A blockchain developer who claims to have reverse-engineered the source code of Brazil's central bank's pilot digital currency has discovered features in the code that would allow a central authority to freeze funds or reduce balances.
However, he has since argued that there could be situations where such features could be beneficial.
The source code of the Real Digital pilot project was aware on the GitHub portal on July 6 by the main bank in Brazil. Was explained at the moment the Real Digital pilot project is intended to be used in a test environment only and that the โpresented architectureโ may be subject to additional changes.
Pedro Magalhรฃes, blockchain developer and founder of technology consultancy Iora Labs, later in the day. reclaimed having been able to โreverse engineerโ the open source code of Banco Central do Brasil's Digital Real, revealing functions in the code.
Features included the ability to freeze and unfreeze accounts, increase and decrease balances, move Real Digital from one address to another, and create or save Real Digital from a given address.
6/ These resources can be executed by any entity that receives the due permits from the controlling entity of the new system, that is, the Central Bank.
Among the changes that authorities could potentially make using these functions are, for example: pic.twitter.com/AT5v1rOQbK
โVini Barbosa (@vinibarbosabr) July 10, 2023
Magalhรฃes told Cointelegraph that Brazil's central bank will "probably" maintain these functions for the purpose of collateralized lending functions and other financial operations that can be carried out on decentralized financial protocols.
The problem, Magalhรฃes explained, is that the code lacks specificity about the circumstances in which tokens can be frozen and, above all, who has the power to execute them:
โIt is one thing to agree to an operation and execute a DeFi operation that involves different blockchains; It is a completely different thing for an institution to have the ability to freeze the balance on its own initiative, and that is precisely how smart contracts have developed.โ
These aspects must always be publicly exposed in smart contracts and discussed with the population, which has not yet been done,โ he added.
Many in the cryptocurrency community have raised concerns that a CBDC has the potential to infringe on their rights. financial freedom and invade your privacy.
11/ One of the purposes of publishing the pilot, as it is written in the so-called โIncorporation Kitโ of the project, is to receive feedback, leaving all the documentation subject to evolution or changes. And that's exactly what developer Pedro Magalhรฃes did: he provided feedback.
โVini Barbosa (@vinibarbosabr) July 10, 2023
a july 10 mail, Magalhรฃes said while the Brazilian people concerns about a CBDC are understandable, it may actually offer some "benefits".
He explained that the taxes will be easier to trace, allowing the public to inspect what resources tax funds are allocated to โ in addition to inspecting purchases made by the state on the chain and strengthening transparency in parliamentary amendments.
Related: Visa, Microsoft and others join Brazilian CBDC pilot
Fabio Araujo, an economist at the Central Bank of Brazil, explained in July 2022 that Digital Real has the potential to stop bank runs and seeks to provide entrepreneurs with a safer and more reliable environment to innovate.
The Real Digital pilot is reportedly running on Hyperledger Besu, a privately operated Ethereum Virtual Machine (EVM) compatible blockchain.
Because it's not permissionless like the main Bitcoin or Ethereum networks, users will need central bank approval to become a node, Magalhรฃes fixed on July 7.
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