The key functionality of any decentralized cryptocurrency is that the currency is not backed by any third party. However, the virtual coins issued don’t often hold any fiat value, thereby exposing them to highly volatile spikes in value. Nevertheless, a virtual token such as eINR, backed by fiat currency gives individuals and organizations with a highly resilient, decentralized method of exchanging value whilst still using a familiar accounting unit. Individuals who trade in ‘stable coins’ backed by fiat currency can make use of blockchain technology to indulge in decentralized transactions, while being protected from the high volatility of other cryptocurrencies. In order to ensure value, and maintain a stable exchange price, a reserve which is of higher value than the number of eINR issued is always maintained.
NOTE: Due to regulatory restrictions and exchange control of the Indian Rupee by the Indian Central Bank (RBI), eINR Limited is legally able to maintain reserves only in non-INR fiat currencies such as USD and EUR. Despite this, at any given point of time, eINR Limited will maintain enough non-INR reserves to redeem all eINR at par. Effectively, this ensures that 1 eINR = 1 INR, for all practical purposes.