According to local media reports, the Brazilian central bank had to leave the decentralized element of the CBDC to deliver a solution in 2026, partly due to the immaturity of the privacy solutions presented.
Brazilian CBDC to dump blockchain in an attempt to launch in 2026
The Central Bank of Brazil wants to accelerate the development of a digital currency of the central bank to deliver a working solution as quickly as possible. According to local media reports, Drex, the Brazilian Central Bank Digital Currency (CBDC), will leave the majority of its tokenization and blockchain elements, aimed at a launch date in 2026.
Fabio Araujo, coordinator of the Drex project at the Central Bank, confirmed this change and stated that the new proposal will be delivered in two phases: the first phase will not contain a decentralized aspect, with an expected launch next year, and the second phase will continue to implement and adult blockchain technologies.
The implementation of a centralized Drex means that many of the tested use cases that were tested during the two phases of the pilot cannot be implemented, given the lack of programmability of the underlying architecture. Furthermore, there is no guarantee that the Hyperledger Besu project will continue to use, an open source, Ethereum-compatible blockchain platform solution that was chosen for Drex in 2023.
ARAUJO stated that, although the privacy solutions presented for the now drug -decentralized version of Drex, they still have to improve to be part of the security structure of the Brazilian financial system. “We find good privacy solutions, but apparently they are not enough. We have to put this to the test,” he said Valor Economico.
Privacy is a roadblock for the decentralized DREX ambitions since last year, when the central bank announced the pilot’s postponement because of the inefficiency of the privacy solutions presented, which were missing the functionality to offer bank-transaction levels of confidentiality and verifeability.
Nevertheless, the centralized version of Drex will provide a retention descialization solution, which will open the door for credit activities with different types of collateral. The tools needed to implement this functionality have not yet been announced.
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