Introduction

In the modern world, digital technologies penetrate into all spheres of life, including finance. More and more countries are exploring the possibility of creating their own national digital currencies, which can provide a new level of efficiency, security and availability of payments. Russia does not remain aloof from this process and is developing a digital ruble – a new type of money that will have the same functions and properties as a regular ruble, but will exist only in electronic form. The purpose of this article is to tell what a digital ruble is, how it differs from cash and non-cash money, as well as cryptocurrencies, what advantages and disadvantages it can have for citizens, businesses and the state, as well as what examples of digital currencies are in other countries.

What is a digital ruble?

The digital ruble is a new type of money that is planned to be introduced in Russia in the near future. The digital ruble will be issued and controlled by the Central Bank of Russia, and not by private companies or organizations. This means that the digital ruble will have legal force and a guaranteed value. The digital ruble will not replace cash or non-cash payments, but will complement them. The digital ruble will operate on the basis of a special platform that will ensure the security and transparency of transactions.

This platform will use distributed ledger technology (DLT) but will not be completely decentralized like cryptocurrencies. The digital ruble will have a virtual form and a unique digital code that will be stored on a special electronic device or application. The digital ruble will be able to work without being connected to the Internet or the power grid.

The main differences between the digital ruble and cash and non-cash money

The digital ruble has a number of differences from cash and non-cash money, which make it more convenient and profitable to use. Here are some of them:

• Speed ​​and cost of transfers. The digital ruble will allow you to make transfers instantly and almost free of charge, unlike cash or non-cash money, which require time and commissions.
• Availability and convenience. The digital ruble will allow paying for goods and services anywhere and at any time using a smartphone or other device, unlike cash or non-cash money, which require ATMs, terminals or cards.
• Security and protection. The digital ruble will reduce the risk of losing or stealing cash, as well as fraud or cyberattacks in cashless payments, since the digital ruble will be stored on a secure platform and be able to track movement.
• Management of monetary policy and financial stabilization. Digital The ruble will allow the Central Bank of Russia to more effectively regulate money circulation and inflation, as well as respond to economic shocks and crises, since the digital ruble will have the ability to program and influence supply and demand.

Digital ruble and cryptocurrencies

The digital ruble has some similarities with cryptocurrencies such as bitcoin or ethereum, but also has a number of significant differences. Here are some of them:

• Release and control. The digital ruble will be issued and controlled by the Central Bank of Russia, and not by private companies or organizations. This means that the digital ruble will have legal force and a guaranteed value, unlike cryptocurrencies that do not have a central issuer or regulator.
• Technology and infrastructure. The digital ruble will operate on the basis of a special platform that will ensure the security and transparency of transactions. This platform will use distributed ledger technology (DLT) but will not be completely decentralized like cryptocurrencies. This means that the digital ruble will have some level of centralization and oversight, unlike cryptocurrencies that operate on the basis of consensus among network participants.
• Functionality and features. The digital ruble will have the same functions and properties as the regular ruble, but will exist only in electronic form. The digital ruble will be able to work without an internet or electrical connection, and will also have some programmable features, such as automatic execution of contracts or setting limits or deadlines. Cryptocurrencies, on the other hand, have a wider range of features and capabilities, such as the creation of smart contracts or the tokenization of assets.

Benefits of using the digital ruble

The use of the digital ruble can bring many benefits for citizens, businesses and the state. Here are some of them:

• For citizens: the ability to pay for goods and services anywhere and at any time using a smartphone or other device; the ability to receive social payments and other public services in digital form; the ability to reduce the risk of loss or theft of cash; the opportunity to participate in new forms of economic activity, such as digital assets or tokenization.
• For business: the ability to reduce the cost of servicing and storing cash; the ability to increase efficiency and competitiveness in the market; the opportunity to develop innovative products and services based on the digital ruble; opportunity to improve relationships with customers and partners.
• For the state: the opportunity to increase control and supervision of the financial sector; the ability to fight money laundering, terrorist financing and tax evasion; the ability to stimulate economic growth and digitalization; opportunity to increase the sovereignty and security of the country.

Disadvantages and possible problems when using the digital ruble

The use of the digital ruble may also have some disadvantages and potential problems for citizens, businesses and the state. Here are some of them:

• Confidentiality and protection of personal data. The digital ruble may violate the privacy and protection of users’ personal data, as it will store information about all transactions and their participants. This information may be available to the Central Bank or other government agencies, which may use it for various purposes that may not always correspond to the interests of users.
• Availability and reliability. The Digital Ruble may be unavailable or unreliable in the event of a system failure or cyber attack that could damage or destroy the Digital Ruble or its platform. This can lead to loss of money or the ability to make payments. In addition, the digital ruble may be dependent on the technological level and training of users who may not have the necessary devices or knowledge to use it.
• Legal status and regulation. The Digital Ruble may have an uncertain or complex legal status and regulation that may create problems or inconvenience for users. For example, a digital ruble may be subject to various taxes or fees that may differ from cash or non-cash money. In addition, the digital ruble may be subject to various restrictions or terms of use, which may change without regard to the interests of users.
• Trust and perception. The digital ruble may face low levels of trust and acceptance from users who may prefer traditional forms of money or cryptocurrencies. This may be due to insufficient awareness or literacy of users about the digital ruble, as well as negative associations or stereotypes in relation to the digital ruble.

Examples of digital currencies in other countries

Russia is not the only country that is developing its own national digital currency. More and more countries are exploring the possibility of creating their own digital currencies, which can provide a new level of efficiency, security and availability of payments. Here are some examples and experiences of using digital currencies in other countries:

• China: launched the Digital Yuan Project (DCEP) in 2014, conducted the first pilot tests in 2020, and scaled up the project for the 2022 Olympics. The goal of the project is to increase the efficiency of settlements, strengthen control over monetary circulation, support financial inclusion and digitalization, and strengthen the international status of the yuan. According to the People’s Bank of China, the digital yuan in circulation at the end of 2022 was 13.61 billion ($2.01 billion). Taking into account digital yuan, the money supply of MO increased by 15.3% and amounted to 10.47 trillion.
• Sweden: launched the Digital Krona (e-krona) project in 2017, conducted the first technical tests in 2020, plans to complete the project by 2026. The goal of the project is to preserve the role of the national currency in the face of declining demand for cash, to provide access and convenience of payments for the population and businesses, to support financial stabilization and innovation.
• Bahamas: launched the Sand Dollar project in 2018, became the first country in the world to introduce a national digital currency in 2020. The goal of the project is to increase financial inclusion and accessibility for remote islands, reduce the costs and risks of cash, improve the efficiency and security of settlements, promote economic development and tourism.
• European Union: launched the Digital Euro project in 2020, conducts consultations and analyzes on various aspects of the project, plans to decide on the launch of the project by October 2023. The goal of the project is to provide a modern and secure payment method in the euro area, maintain confidence in the single currency and financial system, and strengthen the sovereignty and role of Europe in the global economy.

Conclusion

In conclusion, we can say that the digital ruble is one of the most ambitious and promising projects in the field of digital currencies, which can bring many benefits to Russia and its citizens. However, it also requires a lot of work and cooperation between all stakeholders to ensure its successful implementation and operation. Therefore, we urge all readers to be attentive, informed and active in relation to the digital ruble in order to make it a real asset of our country.