• The Central Bank of Brazil has chosen Hyperledger Besu, an open-source, Ethereum-compatible platform, to run the digital real pilot project.
• It will be a two-tier system in which banks will issue a tokenized version of the currency and manage its circulation.
• This choice allows for the development of applications and services using the tokenized digital real without incurring any licensing costs.
Digital Real Pilot to Run on Ethereum-Compatible Blockchain
The Central Bank of Brazil has announced that it will use an Ethereum-compatible, permissioned blockchain for the issuance of its own central bank digital currency (CBDC), known as the Digital Real. Hyperledger Besu, an open-source blockchain platform was selected for the tests due to its compatibility with Ethereum and lack of licensing costs.
Tokenized Version of Digital Real Issued by Banks
The tests will involve only the tokenized version of the digital real, which will be issued by private banks with deposits as collateral. The two-tiered structure is designed to maintain bank functions while also allowing third parties to develop services using the tokenized digital real without any additional licensing costs.
Advantages and Disadvantages
The selection of Hyperledger Besu could potentially open up an economic playing field to more competition, but it could also minimize the role played by banks in this new digital economy. Additionally, since it is open source there are no licensing costs associated with its use. However, this does mean that there is less control over its operations than if it were licensed software.
Quote from CTO
JC Bombardelli, CTO of ed-tech startup Gama Academy commented: “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.“
Start Date for Test Project
The start date for these tests has been set for this month and they are expected to conclude before 2024 when a working version should be ready for launch. Fabio Araujo, coordinator of Digital Real projects at Central Bank stated: “The regulatory framework will be the current one to avoid asymmetries in relation to what exists today“.