Brazil’s CBDC (or central bank digital currency) codebase could potentially freeze or even reduce funds. This, according to an analysis by a blockchain developer.
According to a reports, a blockchain/DLT developer found certain functions that could potentially allow a centralized entity to freeze payments or even reduce user balances after reverse-engineering the source code of Brazil’s CBDC pilot project.
These types of features, according to blockchain dev Pedro Magalhes, could be useful in certain scenarios, like for secured loans as well as other financial transactions that are based on decentralized finance (DeFi) protocols.
Pedro also mentioned that that the codebase is vague or not clear as to the actual conditions through which the crypto tokens could become frozen and who has the ability to initiate them.
Pedro added that these elements/issues should be made public in the smart contracts and discussed with the public.
Crypto industry participants and the community may be concerned that a CBDC could significantly limit their access to funds and compromise their privacy.
As mentioned in reports, the digital real pilot in Brazil is presently operating on the privately-run, Ethereum Virtual Machine (EVM) that’s reportedly compatible with the Hyperledger Besu blockchain.
As noted in a report from Juniper Research, the possibilities for payment types “accelerate beyond what many in the market expected.”
To date, blockchain has “had a mixed impact across payments and banking, but the rise of stablecoins and CBDCs threatens to accelerate this impact significantly.”
Stablecoins and CBDCs “are two ways of solving the same problem – how do you offer
a better digitally-native payments solution?”
Most existing payment types “have been designed around traditional systems intended for in-person or telephone payments, such as credit cards, or even cash.”
Stablecoins and CBDCs are “showing what can happen if a system is designed from the ground up as digital.”
However, when any payment’s system is “changing to the same extent CBDCs and stablecoins are threatening to, there are many implications of this.”