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.