Brazil: the land of the Amazon, carnival, meat exports and recently bitcoin. The South American country is increasingly engaged in innovation within the crypto sphere. And this sector may see even more developments after the director of the central bank, Fabio Araujo, said that bitcoin “is a financial innovation.”
Adoption in Brazil
It hasn’t even been a week since we wrote an article about bitcoin adoption in Brazil. In fact, the country is 84% aware of the crypto world. In addition, a Brazilian bank – which introduced crypto to their customers – added a whopping 1 million new users within one month. So it seems that the country is moving more and more towards the crypto market.
Perhaps the country is even going so far as to adopt bitcoin as legal tender. And after the director of the central bank introduced bitcoin a financial innovation calls it a financial innovation, can it still go wrong? One would not expect such a positive compliment about bitcoin from a central bank so soon.
Started investigating 10 years ago
Interestingly, the director told that the central bank started investigating the properties of bitcoin over a decade ago. This would mean that they were already investigating bitcoin when the coin was 3 years old. At that time, the price of BTC was between $2.20 and $10.
So you have to consider how much fomo these researchers must have now (or not). If they researched well, they might have a little bit in their portfolio.
Despite Araujom’s positivity, he did tell us that he rules out bitcoin as a currency. He believes the volatility of the crypto market is a major drawback of this niche.
Brazil CBDC
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. It would, according to the director, remove volatility and it can thus work as a payment solution.
“Even though CBDC uses the technology that supports crypto, CBDC is not ‘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. In addition, it is interesting to note that the Brazilian CBDC is made in partnership with Stellar (XLM).
The director reports that a pilot project will probably be ready in 2023, while it was first supposed to happen in the second half of 2022. But then again, these kinds of delays are not remarkable in crypto by now.
