Digital Real Pilot to Run on Ethereum-Compatible, Permissioned Blockchain
According to the Central Bank of Brazil, the digital real pilot project will use an Ethereum-compatible, permissioned blockchain for the issuance of the tokenized version of the country’s currency. Hyperledger Besu, the open-source platform elected for the tests, will allow the project to run without any licensing costs and to deal with maintenance costs later, if the platform is definitely chosen.
Tokenized Digital Real Pilot to Use Ethereum-Compatible Hyperledger Besu
Brazil continues to move forward with its plan of delivering a working version of its own central bank digital currency (CBDC), the digital real, for the end of 2024. According to reports, the central bank of the country chose Hyperledger Besu, an open-source, Ethereum-compatible blockchain platform, as the base upon which to run the tokenized version of the digital real.
Local analysts believe the compatibility with Ethereum might bring a slew of third parties to develop applications and services using the tokenized digital real, opening the economic playing field to more competition. However, this could also minimize the role of banks in the new digital economy. On this, JC Bombardelli, CTO of ed-tech startup Gama Academy, stated:
I don’t think it’s a total nod to the defi world because that would mean giving up a lot of controls that the central bank would never want to have.
Another reason for choosing Hyperledger Besu would be its open-source origins, which would allow the government to use it without having to pay for licenses.
The tests, which are slated to start this month, will only include the tokenized version of the digital real, destined to be used in various transactions and issued by private banks with deposits as collateral.
The final structure of the digital real will include a two-tiered system, in which the real currency will only be managed by authorized institutions. On this, Fabio Araujo, coordinator of the digital real projects at the Central Bank of Brazil, stated:
The regulatory framework will be the current one to avoid asymmetries in relation to what exists today. The digital real will serve more for interbank transactions and the tokenized real will be a kind of stablecoin issued by banks.
The digital real structure allows banks to keep their functions in the system and answers to a series of privacy and compliance worries. However, other CBDCs like the Chinese digital yuan, deliver the actual currency to its users and can be used directly to make and receive payments via a digital wallet.