Concerns over CBDC are confirmed – programmer discovers controversial features in Brazilian pilot project


Pedro Magalhaes, a blockchain developer, says he has managed to analyze the code of a Brazilian CBDC pilot, discovering functions that allow accounts to be frozen and emptied. While this initially seemed disturbing, the developer argues that there are situations in which these functions can be beneficial.

Controversial discovery in CBDC code

On Thursday, July 6, the Brazilian Central Bank published the source code of a pilot digital real project on GitHub, stressing that it is a test environment and “the architecture is still subject to change.”

On the same day, Pedro Magalhaes, founder of consulting firm Iora Labs, announced that he had “reverse-engineered” the code of the Central Bank of Brazil’s digital real, revealing some troubling features. These include the ability to freeze and unfreeze accounts, increase and decrease balances, transfer currency between addresses, and create and destroy digital real from specific addresses.

Magalhaes suggests that the Brazilian Central Bank is likely to apply these functions to secured lending and other financial operations based on decentralized financial protocols (DeFi). However, the problem is that the code does not specify under what circumstances tokens can be frozen and who has the authority to do so. Magalhaes stresses that such aspects should be clearly described in smart contracts and discussed with the public.

Developer reassures, but remains vigilant

Many members of the cryptocurrency community are expressing concern that CBDCs may infringe on their financial freedom and privacy. Magalhaes, in his July 10 post, suggests that despite these concerns, CBDC could bring some benefits. He says it would be easier to track taxes, which would allow the public to control the allocation of funds and monitor government spending. It would also facilitate transparency in the legislative process.

In July 2022, Fabio Araujo, an economist at the Brazilian Central Bank, explained that the digital real has the potential to stop capital flight and create a safe and reliable environment for entrepreneurs.

Despite all the excuses, this information has caused a marked increase in prejudice against any CBDC project. The lack of full and exclusive control over the funds held by potential users is perceived as a restriction of freedom. This kind of tool, with the features outlined above, is seen as an over-reaching government intrusion into citizens’ privacy.

Brazilian real from a technical point of view

The pilot digital real is based on the Hyperledger Besu platform, a private blockchain compatible with the Ethereum Virtual Machine (EVM). Since CBDC is not as decentralized as Bitcoin or Ethereum, users must get approval from the central bank to become a node in the network, Magalhaes reported on July 7.

Disclaimer: Blockbulletin does not take accountability of investments based on the information of the website. We highly advice readers to make extensive research prior to any invest

Share this article

More news


XRP outperforms Bitcoin and Ethereum

In the past week, XRP decisively outperformed its main rivals, Bitcoin (BTC) and Ethereum (ETH), in terms of capital flows. Moreover, it recorded an impressive $2.7 million…

Solana and Avalanche on the eye of investment funds

Two alternative coins, Solana (SOL) and Avalanche (AVAX), are gaining increasing interest and are successively attracting the attention of investment funds. Although bitcoin (BTC) remains the main…
All articles loaded
No more articles to load


Cryptocurrency wallets

Cryptocurrency wallets

We talked about security when trading crypto assets in an article titled “Online security“. We also mentioned how important it…
hardware wallets

Cryptocurrency hardware wallets

From the article titled “Cryptocurrency wallets” you learned about the different types of wallets. They were briefly characterized there. Let’s…
Where to buy cryptocurrency brokers

Which cryptocurrency Brokers to use

In the article “Where to Buy Cryptocurrencies (Exchanges)“, we introduced you to which exchange platforms you can purchase cryptocurrencies on.…
Trading cryptocurrencies

Trading cryptocurrency

In the cryptocurrency market, you face many opportunities to invest in cryptocurrency or buy or sell cryptocurrency. If you want…
All articles loaded
No more articles to load


All articles loaded
No more articles to load

Latest news

All articles loaded
No more articles to load