This is the first real digital pilot, announced on March 6.
On Monday, March 6, the Central Bank of Brazil announced the first pilot of the digital real, finalizing the plans for the new form of the Brazilian currency. This project will involve tests throughout 2023, with the participation of financial entities, following the model used in the development of Pix.
Fábio Araújo, responsible for the real digital project in BC, stated that the objective is to develop a test platform with “specific focus on the DLT programmability infrastructure”. DLT (Distributed Ledger Technology) is a technology that allows the distributed ledger of information on a computer network, which includes Blockchain technology.
The implementation of the digital real has been discussed for some time by the Central Bank, and the idea is that the new form of currency is an alternative to cash and facilitates financial transactions. With the pilot announced, the plans for its implementation begin to become more tangible, and the Central Bank continues to work to make digitally viable.
What Is, In Practice, a DLT?
Distributed Ledger Technology (DLT) is a ledger network that allows all participants transparent access to transaction history and data. DLT is a more collaborative version of traditional databases and its security is considered superior.
The use of DLT for a national currency, as it is intended to do with the real, has implications that go through gaining transparency in operations, which facilitates control by the authorities.
While DLT has many benefits, the privacy of the data being transmitted is a major concern. Distributed technologies tend to make information widely visible on the web, and it is necessary to think carefully about the strategies that can be used to ensure the privacy required by law.
How Money Can Be Programmed Using This New Technology
Understanding DLT technology is fundamental to understanding the changes that the digital real can bring, however, the ultimate goal of the Central Bank is not limited to creating a more modern database. In fact, the main focus is on creating “programmable money”.
The term “programmable money” does not just refer to simple tasks like scheduling payments, but to a deeper concept. When the coin is programmable, it is possible to embed rules directly into the coin itself.
This programming can allow companies to create loyalty programs for their customers, in which purchases and services provided are automatically counted towards the delivery of a monetary bonus.
In addition, this technology can make the payment process more efficient, with the possibility of creating smart contracts that automate the transfer of values in a faster and safer way.
Therefore, the digital real is not only a more modern form of money, but it can also bring significant changes to the way financial transactions are carried out. DLT technology and the concept of programmable money can play an important role in building a more digital and efficient economy, and even in banking inclusion.
By Audy Castaneda
