In 2021, a lot was said about Bitcoin and the entire universe surrounding cryptocurrencies. In addition to price speculation, the environment has great fertility for new features and functionalities applicable in everyday life, which ended up becoming popular in formats such as NFTs, DeFis, smart contracts and many other names unfamiliar to the general public. In this context, still expanding, the Real Digital proposal appears.
Still under development, the digital currency project could come to life in 2022. While the novelty does not come to life, it is worth knowing more about the subject: what is the purpose of the technology and how would its implementation change the lives of Brazilians?
Before answering these questions, however, it is necessary to contextualize the panorama that encompasses cryptocurrencies and the growing interest of governments in the subject.
Where did the idea come from?
In short, this category of digital assets had the infamous Bitcoin as a forerunner as early as 2009, being developed as a direct response to the 2008 Financial Crisis — triggered by the collapse of the US housing market and the lack of regulation in the financial industry. The event severely affected economic powers around the world, who are still struggling with the effects it provoked even more than a decade after its demise.
Bitcoin, as far as you are concerned, was created as a efficient and safe alternative to banks, allowing users to transfer between themselves without the need for an intermediary or authority — in this case, a country. The guarantee of trust in this system is based on the fully encrypted network that houses the operations, known as blockchain.
Money transfer process in blockchain technology. (Source: iHodl / Reproduction)Source: iHodl
In 2009, the idea was seen as illusory and fruitless. In 2021, Hillary Clinton, former US presidential candidate and secretary of the US government, noted that cryptocurrencies offer “the potential to undermine currencies, to undermine the role of the dollar as a reserve currency [e] of destabilizing nations.” This thought, concisely, summarizes the current international economic scenario, in which several countries are trying to combat the “threat” of Bitcoin independence with their own alternatives — such as Brazil and its Digital Real.
Real Digital and the race for the “new gold”
As suggested by the Coordinator of the Real Digital Project at the Central Bank, Fábio Araújo, the development of the Brazilian alternative “took a little longer than expected”, but it is finally getting off the ground. The venture, while not exactly innovative, joins the rising vanguard made up of several other countries — including the United States, China and Russia.
More specifically, website data Atlantic Council point out that at least 90 countries have flirted with the idea of developing a “Digital Currency Issued by Central Bank“, Where CBDC, as it is known by the acronym in English. Among them, there are at least 7 projects launched, while 15 are already under development and another 39 are still in the research phase.
See the graphic:
Map with the progress of CBDC projects; Brazilian alternative is already under development. (Source: Atlantic Council / Reproduction)Fonte: Atlantic Council
For governments, CBDCs can fulfill multiple objectives and deliver benefits as per their project, such as better cost-effectiveness in issuance, greater financial inclusion, and lower transaction costs. In the case of Brazil, the importance of implementing Real Digital was reinforced by Pix release, an immediate success among Brazilians, which helped to facilitate transfers of values in different spheres of the national economy.
Although the real purposes of the Brazilian CBDC have not yet been properly established, the Central Bank has already stated its interest in projects that incorporate characteristics such as: o support to Decentralized Finance (DeFi), o support of protection mechanisms and supervision of authorities competent, and the ability to intelligently resolve currency transactions — that is, a system with efficient operations, which does not require an intermediary, but which can be regulated by one.
In practice, finally, how could this improve the life of the average Brazilian?
The (possible) advantages of Real Digital
In addition to following market trends, what would be the advantages of using a digital version of Real? In an interview with TechWorld, Rudá Pellini, co-founder of Wise&Trust and author of the book “O Futuro do Dinheiro”, explained what should be the impact of Central Bank cryptocurrency. According to the specialist, the advantages of the technology go far beyond what we already have with Pix, which already allows us to carry out financial transactions in a “digital environment” with agility.
The specialist explains that Pix, despite being a facilitator, is still just an alternative means of payments, while CBDC offers new possibilities: “With Real Digital, we will be able to have integrations with Decentralized Finance protocols and a series of other innovations in the protocol itself of the coin,” he comments.
According to Pellini, the main advantage of Real Digital would be its independence: like other cryptocurrencies, it would be possible to deal with the asset without the need for a bank or financial institution. The user would only need a wallet app on the mobile to carry out the transactions, with everything being validated on the blockchain.
Bitcoin, altcoins ou Real Digital?
While the proposal of a national economy more independent of banks seems distant, this is not impossible. The objective is shared not only by Bitcoin itself, but by several others altcoins with different proposals of action. Even though they share similarities, Pellini says that CBDCs are not comparable, nor do they offer competition to cryptocurrencies in the short term.
“Right now, I believe that Central Bank initiatives are even driving the adoption of cryptocurrencies globally,” he says, “since they help spread the knowledge and usability of these technologies, as well as allow for integration between different projects.”
Alternatively, some countries have adopted Bitcoin as their legal tender, such as El Salvador. (Source: Shutterstock)Fonte: Shutterstock
However, the expert understands that the future may converge in a different direction: “As Hayek theorized in 1976 in his work ‘The Privatization of Money’, I believe we will see a natural competition between different types of currency and their issuers,” he explains.
According to the expert, we may soon have cryptocurrencies coming from different sources. In addition to decentralized solutions like Bitcoin and official initiatives from countries like Brazil, companies are also eyeing this market and can carry out private issues — Facebook, for example, has already tried to launch its own cryptocurrency.
A step forward in evolution
Even if its implementation is not adequate and perfect, according to the ideals of the most avid enthusiasts of the cryptocurrency niche, the Real Digital could mean an unprecedented advance for the Brazilian economy. In this context, Pellini says that any project capable of promoting integration, security and cost reduction is “another step on the path to financial freedom for Brazilians”. Succinctly, he concludes: “In the end, all initiatives that deliver any of the above items should be celebrated and encouraged.”