Brazil's CBDC pilot contains code to freeze or reduce funds, according to a blockchain web 3.0 dev.
Brazil’s CBDC pilot contains code that can freeze or reduce funds, dev claims

Reverse-Engineering Brazil’s Central Bank Digital Currency

Pedro Magalhães — a blockchain developer and founder of tech consulting firm Iora Labs — recently claimed to have reverse-engineered the source code of Banco Central do Brazil’s Digital Real, uncovering functions that would allow a central authority to freeze funds or reduce balances. Despite this, he argued that there could be beneficial situations for such functions.

The Real Digital pilot project was posted on GitHub portal on July 6 by Brazil’s top bank. It was made clear that the Real Digital pilot project is intended for use only in a test environment and that the “presented architecture” may be subject to additional changes.

The discovery of these functions has sparked a discussion in the crypto currency reddit community, with many asking when will web 3.0 be released, and what is web 3.0 explained. Those interested in top crypto sites and real time crypto, are also looking into harmony one crypto and crypto ethereum.

Real Digital Functions and Central Bank

Real Digital has several functions, such as freezing and unfreezing accounts, increasing and decreasing balances, moving Real Digital from one address to another, and creating or burning Real Digital from a certain address.

According to Magalhães from Brazil’s central bank, these functions will likely be kept for secured loan functions and other financial operations that can be done on decentralized finance protocols.

However, the code does not specify the conditions under which the tokens can be frozen, and, more importantly, who has the authority to execute them:

These details should always be made public in the smart contracts and discussed with the public, which has not been done yet,” he said.

Cryptocurrency Community Reacts to Potential of CBDC

The cryptocurrency community has voiced their apprehension of a Central Bank Digital Currency (CBDC) due to the fear of a lack of financial freedom and privacy.

On July 10th, Magalhães stated that while people’s worries are understandable, a CBDC could bring certain advantages. He pointed out that taxes would be more easily tracked, enabling the public to analyze where the funds are going, in addition to overseeing purchases made by the state on the blockchain and increasing transparency in the amendment process.

Fabio Araujo, an economist from the Central Bank of Brazil, stated in July 2022 that the Digital Real could help prevent bank runs and provide entrepreneurs with a more secure and dependable environment to innovate.

The Digital Real pilot is reportedly running on Hyperledger Besu — a privately operated Ethereum Virtual Machine (EVM)-compatible blockchain.

Due to its permissioned nature, users must have the central bank’s approval to become a node, as Magalhães pointed out on July 7.

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