Brazil: the land of the Amazon, carnival, meat exports, and recently also bitcoin. The South American country is increasingly engaged in innovation within the crypto sphere. And this sector could see even more developments after the head of the central bank, Fabio Araujo, said that bitcoin “is a financial innovation.”
Adoption in Brazil soars
It wasn’t even a week ago that we wrote an article about bitcoin adoption in Brazil. Indeed, the country is 84% aware of the crypto world. In addition, a Brazilian bank — which introduced crypto to their customers — gained a whopping 1 million new users within a month. So it seems that the country is moving more and more towards the crypto market.
The country may even go so far as to adopt bitcoin as legal tender. And after the head of the Central bank calls bitcoin a financial innovation, can it still go wrong? You wouldn’t expect such a positive compliment about bitcoin from a Central bank so soon.
Research started 10 years ago
It is interesting that the director told us that the Central bank started to investigate the properties of bitcoin more than 10 years ago. This would mean that they were already researching bitcoin when the currency was 3 years old. Back then, the price of BTC was between $2.20 and $10.
So consider how much fomo these researchers must have now (or not). If they researched well, they might have a little bit in their portfolio.
“We began to accelerate this [research] in 2009, with the launch of bitcoin and distributed database technology facilitating the creation of Web3. The bitcoin application brings the Proof-of-Work (PoW) solution, which is fundamental to the services that Web3 brings to the population,” he said.
Despite Araujom’s positivity, he did say that he rules out bitcoin as a currency. He believes the volatility of the crypto market is a major drawback of this niche.
An ‘own crypto’ from Brazil ( in collaboration with Stellar)
Still, the director felt that, in this case, there is a need for a Central bank digital currency; a CBDC (Central Bank Digital Currency). This is a currency that remains the same as the euro, dollar, real, or any other fiat currency. According to the director, it would remove volatility, and it could work as a payment solution.
“Even though CBDC uses the technology that supports crypto, CBDC is not a ‘real crypto.’ The CBDC is an expression of the real within the environment in which cryptocurrencies operate, in the same way, that the real does not compete with listed assets,” he added.
Araujo confirmed that the institution is investigating the CBDC, with tangible results expected to come out in 2024. It is also interesting to note that the Brazilian CBDC is being made in partnership with Stellar (XLM).
The director reports that a pilot project will probably be ready in 2023, whereas this was initially supposed to happen in the second half of 2022. But then again, these kinds of delays are no longer remarkable in crypto.
