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Douglas da Silva | Apr 23, 2024
Digital Brazilian Real, also known as ‘Drex’ and Real Digital, is Brazil’s official digital currency and has recently undergone a pilot project from the Central Bank of Brazil. With a focus on programmable money and asset tokenization, this ground-breaking initiative is expected to completely alter the Brazilian financial landscape.
Today we’re looking at Brazil’s distinctive Central Bank Digital Currency (CBDC) strategy, potential business applications, and opportunities for innovation in this dynamic digital currency market.
What is CBDC?
Central Bank Digital Currencies are cryptocurrencies developed, issued, and managed by a central bank. They’re essentially the same thing as traditional, physical money — just in a digital form.
CBDCs are designed to be a stable, digital alternative to fiat currencies and are designed to work in tandem with the physical currency.
A country that creates its own CBDC coins will also have physical coins, paper money, and digital money that all use the same value system and can be used interchangeably.
Learn more about: How Blockchain Can Reshape the Global Economy with CBDC
A Unique Approach to CBDCs with Real Digital
With that in mind, Brazil has taken a different approach to its CBDC. In contrast to other CBDCs, Brazil’s Real Digital was initially designed for something other than retail payments.
This is because Brazil already has an established and popular digital payment system called Pix, which successfully handles daily transactions.
Pix went live in November 2020 and has been very successful with the Brazilian public. In its first year, the instant payment system saw more than 330 million individual keys in operation and acted as the first-ever digital money transfer for 45 million people.
This enthusiastic embrace of a digital payment system encouraged the development of a CBDC for Brazil. While Real Digital is expected to be integrated into Brazil’s existing digital payment systems, the Central Bank of Brazil also plans to focus on several different use cases in addition to daily transactions.
New goods and services
The first focus of Real Digital is investigating new goods and services that companies and financial institutions can create with the help of this new digital currency. Because Brazil has already so readily accepted the Pix payment system, companies have the opportunity to build Real Digital into more types of transactions.
The programmability of money
Fábio Araujo, an economist at the Central Bank of Brazil coordinating the Real Digital initiative, hopes that Real Digital will “provide entrepreneurs with a safe and reliable environment to innovate through the use of programmability technologies, such as programable money and smart contracts.”
By using Real Digital with smart contracts or Internet of Things (IoT) devices, this new currency has the potential to speed up and automate payments, purchases, and transfers.
Better financial inclusion
One of the most exciting aims of Real Digital is improving financial inclusion across Brazil. Just as Pix has encouraged millions of people to try out digital payments, the hope is that Real Digital will help improve financial education and banking adoption among Brazilian citizens.
The Future of Business with Real Digital: Innovative Applications
The Real Digital pilot project has the potential to open up a wide range of cutting-edge uses beyond standard payments, creating new opportunities for businesses. Some examples include:
- Tokenizing physical assets: Itaú Bank, one of Brazil’s major financial institutions, has created a project that uses blockchain technology to make investments in cryptocurrency liquidity pools easier. By creating a mobile experience, investors can provide tokens of Brazilian Real and US Dollar (represented by the stablecoin USDC) in exchange for returns, bringing liquidity to other customers who wish to exchange between these two currencies.
- Smart lockers for e-commerce: A collaboration between fintech Capitual and TecBan demonstrates the concept of programmable money, where smart lockers identify when a customer retrieves their online purchase and only then release the payment (in Real Digital) to the seller.
- Offline payments: Another potential use case comes from Giesecke+Devrient, which aims to use Real Digital to create a token-based offline payment solution. Their project, Filia, works with secure hardware elements like the chip found in payment cards and processes payments between offline wallets, all while ensuring only authorized wallets are allowed to transact.
- Rural financing: A project from Vert would bring funding to rural communities. Their project uses a programmable tokenized asset with a value linked to the Real stablecoin. The project is designed to bring greater fluidity and transparency to rural financing.
Explore the potential of the Digital Brazilian Real
As Brazil’s official digital currency pilot project advances, now is the perfect time to explore the potential of Real Digital for your business.
With a focus on programmable money and asset tokenization, Real Digital from Brazil stands out as an innovative and promising development in the world of CBDCs.
The pilot project highlights smart contracts, creative applications, and compatibility with current financial infrastructure, emphasizing its potential to promote financial innovation and business expansion in Brazil and beyond.
Businesses looking to create cutting-edge solutions tailored to their needs can stay informed by working with the right partners.
At Cheesecake Labs, our experience with blockchain technology and our status as a Stellar integration partner make us the perfect choice to help businesses leverage Real Digital’s exciting opportunities.
Use Case: Real Digital for DvP transactions
We’ve even partnered with Mercado Bitcoin, CPQD, ClearSale, and Stellar to use Real Digital for Delivery versus Payment transactions on the Stellar blockchain network for the Central Bank of Brazil’s LIFT Challenge.
This project has afforded the Central Bank of Brazil a global innovation award and it has given us hands-on experience with the power and potential of the Real Digital.
Get in touch with the team at Cheesecake Labs to learn how we can help you take advantage of this ground-breaking digital currency. We can’t wait to hear about your ideas!
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