- Blockchain developer Pedro Magalhaes discovers that Brazil’s Central Bank Digital Currency (CBDC) has a built-in function to freeze funds and adjust balances.
- This revelation has sparked apprehension among Brazilians, who are reminded of the country’s previous financial crisis when finances were frozen for 18 months.
In a riveting revelation, Pedro Magalhaes, a renowned blockchain developer and founder of Iora Labs, has decoded a critical aspect of the Brazilian Central Bank Digital Currency (CBDC) that could reshape our understanding of digital monetary systems. His deep dive into the Application Programming Interface, as made public by the monetary authority on Github, has brought to light an alarming capability of the CBDC: the power to freeze funds and adjust balances.
A Chilling Discovery: Embedded Authority Over Funds
Despite the technical intricacies, Magalhaes’s findings essentially unmask an unsettling feature of the Brazilian CBDC. The government has engineered an inherent ability to suspend transactions and manipulate balances, triggering concerns among citizens. Magalhaes, who first shared his findings on LinkedIn, initially presumed this function would be specific to DeFi or CeFi protocols, where freezing balances may be required to finalize smart contract operations.
However, subsequent exchanges with the officials revealed that this powerful function was no limited feature. The central bank can invoke it whenever deemed necessary, an admission that sends shockwaves through a population with a haunting memory of an 18-month freeze on finances in the 1990s.
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While the Brazilian banking authorities remain tight-lipped, failing to respond to Decrypt’s request for comment, the confirmation of Magalhaes’s findings came via Vini Barbosa, a reporter for Brazilian crypto news outlet Portal Do Bitcoin. Through his social media, Barbosa reiterated the central bank’s stance, highlighting that the current legislation in Brazil indeed supports such measures.
This alarming disclosure places Brazil’s CBDC under a new light, with apprehensions of undue governmental control running high among users. In a country bearing the scars of past financial turmoil, the battle against excessive centralization in the realm of digital currencies has now taken to social media platforms. As per Magalhaes, making this information public is the most effective resistance to the central bank’s overreaching authority, a call to arms for Brazilians to scrutinize the actions of their Central Bank in this digital era.