There is a new digital currency, one commissioned by Russian President Vladimir Putin called the CryptoRuble. However, it does not fit the definition of a cryptocurrency since it is issued by a governmental authority and no mining is involved in its creation. Despite this, it may still be attractive to investors who are looking for alternative investment options.
Intended as a digital version of the Russian Ruble, the CryptoRuble is going to have the same value as the Russian Ruble. In June 2021, the first group of banks to evaluate The CryptoRuble was formed. A dozen banks were tasked with assessing the currency. Officials hope it will be an attractive investment for those looking for digital currency. However, many naive investors, unaware of the value of a decentralized currency that relies on a blockchain to validate it, may mistake it for a Russian-based cryptocurrency.
It is expected that the bank will be able to allow citizens to test the currency by the end of 2022. The purpose of CryptoRuble is to reduce costs within the financial system while also stimulating competition among banks.
In relation to actual cryptocurrencies, Russia still does not recognize this virtual currency as legal tender. This means that Russians cannot use cryptocurrencies to pay for goods and services. Despite this disdain for cryptocurrencies, the government is currently testing CryptoRuble to make financial transactions more efficient and less costly.
The CryptoRuble is a Centralized Currency
CryptoRuble is a digital currency that will be issued by the Russian Central Bank. Despite being a centralized currency, it is expected to operate similarly to the Russian ruble, only digitally and encrypted. In addition to having the same price as the Ruble, the CryptoRuble will be able to be exchanged with traditional Rubles, but unlike the normal digital currency, it won’t be tradable on the open crypto market.
By regulating CryptoRuble through the Russian government, the currency will be protected from the wild fluctuations that real cryptocurrencies are subject to. As a result, this digital currency is expected to be a more stable investment for those looking to profit from the growing popularity of digital currency.
As opposed to cryptocurrencies, CryptoRuble will not be mined, but rather will be issued by the Russian government. Because it will be regulated by a government agency, officials hope the scheme will appear to be a more attractive investment for those in search of stability.
The Russian government is interested in blockchain technology because it can be used to send money in a discreet manner without worrying about sanctions. The CryptoRuble is an effort to compete against real cryptocurrencies that are beyond the control of the government.
The Russian government remains unimpressed with cryptocurrencies, believing that they are mostly used for criminal purposes.
The Difference Between the CryptoRuble and Cryptocurrency
Even though cryptoRuble uses the prefix “crypto,” it is not a cryptocurrency.
A cryptocurrency is a digital or virtual currency that uses cryptography as a security measure. Due to this security feature, cryptocurrencies are hard to counterfeit. A cryptocurrency’s most endearing feature is its organic nature; a central authority does not issue it, thus theoretically impervious to government interference.
Cryptocurrencies are decentralized, which means they’re not regulated by governments or financial institutions. Cryptocurrencies are traded on decentralized exchanges and can be used to buy stuff too. The first cryptocurrency, Bitcoin, created in 2009, proved the currency was incorruptible and didn’t need intermediaries to add transaction fees.