The beginning of the third decade is becoming grandeur for India. A lot of action is happening in the country, and we are becoming a prominent power in the world economy. On November 1st, 2022, the Reserve Bank Of India (RBI) launched the pilot for the Central Bank Digital Currency- CBDC, an e-RUPI digital payment platform set to revolutionize the payment system like UPI. It is issued to create an additional option for monetary transactions and isn’t much different from banknotes. However, because e-RUPI is digital, it is often matched with cryptocurrency. So, there are similarities between CBDC and crypto, but they are different.

There are a lot of differences between cryptocurrency and e-RUPI, and in this article, we will discuss all these differences. Hold on with us.


What is CBDC?

A CBDC is a digital currency issued and controlled by a country’s central bank. It’s like having a digital version of your physical currency that you can use to make transactions and settlements electronically. The idea behind CBDCs is to provide a safe, efficient, and convenient means of payment to the public while maintaining the financial system’s stability and integrity.

With a digital rupee, people could make transactions and settlements electronically, which could be faster and more secure than traditional payment methods. Plus, it would be accessible to anyone with a smartphone, potentially expanding access to financial services for the unbanked or underbanked.


What is the Purpose of CBDC?


Enhancing Payment System Efficiency

Traditional payment systems have been around for a long time, and while they have served us well, they have their fair share of inefficiencies. From slow transaction times to high transaction fees, the current payment systems are far from perfect. CBDCs can enable faster and cheaper transactions. Because CBDCs are digital, transactions can be processed almost instantaneously, which can be a game-changer for businesses that rely on speedy transactions. Plus, because CBDCs are designed to be a direct liability of the central bank, they can potentially eliminate the need for intermediaries like banks, which can reduce transaction costs.


Promoting Financial Inclusion

According to the World Bank, an estimated 1.7 billion adults worldwide still do not have access to basic financial services. This lack of access to financial services can have significant consequences, including limited economic opportunities and increased poverty. CBDCs can potentially increase access to financial services by providing a digital alternative to traditional banking systems. Because CBDCs can be accessed through a mobile phone or other digital devices, anyone with internet access can use them, regardless of location. This can be particularly beneficial for those in rural or remote areas who may not have access to physical bank branches.


Improving Monetary Policy Transmission

Monetary policy is a powerful tool central banks use to manage the economy. However, traditional monetary policy tools have their limitations. CBDCs can potentially improve monetary policy transmission by providing a direct channel between the central bank and the economy. Because CBDCs can be issued and distributed directly by the central bank, they can bypass the banking system and provide more direct and immediate economic effects.


Ensuring Financial Stability

Financial crises can have severe consequences, leading to economic downturns, job losses, and social unrest. The 2008 financial crisis is a prime example of how a financial crisis can devastate the global economy. One-way CBDCs can help to prevent financial crises is by providing greater financial transparency. Because CBDCs are digital, they can be easily tracked and monitored, providing central banks with greater insight into the flow of money and the behaviour of financial institutions. This can help identify potential risks to the financial system and enable central banks to take action to mitigate those risks before they escalate into a crisis.


What are the Advantages of CBDC?


Faster Mode of Payment

Traditional payment systems are often slow and require multiple intermediaries, resulting in delayed transactions and increased costs. However, CBDC can improve payment speed by facilitating instantaneous transactions that do not require intermediaries. This means that payments can be processed in seconds, allowing faster and more efficient payment processing.


Cheaper Global Transfers

Cross-border transfers are often expensive and inefficient due to the involvement of multiple intermediaries and high transaction fees. CBDC can reduce transfer costs and increase efficiency by enabling direct transfers between individuals or entities without intermediaries.


24/7 Availability

Traditional banking hours limit the availability of banking services to specific times of the day, which can be inconvenient for many people. However, CBDC can provide round-the-clock transaction availability, allowing individuals and businesses to make payments anytime.

CBDC can make payment systems available 24/7, providing greater user flexibility.


No Manufacturing Required

CBDC is a digital currency that does not require manufacturing, reducing the environmental impact of currency production. For example, in the Bahamas, the Sand Dollar is a CBDC that is helping to reduce the country’s reliance on physical currency.


Well-organized Government Payments

CBDC can increase efficiency and transparency in government payments, making them more organized and effective. It can enable faster and more transparent government payments by providing real-time tracking of payments and reducing the need for intermediaries.


What is Cryptocurrency?

Cryptocurrency is a digital currency completely decentralized and free from government or central bank control. It relies on blockchain technology, a public ledger that records all transactions and uses cryptography to secure them.


The most popular cryptocurrency is Bitcoin, created by an anonymous person or group using Satoshi Nakamoto’s pseudonym. The purpose behind the creation of Bitcoin was to help people send money over the internet without going through traditional financial institutions.


What is the Purpose of Cryptocurrency?



Cryptocurrency is designed to promote decentralization, with no single entity controlling it. This makes it resistant to corruption, manipulation, and censorship, ensuring that no single entity can manipulate the system for its benefit.


Financial Freedom

Cryptocurrency can offer financial freedom by providing an alternative payment system that a single entity, government, or financial institution does not control. As a result, people can transact with anyone worldwide without intermediaries, and the fees are often lower than with traditional payment systems.



Blockchain technology records every transaction in a public ledger that is verified and encrypted, ensuring that all transactions are secure and transparent. Cryptocurrency transactions are anonymous, and there is no need to disclose personal information to complete a transaction.



Cryptocurrency promotes accessibility by enabling anyone with an internet connection to access financial services, regardless of location or financial situation. Cryptocurrency also eliminates the need for intermediaries, making it easier for people to access financial services directly.



Cryptocurrency promotes transparency using blockchain technology, which records every transaction on a public ledger that anyone can view. This ensures that all transactions are transparent and can be verified, providing a high level of trust and confidence for users. Furthermore, cryptocurrency eliminates the need for intermediaries, making it easier for people to access financial services directly and ensuring no hidden agenda behind financial transactions.


What are the Advantages of Cryptocurrency?



One of the most attractive features of cryptocurrency is anonymity. Transactions can be made without revealing the identity of the parties involved. This anonymity can be beneficial when privacy is crucial, such as political donations or sensitive business transactions. However, it is important to note that anonymity can also be misused for illegal activities, such as money laundering or financing terrorism. Nevertheless, the anonymity provided by cryptocurrency is a significant advantage for many individuals and businesses.


No third-party involvement

Cryptocurrency transactions are peer-to-peer, meaning there is no need for a third party, such as a bank or financial institution, to verify or authorize transactions. This eliminates the need for intermediaries, which can reduce transaction fees and provide greater control over personal finances. Moreover, it allows for more direct and immediate transactions, which can be especially important in cross-border transactions.


Global Accessibility

Cryptocurrency transactions are borderless, making them accessible to anyone, anywhere. Unlike traditional financial systems, individuals can use cryptocurrencies in countries without stable financial systems or access to traditional banking. This feature is especially beneficial for people who do not have access to traditional financial services or live in countries with unstable economies or high inflation rates.


Faster Transactions

In traditional systems, bank and wire transfers can take days, while cryptocurrency transactions can be completed within minutes. This is possible because cryptocurrencies are based on blockchain technology that allows for “atomic” transactions or transactions that clear and settle as soon as a payment is made.


Immutable Transactions

Transactions on the blockchain cannot be altered or reversed, making them immutable. This feature provides increased security and trust, as there is no way for fraudsters to manipulate or reverse transactions. Immutable transactions also promote accountability and transparency, as all transactions are recorded on the blockchain, making tracking and verifying them easier.



CBDC vs. Cryptocurrency: Differences you must know


Regulatory Framework

The RBI’s CBDC is a digital version of the Indian Rupee, issued and regulated by the Reserve Bank of India (RBI). The RBI has the authority to create, issue, and control the circulation of the CBDC. Therefore, the regulatory framework for CBDC is similar to the existing regulatory framework for traditional currency.

On the other hand, cryptocurrencies such as Bitcoin, Ethereum, and Litecoin are decentralized, which means any central authority or government does not regulate them. Although some countries have introduced cryptocurrency regulations, the regulatory framework for cryptocurrency is still in its early stages and varies from country to country.

In the case of the RBI’s CBDC, the regulatory framework will help ensure that the CBDC is stable, secure, and easily accessible. It will also help prevent money laundering and terrorist financing, which are major concerns for the central bank.


Control and Authority

One of the major differences between CBDC and cryptocurrency is the level of control and authority each has. For example, CBDC is a digital version of the Indian Rupee backed by the central bank and is under the direct control and authority of the Reserve Bank of India. On the other hand, cryptocurrencies, like Bitcoin, are decentralized and operate independently of any government or central authority.

The importance of control and authority in financial systems cannot be overstated. A regulated and controlled financial system ensures stability, protects consumers, and supports economic growth. The regulatory framework for CBDC ensures that the central bank has control and authority over issuing, distributing, and regulating digital currency while still ensuring user privacy and security.



Transparency is a key aspect of any financial system, and it is no different for the Reserve Bank of India’s (RBI) Central Bank Digital Currency (CBDC). The RBI’s CBDC is designed to operate under a highly transparent framework, with all transactions recorded on a secure and immutable blockchain ledger. This ensures that all transactions are visible to the relevant authorities, promoting accountability and reducing the risk of financial fraud or money laundering.

In contrast, transparency in cryptocurrency is often lacking, with transactions being anonymous and difficult to trace. This has raised concerns among regulatory authorities worldwide, who have cited the potential misuse of cryptocurrency for illegal activities such as terrorism financing and money laundering.



CBDC is designed to be stable, meaning its value will not experience wild fluctuations like we often see in the cryptocurrency market. The value of the CBDC will be pegged to the value of the Indian rupee, making it a stable digital currency. This stability is achieved through the central bank’s control over the supply of CBDC, which can be adjusted to maintain its value.

In contrast, cryptocurrencies are known for their high volatility, with prices changing dramatically in hours or days. In addition, cryptocurrencies are decentralized, and their value is determined by market demand and supply. With no central authority controlling the supply, cryptocurrencies are subject to wild swings in value.




With CBDC, RBI is set to counter all the inefficiencies of the current financial system. For example, cross-border transactions are one of the problems which are tedious and expensive. The introduction of the digital rupee hopefully enables instant cross-border money and makes operations more seamless.

If you want to know more about CBDC, read this guide on CBDC Explained: e-RUPI Digital Payment Benefits and its Working.




Is CBDC better than cryptocurrency?

CBDC is better than crypto as it is regulated by the central authority, which immobilizes illegal activities like money laundering. In addition, CBDCs are digital versions of fiat currency issued and backed by central banks, while cryptocurrencies are decentralized digital assets not backed by any central authority.


Is CBDC a threat to cryptocurrency?

The coexistence of CBDCs and cryptocurrencies is possible, and their impacts remain to be seen. CBDCs may be seen as a potential threat to cryptocurrencies due to their similarities in digital currencies. However, CBDCs are centralized and controlled by governments, while cryptocurrencies are decentralized and run on blockchain technology.


What is the connection between cryptocurrency and CBDC?

The connection between cryptocurrency and CBDC lies in their shared aim to facilitate faster, cheaper, and more secure transactions in the digital era. Cryptocurrency and CBDC are both forms of digital currency, but they differ in their underlying technology, regulatory framework, and control. While cryptocurrencies are decentralized and operate independently of central banks, CBDCs are centralized digital currencies issued and backed by central banks.

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