Digital copying is prevented by Blockchain Technology. A cluster of computers controls the technology without central authority. Data is open and transparent because it is shared.
Blockchain ledgers are the foundation of cryptocurrencies such as Bitcoin, Ethereumand Facebook’s LIBRA. Some solutions allow individuals and organizations to create legally enforceable documents “smart contracts”, This enables precise supply chain network monitoring and remote voting and elections.
What exactly is the Central Bank Digital Currency (CBDC)?
It is a digital money backed by a country’s central bank. The CDBC is like the central bank notes legal tender and accepted to pay for various transactions within a country.
Second, unlike cryptocurrencies, CBDC is backed by the central bank, giving it more stability and less volatility.
It is referred to as “programmable money.” The central bank may authorize the use of CBDC for specific users, such as individuals or financial institutions. When CBDC is made available to the public, it is referred to as “CBDC for retail.” So, just as people use currencies for everyday transactions, they could also use CBDC.
Finally, like cryptocurrencies, the CBDC works with blockchain technology, so every transaction – the Amount, accounts involved, purposeand so on – is recorded.
CBDC has the following advantages:
That Subhash Chandra Garg Committee (2019) recommended a Ban on private cryptocurrencies because
Concerns such as volatility, instability, security risk and risk of funding illegal activities. However, the committee
stressed that an official digital currency can have a number of advantages, such as:
• Promotes the cashless society.
• increasing financial inclusion
• Increasing the effectiveness of monetary policy
• Driving the development of the fintech sector
• Provide a real-time picture of economic activity for better and more efficient GDP estimates
monetary policy formulation.
• The traceability of transactions would act against corruption and money laundering.
• Tackling the monopoly of private-sector-issued cryptocurrencies.
Issuance of CBDC in India
The committee is investigating issues related to Virtual Currencies (2019) directed by Subhash Chandra Garg
recommended that we must be open-minded towards the launch of an official digital currency in India. It
recommended that a committee be set up, if necessary, to review and develop an appropriate digital model
Currency in India. If such a digital currency is issued, the RBI should be the regulator.
That The draft national blockchain strategy presented by the National Institute for Smart Governance has also called on India to develop a central bank digital rupee.
‘Proof of Work’ to a ‘Proof of Stake’
Merging is the name for the full conversion of the Ethereum blockchain platform out “Proof of Work” to a “Proof-of-Stake” consensus mechanism.
Working demonstration: As a decentralized platform, Ethereum does not have organizations like banks that approve transactions that take place on its network; previously made approvals about the Proof of Work (PoW) consensus process.
High energy consumption: These mining farms were energy guzzlers, at times consuming more electricity than entire countries and were therefore a major problem in terms of environmental compatibility.
The total annual electricity consumption of the cryptocurrency is roughly the same as that of Finland, while its carbon footprint is comparable to that of Switzerland.
For a while, European governments considered a crypto mining ban, while China launched a nationwide crackdown on crypto miners, driving them overseas.
Proof of use is a new method that would eliminate the need for crypto miners and massive mining farms that previously powered this Blockchain through a mechanism known as “Proof-of-Work” (PoW).. Instead, it now uses a “Proof-of-Stake” (PoS) method that randomly selects “validators” to approve transactions in exchange for a modest payment.
Validators are people who donate a computer to maintain the integrity of the blockchain by regularly calculating the link from the first block to the last.
- This would be completely e.glimit the need for Ethereum network miners.
- It is saved about 99.95% of Ethereum’s energy consumption.
- It will do Ethereum network transactions are extremely secure.