The pilot version of Real Digital, Brazil's central bank digital currency, enables authorities to freeze users' wallets and reduce their balances, according to Pedro Magalhães, a blockchain developer from Brazil. Magalhães claims to have reverse-engineered the CBDC's functions based on the source code published for a public audit by the Banco Central do Brasil (BCB), the currency issuer, on GitHub on July 6. Magalhães was quick to describe his discovery on LinkedIn later that day, from where it has spilled over to Twitter.
More details have been provided in a nineteen-part tweet thread by Vini Barbosa, a Brazil-based crypto journalist. Barbosa reports how Magalhães, a blockchain and DeFi specialist with expertise in Solidity, the language used for Real Digital development, unearthed the features allowing CBDC controllers to make serious modifications to the currency ledger directly affecting users.
The functions Magalhães points to include:
- minting tokens,
- enabling/disabling target accounts,
- freezing/unfreezing specific accounts,
- increasing/decreasing financial balances of frozen accounts,
- moving Real Digital coins or other network tokens from one address to another,
- creating/burning coins at/from certain addresses.
Interestingly, Brazil's central bank has already confirmed that Magalhães's analysis is, pun intended, right on the money, admitting to the possibility of executing any of the named functions. "The BC and institutions already have similar functionalities in the current environment of systems such as SPSB and PIX, their use being governed by law and regulation," the bank replied in a commentary for Portal do Bitcoin, a Brazilian crypto outlet, according to the translation provided by Barbosa in his tweet.
Interviewed by Cointelegraph, Magalhães explained that the BCB would "probably" maintain the highlighted functions to enable secured loans and other financial operations. He stressed, though, that the source code doesn't specify the conditions for freezing tokens or decreasing funds, nor does it define entities authorized to perform such actions.
The current pilot project is subject to changes. The BCB plans to roll out its CBDC by 2024, according to the statement made by the institution's president Roberto Campos Neto at a press conference in December last year.