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What is the primary technological difference between India's Central Bank Digital Currency (e-Rupee) and decentralized cryptocurrencies like Bitcoin?

  1. e-Rupee uses a proof-of-work consensus mechanism, while Bitcoin uses proof-of-stake
  2. e-Rupee is a centralized liability of the RBI and legal tender, while Bitcoin is a decentralized, private asset with no sovereign backing
  3. e-Rupee transactions are completely anonymous and untraceable, while Bitcoin transactions are public
  4. e-Rupee can only be mined by commercial banks, while Bitcoin is mined by retail investors

Answer: e-Rupee is a centralized liability of the RBI and legal tender, while Bitcoin is a decentralized, private asset with no sovereign backing

The e-Rupee (CBDC) is issued, regulated, and fully backed by the central bank, making it risk-free and legally recognized for settling all debts. It operates on a centralized or permissioned ledger. Bitcoin, conversely, operates on a decentralized, public blockchain without any central authority, lacks legal tender status, and is subject to extreme price volatility, functioning more as a speculative asset than a stable currency.

Topic Banking - Digital Currency
Exam Relevance Banking, UPSC Prelims, SSC
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