Economic Sectors and the Influence of Supply and Demand: A Web3 Case Study

Supply and demand are the main drivers of progress for any asset or business. They create excitement and attract capital, which can be used to develop various economic sectors.

In our news article today, Coinmooner aims to explain the current situation in the Web3 industry, particularly the decrease in transaction volume caused by the end of sponsorship incentives and the reduced demand for digital currency in India.

Until January 2024, the Reserve Bank of India (RBI) supported a pilot program for the digital rupee, instructing commercial banks to artificially increase the number of daily transactions to one million to "test the system's resilience at scale." This was part of efforts to integrate digital currency into everyday financial operations and assess its potential capabilities and challenges.

However, with the end of RBI's sponsorship, the transaction volume has significantly dropped. This is due to the need for more incentives and decreased interest from users and businesses in the new form of currency. The low demand for the digital rupee in India can be attributed to various factors, including a lack of awareness, distrust of digital currencies, and a preference for traditional financial tools.

From Incentives to Challenges: The Journey of India's Digital Rupee

In addition, Coinmooner decided to examine the concerns of Indian authorities on this issue. During our analysis, we learned that, as part of a pilot project, some banks were offering bonuses to their customers, paying part of their employees' salaries in digital rupees, and encouraging merchants to reduce transaction costs. Holders of digital rupees were incentivized with lotteries, prize draws, increased cashback, and free services.

However, commercial banks have stopped supporting this initiative, raising doubts about the future of the digital currency introduced by the Reserve Bank of India (RBI). There is a stark contrast between the initially high expectations and the actual use of the digital rupee. According to a source from the RBI, further efforts to stimulate demand may require more than just developing retail CBDC technologies. Income-generating tools, like cash, will be needed to increase asset value.

Earlier, the Governor of the Reserve Bank of India, Shaktikanta Das, mentioned that the primary financial regulator has started exploring offline solutions for the large-scale implementation of the digital rupee in payments and transfers, especially in areas without internet access. Coinmooner will continue closely monitoring developments in the Web3 space in India and keep our readers informed of all significant changes. We also want to remind everyone that in the Web3 industry, it is crucial always to use advanced security measures to protect your finances from potential losses.