Pedro Magalhes, a blockchain developer, claims to have successfully reverse-engineered the code of the Brazilian central bank’s test digital currency (CBDC).
He identified the capabilities that allow a centralized authority to freeze funds or lower balances. Although there have been questions about these capabilities, the developer contends that there may be circumstances in which they are helpful.
The digital Brazilian actual pilot project’s source code was posted on the GitHub domain by the Banco Central do Brazil on July 6, with a disclaimer that it was just meant for testing and might be changed later.
Iora Labs founder and well-known blockchain developer Pedro Magalhes said afterward that he had successfully “reverse-engineered” the open-source code, revealing numerous functionality.
These included creating or removing digital real from particular addresses, thawing out accounts, altering balances, and moving money between addresses.
Magalhes emphasized that the code was vague regarding the conditions under which the tokens may be frozen and, more importantly, who can carry out such acts.
The blockchain developer highlighted the sharp contrast between decentralized financial operations and giving an institution the authority to unilaterally freeze funds by expressing concerns about an institution freezing a user’s balance.
However, Magalhes recently opined that despite the uncertainty surrounding Brazil’s CBDC, there might be advantages in a post on July 10. In his view, a digital currency would improve the traceability of taxes, allowing the general public to examine the distribution of tax dollars and keep track of the government’s on-chain purchases, boosting the transparency of parliamentary amendments.
Brazilian progress toward CBDC
The Central Bank of Brazil first announced the Real Digital Pilot participants on May 24. An overwhelming reaction resulted in 36 submissions from over 100 organizations representing various financial sectors.
Visa, Mastercard, Ita Unibanco, BTG Pactual, and other Brazilian banking institutions were among the 14 selected partners. With a set supply that would progressively rise over time, the CBDC proposal, also known as the digital real, seeks to be tethered to the national fiat currency.
By the end of 2024, Fabio Araujo, the project coordinator for Brazil’s CBDC initiative, wants to see widespread use of the digital real among the populace.
