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Brazilian central bank calls bitcoin a ‘financial innovation’

Braziliaanse centrale bank noemt bitcoin een 'financiële innovatie'

Brazil’s central bank director Fabio Araujo recently stated the need for a digital central bank currency (DCBV). DCBV will have to use the same technologies that form the foundation for crypto. Araujo expects to have a first pilot project available with the Brazilian central bank in 2023. In 2024 the project will have to deliver results.

The Brazilian director labels bitcoin (BTC) as a financial innovation and a catalyst for the developments of the Web3 concept. Web3 is a sequel to the World Wide Web in which concepts such as decentralization and token based economy are central. More and more companies, such as Google, are betting on Web3. Interest in Web3 has formed the basis for research into DCBV. However, he does not see bitcoin as a currency and mentions that volatility is a major disadvantage. Bitcoin reached a record high of $69,044 in November 2021. At the moment the price is hovering around $23,000. According to Araujo, a DCBV is necessary to contain the volatility of the currency.

Since 2009, when bitcoin went live, the bank has been investigating Web3 and distributed database technology. A distributed database is a database in which data is stored in different physical locations. The use of this with bitcoin and the Proof of Work (PoW) principle are essential for making Web3 mainstream, according to Araujo.

Araujo also discussed the smart contract technology that Ethereum (ETH) introduced in 2015. With this, he sees opportunities to enable a range of innovative financial products similar to features introduced by Bitcoin, Ethereum, DeFi, Web3 and stablecoins.

Rising Number of Brazilian Crypto Investors

The number of crypto investors in Brazil continues to rise. For example, the Warren Buffet-backed Brazilian bank Nubank recently introduced a new crypto service. After a month of this, the counter stands at 1 million users. Funnily enough, the bank only expected this number of users after 1 year of operation. Other crypto projects are also successful in Brazil. For example, Mexico-based crypto exchange Bitso revealed that it reached 1 million Brazilian users.

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