite similar to the e-krona of Sweden, which was done at a smaller capacity. Facebook also started working on the blockchain digital currency under the Libra Project in 2019, which is expected to be released in 2020. Though it differs from digital currency and will come under the Libra association, it is a permissioned system where only a few trusted entities can keep track of the ledger. And there is less volatility than in something like bitcoin. Libra has started the goal to be more useful than any national currency, accepted in more places, and with fewer complications leading to globalization. But when china released its version through a centralized bank, it became much different. Dealing with the central bank provides much more credibility than corporate banks where a business has to ensure their assets others they will vaporize.
And on the other hand, the central bank would know who owns how much digital currency reducing money laundering, which will become more difficult. So Central banks around the world are finding a middle ground between fiat currency and cryptocurrency. Even Japanese banks are coming forward to develop their digital currency. Whereas countries like India, which have recently accepted cryptocurrency legally but are far off from using digital currency and stay tuned to this place to catch the latest news on digital currency.
