There is an array of digital payment methods available in India, e.g. IMPS, UPI, NEFT, RTGS, Wallets, Cards and NETC. Is an additional payment instrument such as CBDC necessary? Though actual users of digital payments are 200 million, there is potential user base of 700 million. Besides, digital payments are accepted at 15 million outlets, against a total potential of 50 million outlets. Thus a new medium of exchange, CBDC can be accommodated.

Paper and metal currency has the cost of making and distribution. Currency is printed at security presses, under the authority of the RBI, and is distributed through 20 currency vaults at its regional offices. These currency vaults feed 4000 currency chests managed by the commercial banks. Bank branches get their cash from these currency chests and the public is served by these branches. The soiled notes are returned to the RBI through the same channel. Thus physical currency is a costlier proposition than digital currency.

CBDC’s design could evolve over a period of time. To begin with, CBDC could ride the existing digital payments infrastructure. CBDC could use technology other than blockchain initially, and can adopt blockchain at a later stage. On the lines of UPI wallet installed on devices, CBDC can also be presented as wallet. A consortium of banks can play the role of distributors of CBDC. Each bank can acquire a million voluntary customers. Anonymity could be introduced through privacy settings gradually. According to Nandan Nilkeni, the proposed digital rupee (CBDC) should remain anonymous. There are concerns pertaining to surveillance if all transactions are recorded and visible. Banks could be encouraged to be proactive by compensating the infrastructure costs of the branches.

RBI must take steps to widen the user base of CBDC. Digital payment literacy should be encouraged by educating the small stores and individuals.

CBDC from India could be based on blockchain or it could be more like a digital wallet. Blockchain-based currencies provide anonymity, but have high transaction costs and are slower to go through transactions. It all depends on the architecture of the blockchain.

A CBDC could run through a distributed ledger technology (DLT) which empowers the central authority to allow access to and editing the database. Blockchain is a subset of DLT systems, and is far more democratic.

CBDC use cases will decide which which factors are to be accorded primacy. RBI may adopt a phased strategy while introducing CBDC.

Government subsidies is one use-case. These can transferred through Aadhar directly to the beneficiary. It keeps the banks out of the scene. The government will have to bear the cost of fund transfer. CBDC is trustworthy as it is unlikely that the central bank will default on its liability. It is a no-risk settlement asset.

International financial transfers could occur on real-time basis, without an intermediary. The cost of cross-border transfers will fall down.

The cost of printing, storage and transport of the physical currency would be saved. China is promoting digital Yuan. Many other countries too are exploring digital currencies. CBDCs could dethrone private cryptos as they are legal tender. They are greener too, as mining is power-intensive process.

UPI is a cashless electronic mode of money transfer. It, however, transfers fiat money. Instead, one can transfer digital currency issued by the RBI. Here there is no need for settlement, as the transfer is secure, without any third-party risks. A central bank digital currency (CBDC) internationalises the payment system. It is a legal tender issued by the central bank in digital form, and is similar to fiat currency. It is exchangeable with fiat currency one to one. It is in digital form – that’s all.

However, why to have CBDC in an economy where cash is widely used? Cash does need distribution and printing. It involves heavy cost.

Cryptos appeared at the end of the first decade of this millennium. However, privately issued cryptos threaten state control over money.

CBDC is combination of cryptography and decentralised ledger technology. The underlying technology of CBDC and private cryptos remains the same, but they are different. Cryptos are not for transactions. They are treated as assets which would appreciate. Fiat currency, instead of appreciating, depreciates on account of over-supply. CBDC is a currency and not an asset.

CBDC wallets can be maintained directly by the central banks, rather than by the commercial banks. It affects the role of commercial banks as custodians of money. It also constrains the role of banks in creating bank money or cash credit.

New year brought a dramatic downfall of the cryptos. The largest digital token had fallen 50 per cent from its peak. Many other cryptos followed suit. In futures position of cryptos, there was a fall $1.1 billion and more than $1 trillion of the market value had been destroyed. It is not certain where the battering would end. It is really risky to be a crypto investor.

Still optimism prevails amongst crypto fans that better times would come back. The US might release a strategy for digital assets. Federal agencies may assess the risks and opportunities the digital assets pose.

Bitcoin’s fall since its November 2021 high has obliterated $600 billion approximately, and $1 trillion from the overall crypto market.

Those investors who want to dip their toes into crypto, Bitcoin remained a go-for crypto. Some new tokens have entered the sector. A loose collection of coins (dogecoin, shiba inu and Squid game) are called meme coins. It is linked to the ‘Wall Street Bets’ movement where retail traders coordinated online to pile into stocks such as Game Stop Corp. This squeezes the short positions of hedge funds.

Next to Bitcoin and Ether, the popular crypto is BNB or Binance Coin issued by crypto exchange, Binance Holdings. It is the number 3 coin in the world. In 2021, it has outperformed both Bitcoin and Ether.

BNB is widely used on Binance crypto exchange, the world’s biggest by volume. It is the native currency of Binance Smart chain, a blockchain platform that supports smart contracts for use in DeFi and other applications. It challenges Ethereum blockchain.

Alternative coins (altcoins) too witnessed major gains in 2021. Solana and Fantom coins too support smart contracts with other blockchain platforms. They outpaced Binance Coins returns in 2021.

There is flow of capital into altcoins. The momentum is seen in tokens related to metaverse and GameFi. ETH-killers target Ethereum.

Online meat market is estimated to be Rs.700 crore (2019). It is a miniscule 1 per cent of the total market. Major portion of the market is unorganised. In organised market, the players are Licious, FreshtoHome, Tender Cuts, Meatigo and Zappfresh. These constitute 80 per cent of the online meat market. E-commerce sites such as BigBasket hold the rest of the share.

They sell fresh meat, poultry meat, sea food. They have also introduced Ready-to-Eat and Ready-to-Cook food. RTE and RTC constitute 20 per cent of their sale.

Licious operates in 20 cities. Tender Cuts has 54 stores and plans to expand to 100 stores. Tender Cuts serve 10000 orders per day.

As the large market is still unorganised, organised players have a lot opportunities. The key value propositions are hygiene and safety. They have to establish a robust supply chain in order to succeed. They operate in metros, and tier I cities. There is potential to expand in tier II cities.