In a history-making move, Spanish banking multinational Santander recently completed it’s first ever confidential transaction on Brazil’s central bank digital currency (CBDC) test network, Project DREX.
On November 28th, Santander successfully transferred digital reals from one account to a central bank test account using privacy-centric technology called Zether. The transaction details were completely concealed from the other 15 consortium members involved in piloting DREX.
Jayme Chataque, Santander’s Head of Digital Assets and Blockchain, confirmed the central bank received the funds while other participants could not view the transaction. However, Chataque noted work remains to reliably conduct private transfers at scale across DREX.
Nonetheless, this initial success proves the possibility of guaranteeing privacy within a CBDC. Resolving confidentiality concerns could pave the way for full-blown CBDC deployment in Brazil.
Critics argue CBDCs must balance transparency through an immutable ledger with user privacy protections inherent to cash. Santander’s historic DREX transaction demonstrates this balance is achievable via privacy-enhancing cryptography like Zether.
While questions around efficiently scaling privacy features remain, overcoming initial hurdles bodes well for Brazil’s CBDC. Few countries have advanced as far in exploring how to make CBDCs a palatable replacement for notes and coins.
Santander unlocking user privacy on DREX underscores Brazil’s progress to date. The ability to replicate bank-level confidentiality safeguards could tip the scales for a Brazilian CBDC in the not-too-distant future. Santander’s success proves CBDCs can potentially deliver the best of both worlds – transparency and privacy
