Fabio Araujo, the director of the Central Bank of Brazil, has praised Bitcoin’s (BTC) technological properties terming the asset as a financial innovation that has given rise to new critical products.
For instance, Araujo singled out Bitcoin’s role in giving rise to the Web3 concept alongside triggering most jurisdictions to start researching central bank digital currencies (CBDC),” Livecoins reported on August 4.
Interestingly, the director revealed that the bank began looking into Bitcoin’s properties over a decade ago.
“We started to accelerate this in 2009, with the launch of Bitcoin, with distributed database technology that facilitates the creation of Web3. The Bitcoin application brings the Proof-of-Work (PoW) solution, which is fundamental for the services that Web3 brings to the population,” he said.
Bitcoin as a currency
However, Araujo ruled out the possibility of Bitcoin being used as a currency citing the asset’s volatility as a major drawback. In this case, the director explained that there is a need for CBDC since it eliminates the volatility case and works as a payment solution.
“Even though CBDC uses the technology that supports crypto, CBDC is not a crypto asset. 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.
He confirmed that the institution is looking into the CBDC, with tangible results expected to come out in 2024. It is worth noting that Araujo is the head of the Brazil central bank CBDC program and has asserted that a pilot project will likely be available in 2023 .
Ethereum’s unique properties
Furthermore, Araujo hailed Ethereum’s (ETH) smart contract feature and ability to power decentralized finance (DeFi) as a key technology to drive innovation into the financial sector.
Consequently, the director confirmed that the bank is looking to unveil financial products that encompass features introduced by Bitcoin, Ethereum, DeFi, Web3 and stablecoins.
Notably, Brazil continues to record a surging number of crypto investors as different players jostle to control the market. For instance, Finbold reported that Warren Buffet-backed Brazilian challenger bank Nubank hit one million cryptocurrency users barely a month after launching the service.
Interestingly, the bank anticipated hitting the milestone in a year of operation. Elsewhere, Mexico-based crypto exchange Bitso also revealed it had reached 1 million users in Brazil.