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Brazil takes an important step in the digitalization of its economy with the first transfer using Drex, the digital currency developed by the Central Bank. Despite the innovations, there are concerns about privacy and state control.
Transforming money as we know it is no longer just a futuristic idea.
Recently, Brazil took a decisive step towards the digitalization of the economy by making the first transfer using Drex, the digital currency that promises to change forever the way we deal with financial transactions.
This event, considered historic, is generating both excitement and concerns, pointing to a future where the physical real could become a thing of the past.
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This week, Caixa Econômica Federal and Banco Inter completed the first operation with Drex, also called Real Digital.
The currency, developed by central bank Since August 2020, it has arrived to bring more agility, security and inclusion to the financial system.
Regulated by the monetary authority, it will have the same value and acceptance as the traditional real, but with the advantage of being integrated into a completely digital financial system.
What is Drex?
Drex is a centralized digital currency, issued and controlled by the Central Bank of Brazil.
Unlike cryptocurrencies like Bitcoin, which operate on decentralized networks, Drex relies on the regulated infrastructure of the national banking system.
This approach offers greater stability and security for users, but also raises questions about privacy and state control.
How does digital currency work?
To use Drex, citizens will need authorized financial intermediaries, such as banks or fintechs.
These intermediaries will be responsible for converting amounts from traditional checking accounts to digital wallets.
All transactions will be carried out within the Real Digital platform, operated by the Central Bank, ensuring speed and security in the processes.
According to the Central Bank, Drex will not replace paper money immediately, but will function as a modern and efficient alternative.
This transition is seen as a natural evolution, aligned with global trends towards the digitalization of the economy.
Innovations and advantages
Drex follows the path started by Pix, which revolutionized bank transfers in Brazil.
Just as Pix democratized and streamlined payments, the new digital currency seeks to further expand accessibility and efficiency.
With Drex, a reduction in operational costs and an increase in financial inclusion are expected, mainly benefiting unbanked populations or those with limited access to financial services.
One of Drex's most important promises is the possibility of integration with innovative financial services.
The digital currency can be used in smart contracts, which automate transactions and reduce the need for intermediaries.
This innovation can bring a new era of efficiency to the Brazilian financial system, increasing confidence and practicality for users.
Controversies and concerns
Despite technological advances, Drex has not escaped criticism.
Parts of the political right in Brazil have raised concerns about the potential use of the currency as an instrument of “state surveillance” and “social control”.
Representatives such as federal deputy Júlia Zanatta (PL-SC) accuse Drex of threatening citizens' privacy.
“A centralized digital currency controlled by the Central Bank that can and will be used to impose restrictions on Brazilian citizens,” said the parliamentarian.
Zanatta also presented a project that seeks to prohibit the extinction of paper money in favor of digital currency.
Other critics point to cybersecurity challenges.
A centralized digital currency can be targeted by hackers or expose sensitive user information if systems are not sufficiently protected.
Additionally, there are concerns about how digitalization could impact people who rely exclusively on cash for their daily transactions.
Difference between Drex and cryptocurrencies
One of the biggest differences between Drex and cryptocurrencies is the governance model.
While Drex is centralized, that is, managed by the Central Bank, cryptocurrencies like Bitcoin are decentralized and do not have a regulatory authority.
This distinction makes Drex more stable and predictable, but also less anonymous and less resistant to censorship.
Furthermore, Drex is different because it is backed by the real.
This means that each unit of digital currency will have a value equivalent to that of the traditional real, ensuring that the transition to the digital environment does not bring devaluation or sudden fluctuations for citizens and companies.
The future of money in Brazil
The implementation of Drex is a milestone for the Brazilian financial system.
In addition to modernizing transactions, digital currency can be a powerful tool to promote financial inclusion and boost the economy.
On the other hand, it is essential to balance the benefits of digitalization with ensuring privacy and security for all citizens.
Studies by the Central Bank indicate that the adoption of digital currencies can significantly reduce the costs of issuing and maintaining paper money, in addition to increasing transaction traceability.
This, in turn, can help combat corruption and money laundering by making the financial system more transparent and efficient.
However, for this transition to be successful, a broad effort in financial education and digital inclusion will be necessary.
Many Brazilians still face challenges accessing the internet or understanding financial technologies, and ensuring that no one is left behind is essential.
Do you believe Drex is the future of money or does it pose a threat to privacy and freedom? Let us know in the comments!
Like any political methodology, I can say that this is yet another one to add value and at the same time worry us. Looking at it from a pessimistic perspective, I believe that this raises major questions for us, such as: where will the citizen's financial privacy be? Isn't it enough to pay taxes on everything, through it we will have to report amounts so as not to be charged more? After all, Pix has made it easier for us to carry out several transactions where it is not always our money being moved, but rather third parties.
Truth.
I haven't used cash for a long time. I do all my transactions with Pix and cards, and even the guy who takes care of the car in the parking lot accepts PIX. So I still don't understand the advantage of DREX, because if it's to increase control and avoid politicians' money bunkers, it's still doubtful and I doubt they'll want to use it... DREX would only work with the total elimination of physical money, and then drug dealers and corrupt politicians will only want to accept dollars... We have to agree with the rest of the world...