What is a blockchain-based digital currency? What will be the benefit to the people of India?

What is Digital Currency: Union Finance Minister Nirmala Sitharaman talked about launching digital currency during the budget of 2022. He told Parliament that digital currency will be launched this year by the Reserve Bank of India (RBI). It will be a blockchain-based currency. This digital currency has been said to be issued in early 2022-23. Now the question is coming into the minds of people what is this blockchain, how does it work, what is the digital currency associated with it, what will be the benefit to the common people. Today we will answer all your questions here.

what is a digital currency

Digital currency is based on blockchain technology. Finance Minister Nirmala Sitharaman has also reiterated the same things. This currency has been named Central Bank Digital Currency or CBDC in India. It will be issued by the Reserve Bank. The special thing about this currency is that you can convert it into sovereign currency. There are 2 types of digital currency. The first is a retail digital currency, which is issued to the general public and companies. The second is a wholesale digital currency, which is used by financial institutions.

what is blockchain

If we understand blockchain in simple words, then it is made up of two words. The first is Block, while the second is Chain. Block here refers to multiple data blocks in blockchain technology. That is, data is kept in these blocks. Here there are currency ie data in different boxes. Having currency in different boxes creates a long chain of data here. When any new data arrives, it is recorded in a new block. When a block is filled with data, it is appended to the previous block. Similarly, all the blocks are connected.

How Blockchain Technology Works

Blockchain technology works in a way in the exchange process. It works on data blocks, which we mentioned above. Each block is encrypted and electronically linked to each other. This technology was first used in 1991. .B Stuart Haber and W Scott Stornato used it to timestamp digital documents. After this, in 2009, Satoshi Nakamoto invented the cryptocurrency Bitcoin through the blockchain. You have to understand one more thing not only currency is created in Blockchain Technology, but you can keep a record of anything by digitizing it here. It's like a digital laser for you.