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LogoutIssuing a digital official currency is a good idea for India. However, issuing a digital official currency but excluding other ‘private cryptocurrencies’ is not a good idea. It is like saying in 1993 that the government is concerned about the use of the internet by terrorists to send emails, and will build its own email service. We would have had to live with a singular email application and would not have benefitted from multiple email products such as Yahoo mail, Hotmail, Rediffmail, and Gmail. This would have also prevented the creation of various internet-based applications such as social media (Facebook), chat services (WhatsApp), video steaming (Netflix) and e-commerce platforms (Flipkart) that were built privately on top of the internet. Also, India would have cut herself off from the global digital infrastructure for e-mail communication. If the existing 1500 cryptocurrencies are the various applications of the internet, then an RBI-backed cryptocurrency will be akin to a local area network or a home wifi – limited in its potential and not inter-operable with other applications being built, and not allowing other developers to innovate on top of it. It is risky to reduce the potential of all cryptocurrency applications to their use as currency; much like it would have been to reduce the internet down to email.
Further building an RBI-issued digital currency will be a multi-year project. To create a digital currency, tender it out, pilot it and eventually build it out on a pan-India level will leave us years behind the rest of the world. A few other countries that have declared their intention of building out centrally backed cryptocurrencies are merely evaluating these decisions from a policy standpoint or running pilots. For example, China has been running pilots since 2017. We should look at our official currency project as independent of so-called “private cryptocurrencies.”