April 21, 2024

The next big question is: What’s next for UPI? This technology is now available to thousands of consumers, retailers, and business owners across borders in countries like Nepal, Malaysia, and many other nations. QR scans are used in some areas, but others use them to expedite transactions and reduce costs. Tourists mainly use these systems, but India must also be a part of governments and institutions worldwide to make it a global leader.

While networks for digital currencies such as Bitcoin and Ethereum are widely used in many countries worldwide, there will be intense competition between technologies such as UPI, VISA, and SWIFT. Although each has its purpose, blockchains can provide solutions for most problems.

The current

Blockchain’s use in cryptocurrency is a key feature. This makes it attractive, especially during downturns in stablecoins. But governments worldwide are increasingly concerned about digital currencies failing and don’t want to lose control of their reserve currency for private stablecoins. Although many stablecoin issuers are independent, some prefer to work with governments. The priority of interest in different currencies among shareholders is quite different. Although CBDCs are a great control tool, private institutions and retailers prefer private stablecoins. Private stablecoins can be an excellent solution for global trade if they are properly audited and checked. However, CBDC’s more robust backing by regulators and governments makes them more appealing for specific use cases.

These preferences can be flexible. They are determined by what each group has done and said in response to technology and social change. In addition to the convenience and possibilities that digital currencies offer, cryptocurrencies like Ethereum and Bitcoin allow financial freedom without government censorship. Similar phenomena can be observed in Canada, China, and other countries with centralized regimes like China.

India is an example of a country where the cryptocurrency market is primarily driven by value accrual/investment. However, there is significant demand for digital currency. Cryptocurrency tokens, unlike digital currencies, are digital ownership of government assets. On the other hand, crypto tokens represent a small percentage of the network-based economy. They are very similar to shares in high-growth businesses.

Prospects of digital currency

A single asset is worth less than a network. The number of institutions and users determines the asset’s value. While similar transactions can be solved using the rupee, digital rupee, and e-rupee, the final custody of support and the network are different.

CBDCs in India are mostly piloted for institutional purposes, wholesale settlements, and financial reporting. However, the retail version that exceeds UPI’s reach may be a massive boost to the CBDC. This is true for all CBDCs in any country. China is one of the first to adopt CBDC. It has become the most popular mode of value exchange in Africa and the surrounding regions. Although CBDCs and networks such as bitcoin compete for SWIFT users and market share, UPI is battling VISA and PayPal to be the global leader in global transactions.

UPI is currently used to aid the retail and MSMEs sectors the most. However, UPI might also assist the government and top institutions with large payments. CBDCs are responsible for ensuring compliance, backing, regulation, and reconciliations.

Developments and Problems

The collapse of Luna Foundation’s UST stablecoin earlier in the year has caused a lot of damage to crypto markets. Some structural vulnerabilities were even exposed in different stablecoin designs. The stablecoin industry has been under scrutiny by regulators and governments worldwide. Stablecoins based on the US Dollar is the most widely used stablecoins. This is why the USA has the highest level of regulation and inspection. While India, Japan, Singapore, the EU, and India are currently testing their versions, China has launched its version and is leading the currency dominance race.

The UK and Singapore, both well-known for their financial prowess, use a flexible yet bold approach to test different strategies for their Defi and stablecoin plans. While India has yet to decide on its policy or position on digital currencies, many pilot programs have been completed to benefit from the digital economy’s infrastructure. Tech and interoperability are essential, but the country’s exports and services will still be a significant part of the equation.

Governments have had success in some cases with collaborations with companies like Polygon. This company also demonstrated NFT (non-fungible token) real-time purchasing with Mastercard. This high composability is one significant advantage of blockchain technology. This technology also benefits the country’s citizens. INR onramps for NFTs purchases directly help the Indian music and rap scene.

This again illustrates how open the younger generation is to digital assets and life. Considering that India’s average age for cryptocurrency users is 24 years, it is clear that there is a high acceptance of this technology by the younger demographic.

The road ahead

Infrastructure players have many opportunities to enter the market and take advantage of the current state of digital currency. However, cooperation and compliance with regulators are crucial to the industry’s long-term success.

What can you do more?

Private companies and governments can use blockchain and related technology to reduce the overall cost of money operations in public and private channels. This can lead to more excellent value for the country.

UPIs technology originated in India. However, there is plenty of global competition for CBDCs. The real challenge is spreading the nation’s CBDC (digital currency) across multiple geopolitical regions. The first step in making it ubiquitous is this: Although savvy consumers have adopted digital currencies due to their open economic design and beautiful nature, it will be interesting to see how they react to a more controlled version.

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