What is a CBDC?
A central bank digital currency is the legal tender issued in digital form.
It is the same as a fiat currency but the form is different and is exchangeable one-to-one with government-issued money.
In other words, CBDC is the same as the legal currency we use. Just that it’s in a digital form.
How does Digital Rupee work?
A CBDC is the digital form of fiat currency and will ease transactions. An RBI report had earlier described CBDC as something that will provide a safe, robust, and convenient alternative to physical cash. Depending on various design choices, it can also assume the complex form of a financial instrument, the RBI report said.
Is CBDC a cryptocurrency like Bitcoin?
No. A CBDC is not a private crypto currency. It is a digital form of legal tender and private virtual currencies are entirely different. Private virtual currencies are at substantial odds with the historical concept of money. They are not commodities or claims on commodities as they have no intrinsic value.